Off Plan Consumer Rights - Sample Purchase Contract

Published on 22/10/2007 in Buying Process

LegalClear and simple

Sales or letting contracts need to be worded in a clear and simple style, with no references or deliveries to any texts or documents which are not available to the buyers before or at the moment of the signing of the contract (Provision 10, Royal Decree 515/1989 of 21st in April 1989).

In this sense,  it is not admissible: a contract which requires the buyer or the tenant to ask for a technical advisor in order to understand their clauses because it does not provide the legally required information listed in provision 5.4 of Act 26/1984 of 19th of July 1984  (provided it is written  in the buyer’s or tenant’s language)  (Court Decision STSJ Madrid Sala de lo Contencioso-Administrativo de 16 mayo 2000)

Good faith and balance of clauses

Provision 10 of Royal Decree 515/1989 of 21st in April 1989 states that the contract clauses need to respect the principles of good faith and fair balance of the clauses. Decision SAP Alicante de 7 junio 2002

Those clauses which allow either the seller or the owner to meet the contract requirements in a discretionary way, and therefore, limit the faculties of the buyer or the tenant against that situation, are forbidden. Decision  SAP Soria de 26 febrero 2002

This implies the prohibition of determined clauses, such as: 

A)  Deferment of payment. 

Those clauses which do not clearly show or which omit the postponed amount, the annual interest rate, and the repayment conditions when there are deferment payments and that, in any way, allow the seller to increase the postponed amount during the life of the contract.  

Those clauses that impose an increase of the price for services, accessories, financing, deferments, extra charges, compensations or penalties which do not correspond to additional and effective items that can be freely accepted or rejected by buyers or tenants independently from the main contract. 

Therefore, it is not admissible to state that the building companies usually agree with purchasers   verbally in order to carry out improvement works and charge for them at the end of the works as this would allow an obvious abuse of right.  Decision SAP Jaén de 4 marzo 2002

To those effects: 

Those improvements  which were not diligently predictable at the moment of the approval of projects of urbanization/ building which will cause a variation on the price, will be previously communicated to the owners who will have to accept the exact amount produced by the refurbishment Decission SAP Burgos de 20 Julio 2001

Consent on those improvements can not be derived from the fact that the purchasers had visited the works during the building time. Decision SAP Cantabria de 27 diciembre 2000

Those improvements proposed by purchasers will be documented by legal contract with a description of the content of those refurbishments and specific mentions to the variations on price and completion deadlines.

B) Attribution of errors to the purchaser
 
Those clauses which attribute to the buyer or tenant, certain mistakes, defects or administrative/ bank errors which cannot be directly imputed to them.

C) Entitlement expenses 

Those clauses which impose to the buyer, in first sales of houses, the obligation to pay those expenses derived from New Work Deeds, the Horizontal Division Titling, seller’s mortgages or mortgage cancellation or division.

Therefore, and according to provision 10 of the Royal Decree, any unilateral clause which is imposed to the buyer without allowing him to revise/ negotiate its content, and which allows the seller to unilaterally modify the contract conditions without the consent of the buyer, breaks the fair balance of contract parties which clear and unproportionately damages the buyer and, for that reason, it is legally null and void. Decission STSJ Cast-La Mancha Sala de lo Contencioso-Administrativo de 4 enero 2001

Prescription of legal actions

When a legal claim is based on building defects of houses sold by developers-builders, and the following two consequences can be deducted from the perusing of either the sales contract, the descriptive memo attached to the contract or the publicity related to the contract:

1st consequence:  There has been a definitive influence of publicity on the will and behaviour of consumers when contracting.

2nd consequence: There are deffects and omission of details which were included in the publicity, contract and descriptive memo.

We will be under the cases of breach of contract provisioned in articles 1258 and 1101 of the Spanish Civil Code, which has a prescription deadline of 15 years.  Supreme Court Decision Sala 1ª de 20 enero 1989

Sales contract recommended by Consumers Authorities

Since 2001, there is a model contract for sales of new houses, applicable to both first sales and resales that, even not compulsory, it is intended to be used as the recommended model by every building company and/or developers and used by all the purchasers.

This document has been approved with the favourable opinion of the Advisor Commission on Abusive Clauses, which integrates the Council of Consumers and Users, the Association of Developers and Builders of Spain, the General Direction of Housing, Architecture and Planning, the Public Prosecutor, the General Direction of Registrars and Notaries and National and Regional Administrations involved in Consumption affairs.

