In Times Of Recession Some Imagination Is Needed - Option To Buy

Published on 11/12/2008 in Buying Process

Legal in Spain...And the national government backs this now!

For those wanting to sell: One of the most interesting commercial strategies to sell properties during those periods, when the demand for real estates decreases, is that one of the renting with an option to buy or the so called “rent-to-own”

Real estate agents and developers used to resort to such kind of lease contract instead of keeping the property inactive. Private owners who bought to sell can benefit from these possibilities this way too.

Real Estate Agents and developers that decide to launch this formula let their clients rent the dwelling for a reasonably moderate price, and after a certain period from 2 to 5 years the client is entitled to purchase it. The main advantage is that the sale price is reduced by the amount that the tenant has paid throughout the rental period.  The period must be clearly expressed in the contract; as otherwise, a presumption of an option period of 15 years will work.

This solution can be also found attractive by individual landlords or real estate investors who want to sell their properties. They can save money on the mortgage during the rent period and increase their future chances of selling the property. It is easier to find tenants if you give them an option to buy than to find simple tenants. There is always a possibility to renew the lease contract with or without the option to buy.

The option to buy can (and it is highly advisable) be registered in the Land Registry when the period to opt-to-buy is shorter than four years.

For those wanting to buy: This mix-financed  option  is suitable for people who cannot afford buying a property due to its high price, since they do not have enough money to pay a deposit or can not obtain a mortgage loan from the bank.

And this is especially interesting during the periods of insecurity in the real estate market or financial uncertainty, when the interest rate increase is unpredictable, and it is unknown weather the consumers can cope with this increase. Such a situation can be a good chance for those ones who are interested in a lease with option to buy.

The National Ministry of Housing is including this type of contract among those which will receive Official subsidies within the Housing Plan 2005-2008.  

If you want to include the option to buy in the lease contract you can use the clause below as a model:

Eighteenth. – The Purchase Option.

(Yes, I am “generously” giving to you a clause as a model!)

“The parties agree that before the term of the present contract, FIVE YEARS, comes to an end, the tenant should be able to acquire the property of the real estate – object of this lease.

To purchase the property, the tenant must formally inform the landlord about it within the last month before the date of expiration.

In case of possible purchase the sale price of the dwelling would be of ONE HUNDRED AND TWENTY THOUSAND (120.000) EUROS. Rental payments are not included in this price.

The sale of the real estate would be formalized by a public deed, free of charges. And the payment of the whole agreed price must be done in the moment of the contract signature.

Expenses and taxes originated by the sale would meet the requirements of the Civil Code.

Any of the parties shall be able to register this lease purchase contract in the Property Book Office. The cost of the registration would be paid by the party who promotes it.


Of course, we always advise you to use a good lawyer to take charge of the drafting of this kind of contract.

Written by: Maria de Castro

About the author:

Maria de Castro is a Spanish Lawyer and the Director of the Law Firm www.costaluzlawyers.es.

Costa Luz Lawyers are contract and consumer real estate law specialists covering all parts of Spain. You can contact Maria at mldecastro@costaluzlawyers.es




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