Reservation and Purchase Contracts. What you need to know

After accepting an offer, the seller and buyer sign a reservation contract, and the buyer pays 1% of the agreed price as a reservation fee. This contract takes the property off the market while the buyer’s legal team conducts due diligence, usually within two weeks. The contract can only be cancelled if a specific clause allows it.

If all goes well, a private purchase contract (PPC) is signed within two weeks, with the buyer paying 10% of the sale price. This contract sets the completion date and outlines the terms of the property transfer.

RESERVATION CONTRACT VS. PRIVATE PURCHASE CONTRACT (PPC)

While both the reservation contract and the private purchase contract (PPC) start the buying and selling process and are legally binding, they serve different purposes. The reservation contract follows basic legal requirements and can only be cancelled if explicitly stated in the contract. The PPC (Contrato de Arras Penitenciales, the most common type of contract), however, is regulated by the Civil Code, making it more formal and comprehensive. It is typically used to secure the sale and provides a clearer legal framework for both parties.