The technical report has been worded according to the analysis made by the Comission for Consume Cooperation, without prejudicing the valuation which will be made by the Courts, which are the only competent institution for the valuation of abusive clauses, according to provision 10 bis, number 2, of General Act for the defence of Consumers and Users 26/1984 dated the 19th of July, 1984, together with the competences for classification and control which correspond to Registrars and Notaries.

CONTRACT FOR THE SALE OF OFF-PLAN PROPERTY
SHEET OF PARTICULAR CONDITIONS


This contract for the sale of off plan property [Sales Contract] is made on [date],

BETWEEN [Seller’s name] (the “Seller”) a company organized and existing under the Spanish Laws, with CIF [CIF of the company] with his head office located at:
[complete address of the company]

According to the Deeds which were approved by Notary [name of the Notary] with his file number [file number] on the [date of the deeds of company formation] .Dully Registered in the Commercial Registry of …………………. Book……………. Sheet………………Volume………………….

AND [Buyer name] ( the “ Buyer”), acting on his own name and behalf/ acting on behalf of the “ Buyer” as his legal representative in Spain, registered lawyer number […] of the [ Province]  Bar Association , with personal/ professional address at:

[complete address of buyer or his lawyer]

STATEMENTS
    
 FIRST.- TITLE AND DESCRIPTION OF THE PROPERTY

The seller has full property rights over the following plot:

Development 
Block Floor  
Usable area Share on common elements
Street/Address Number Level Letter 
Land Registry of  Number. Plot number: Book Volume
Annexes 
Garage. Usable area. Location 
Storage Room. Usable area . Location
Other premises. Usable area. Description 

SECOND. - BUILDING STAGE

The house with its described common elements and annexes is under construction in the stage of…………………………. New Work declaration  and horizontal division  public deeds have been signed before the Notary of ………………….., Mr/Ms……………………….., on the date ………………….., filed by the Notary with numbers…………………..,dully registered in the Land Registry with the aforementioned data. Regulations of the Community of Owners are attached to those deeds.  

TERCERO. - ARCHITECT NAME AND LICENSES.

Building works are being carried out according to the Project designed by the Architect Mr/Ms………………….. with address in …………………………………………… The legally required licenses and administrative authorizations have been dully granted. Copies of them are attached to this contract document. 

FOURTH. - BUILDING COMPANY NAME.

Building works have been contracted and are being developed by the company………………………………, with tax identification number………………….. and legal address in …………………………….

QUINTO.-  MORTAGAGE SPECIFICATIONS.

The seller party has already obtained/ is managing to obtain a mortgage loan on the property and described annexes with the Financial company/bank ……………………………… with a fixed/ variable annual interest rate  of ……………………….% of APR ( Annual Percentage Rate) ( to  be revised every ………………………, according to the interest rate which is applicable in every period of time and which results of the application of +/- points to the referential rate ( cross out the not appropriate, being the mortgage responsibility which corresponds to the house: ........……...... €. That mortgage loan has a recovery time of ………..years. The commission for early repayment is of ……………%, to be calculated on the outstanding sum. 
Modifications on the interest rate e subject to these limits or circumstances ………………………………………………………..........................
……………………………………………………………………………………………
Being attached a bank statement on the mortgage loan conditions provided by the Bank
 In consideration of the mutual covenants and agreements contained in this agreement, the parties agree as follows:

SECTION ONE

COMPLETION DEADLINE

 The seller will hand over the house an  annexes object of contract before the date………………….Provided that  by that date the buyer has made all the required payments according to what is agreed in the contract.  In case the seller cannot hand over the house and annexes on the expected contract date, section sixth will be enforceable

SECTION TWO

SALES PRICE AND METHOD OF PAYMENT

Full price, VAT included which has been agreed by the contract parties is of ………………………………..€, according to the following breakdown:

Price of the house (................ €.)
Price of the storage room (.................€.)
Price of the garage (.................€.)
Price of other premises (.................€.)
_________________________________________
Total (.................€.)
Value Added Tax (rate ……. %) (.................€)
In case there are modifications on the VAT rate second, General Condition Number Second will be enforceable

SECTION THREE

DOWNPAYMENT

As a down payment of the agreed price, the seller hands over in this moment, the sum of  .................……… ( ……………………. + ………….. VAT) €.

SECTION FOUR

INSTALMENTS

The rest of the price will be paid by the buyer as follows:
................instalments of ................... ( ................. + ................ VAT) € each.
They will payable successive and ……………………….. (monthly? Quarterly? Biweekly? ), from the date: 
These instalments will be instrumentalised according to their corresponding deadlines through bills of Exchange accepted by the seller, at the expense of this. 
Interest on arrears are of a yearly rate of ……………………% (….. % APR).

