Deposit contract for a property: what to check before signing

The deposit contract is one of the most important documents in the property purchase process, as it formalises the commitment between buyer and seller before the signing of the public deed before a notary. Although it is signed at a still intermediate stage of the transaction, its clauses have very significant effects, so it is worth reviewing it carefully before committing yourself, especially if you are progressing with your house buying process in Madrid.

What exactly is the deposit contract

It is a private document under which buyer and seller commit to completing the sale and purchase within a set period, with the buyer paying an amount of money on account of the final price. There are different types of deposit contracts, with different legal consequences in the event of breach, so identifying which type is being signed is one of the first aspects to check.

Full identification of the parties and the property

Before signing, check that the contract correctly states the identification details of buyer and seller, as well as an accurate description of the property: address, cadastral reference, land registry details and floor area. Any error in these details may cause problems at later stages of the process.

The price, payment method and deposit amount

It is essential that the document clearly specifies the total price of the property, the amount paid as a deposit, and how the rest of the price will be paid when the deed is signed. It is also advisable to note whether that payment will be made with mortgage financing or with own funds.

Deadline for signing the deed

The contract must set a deadline, or a specific period, for signing the public deed before a notary. This deadline should be realistic and take into account the time needed to arrange a possible mortgage, so it is advisable to compare it with your financing situation before agreeing to a deadline that is too tight.

Charges, land registry status and prior documentation

Before signing any deposit contract, it is essential to have reviewed an up-to-date land registry extract for the property, to check its registry status, possible charges or restrictions. You can consult our guide on what the land registry extract is and how to interpret it to know exactly what you should check before this step.

Consequences of non-compliance

The contract must clearly state what happens if either party fails to meet what has been agreed: what happens to the amount paid if the buyer withdraws, or what compensation is due if it is the seller who fails to comply. This is one of the points it is most important to understand properly, as it determines the financial risk you take on when signing.

Other relevant clauses

Also check whether the contract includes suspensive conditions, such as obtaining financing, the condition of the property, the utilities or items included in the sale, and whether there are any outstanding community charges. The more detailed and clear the document is, the smaller the margin for later disputes will be.

The importance of having it reviewed by a professional

Given that the deposit contract has important legal and financial effects, it is highly advisable for it to be reviewed by a professional before signing, adapting it to the particularities of each transaction. At UBICASA we support our buyers at this stage, making sure that each document protects their interests. Discover our available properties in Madrid or contact us if you are about to sign a deposit contract and would like advice before taking the step.