SECTION FIFTH

BANK GUARANTEE

Down payments will be guaranteed by
Bank Guarantee ………………….. granted by the Company/Bank…………………………………….., or
Insurance Policy number…………………………………, signed with the Insurance Company………………………………………
The document which contains this guarantee is handed over to the buyer in this precise moment.

SECTION SIXTH

FINAL PAYMENT AND NOTARY

The remaining amount: (................. + .............. VAT) €  will be paid when signing the Notary public deeds and keys are handed over before the Notary of  ( town…………………..), Mr/Ms………………………………………, with legal address in ………………………………. chosen by the buyer.

SECTION SEVENTH

SUBROGATION

The buyer has been informed on the possibility of subrogating the mortgage loan of the buyer (described in preliminary statement number fifth of this contract).
Decision on subrogation has been: (cross out the non chosen option) 
* To subrogate it, so the remaining balance mentioned before needs to be reduced in ……………… €, corresponding to the amount of the mortgage loan which is being subrogated.
General Condition Number Fourth is enforceable to this case.
* Not to subrogate it.

SECTION EIGHTH

PAYMENT DEFAULT

If there is a payment default regarding what is stated in sections third, fourth and sixth of this sheet of particular conditions, general condition number eighth will be enforceable, unless the default is regarding what is stated in number 3.3 of general condition number 3, in this case, this same clause ( number 3) will be enforceable.

SECTION NINETH

GENERAL CONDITIONS

There is a sheet of general conditions of the contract attached. A signed copy of them is handed over to the buyer now. The reception of them by the buyer is accredited by the signing of the Attachment one of this contract.
In witness whereof, the Parties have entered into the present agreement in two originals in …, on the…… of…………………….of………………………

THE SELLER     THE BUYER



"ATTACHMENT TO THE SALES CONTRACT” 
According to what has been provided in section eighth of the contract, the following informative documentation, as it is legally required by Royal Decree 515/1989, dated the 21st in April and corresponding and  enforceable regional regulations,  is handed over to the buyer at the moment of the signing of the present contract. However, that documents which are not legally required at the present moment (signalled with an “x”), will be handed to the buyer at the very moment they will be diligently obtained by the seller. 
INFORMATION ON PROPERTY AND FINANCING 
[] Copy of Notary deeds of New Work Declaration and Horizontal Property Division.
[] Copy of Notary deed of Mortgage Loan.
[] Amortization Schedule of the mortgage responsibility of the house.
[] Information on the special  bank account for the securing of  down payments according  to Law 57/68, of 27th in July  on Handed  amounts in off plan estate purchases.
INFORMATION ON CONSTRUCTION.
 
[]  General Draft of  house location.
[] Draft of the house.
[]  Description and layout of electricity, telecommunications, water, gas and heating systems
 [] Guarantees of the installations.
[] Description of security measures. 
[] Description of the house, with explicit mention of usable and built areas.
[] General Description of the Building, common areas, and complementary services. .
[] reference to materials and qualities which has been used for the building of the houses, including those of the thermal and acoustic insulation of building. Commun areas and complemantary services.
 
INSTRUCCIONS
 
[] Instructions on the use and maintenance of locations which requires any kina of special knowledge or action.
[] Instructions on evacuation of the building at emergency situations. 
 
COPIES OF AUTHORIZATIONS AND LICENSES
 
[] Copies of authorizations which are legally required for the building of the houses.
[] Copy of the planning certificates supporting the land use circumstances of the plot, with special reference to division or compensation operations.
[] Copy of licence or equivalent document for the use or occupation of the house, common areas, complementary services.
COMMUNITY OF OWNERS.
 [] Copy of Statutes and operations rules.
[] Information about contracts of services and supplies of the community of owners.
 
GUARENTEES OF DOWNPAYED/PRE-HANDED AMOUNTS.
 
[]  Copy of document/s ( Bank Guarantee or Insurance Policy)  which cover the guarantees for the down payments or handed amounts, according to Law 57/1968  about securing of  down payments in house sales and Additional Provision Number One of General Building Act  of 1999. 
LEGAL INFORMATION
 
[]  Copy of the Royal Decree 515/1989 on protection of consumers regarding the information which buyers need to receive, by Law,  in sales or lettings of houses.
[]  Copy of Law 57/68 on securing of  down payments in house sales,  with the amendments introduced by General Building of 1999.
INFORMATION ON BUILDING GURANTEES.
[] In its case, copy of the Insurance Policy, issued by the Company________________________, covering the guarantees which are required by provision 19.1.c) of General Building Act 1999
INFORMATION ON CHARGES OF THE HOUSE
[] ……………………………………………………………………………………………………………. (Charges contained in the ownership title or in the Land Registry information will be mentioned here).

 

 INFORMATION ON TAXES PAYMENT.
-  The seller has already paid or guaranteed (if that is the case), all the taxes related to the ownership or the use of the house, which has been accrued so far and has also been duly settled and notified.
-  Taxes accrued till the date of the delivery of the house and/ or annexes will be paid by the seller. Anyhow, the buyer will pay all the taxes from the moment of the delivery of the house and/or annexes, if this delivery is delayed because of the buyer.
-  Taxes of every kind accrued from the moment of the delivery of the house and annexes (in its case) will be paid by the buyer.
-  For a better information on the taxes involved in buying a house, it is recommendable to consult the Local, Regional and National Taxes Administration.
 
TRASCRIPTION OF PROVISIONS 1279 Y 1280, 1º, OF THE SPANISH CIVIL CODE.
 
Prov. 1279: “If Law requires a Public Deed or any other kind of especial legal form in order to make effective the contract obligations, the contract parties can compel each other to meet those requirements since the moment of the contract consent and the rest of the validity requirements”. 
Art. 1280:   There must be contained in Public Document:
1º Acts and contracts for the creation, transmission, modification or extinction of real rights on properties. 
 
In witness whereof, the Parties have entered into the present agreement in two originals on the place and date above mentioned.

SELLER      BUYER
 
 
 
“GENERAL CONDITIONS OF SALES CONTRACT”

FIRST. - CONTRACT OBJECT.
 
 The seller sells the house and/or annexes mentioned in the contract to which these general condition are added to the buyer, who buys and accepts and whose personal data are listed in the contract.
The sale is made with all the rights, uses, services and easements which are inherent to the house and, in its case, all the annexes included in the sale and derives from the building Project, from the planning rules of the area, including the proportional part in the common elements of the building and, in its case, in common areas of the development, free of tenants and users and in the state of charges derived from what is mentioned in this contract and its annexes.  
In any case, all the charges need to be expressly mentioned in this contract or in the documentation which is delivered attached.
SECOND.- PRICE
 
2.1. Price and VAT output
 The sales price is which is stated in the contract, the payment method is likewise the one that is contained in the contract to which these general conditions are attached.
The seller will output to the buyer, which will be obliged to pay it, the full amount of the Added Value Tax (VAT) which taxes the advanced amounts and the delivery of the house. The output will calculated on the full price.
Said output will be made as the tax accrues, that is, for advanced payments before the delivery of the house at the payment of every one of them and on the effectively received amounts. The part of the tax corresponding to the rest of taxable amount will be accrued and output once the house is delivered to the buyer, which is when the buyer makes the corresponding payment. 
2.2. Changes in prices based on the modifications of VAT rates.
If there is a variation of VAT rates, the final price, VAT included, which has been agreed in the contract will be modified in the amount which results from the application of new VAT rates in force at the accruing date.
If the seller does not timely communicate the change of VAT rates to the buyer, he will not be able to charge any delay penalties to the buyer if a price difference is owed by him due to that modification.

TERCERA. - PAYMENT METHOD
 
3.1. Payment method
The payment method is that which is stated in the contract to which these general conditions is attached.
3.2. Payment of final amount.
The final amount will be paid in cash, by bank draft or by bank transference.
If the buyer does not subrogate the mortgage loan subscribed by the seller, the seller will be obliged:
1. To give to the buyer all the documents needed for the signing of a different mortgage loan on the house.
2. To prove the cancellation of the mortgage at the moment of the delivery of the house and signing of public deeds.
3. To register the cancellation of the mortgage at his costs. Needed before the signing of public deeds.
3.3. No obtaining of financing.
IF the financing is not obtained (either by not subrogation on previous mortgage loan or not obtaining of new one) the buyer will have to pay that amount in a ………………….. period’s time from the notification of the financing denial to the buyer and, in every case, till the moment of requirement for the signing of public deed after the end of the works. The breach of this obligation will be enough for the cancellation of this contract by the seller.
Nevertheless, the buyer can cancel the contract, if the Bank does not accept his application for financing, with devolution of all the advanced amounts within the same deadline established for the previous paragraph
3.4. Payment of the rest of the price.
The rest of the agreed price will be paid according to the conditions which have been established in the corresponding clause of the Particular Conditions of the contract.
 
FOURTH. -  SUBROGATION IN THE MORTGAGE LOAN SIGNED BY THE SELLER.
 
4.1.  Content of the subrogation
If the buyer subrogates the mortgage loan signed by the seller by means of an specific contract clause, the seller will withhold and deduce the amount of the loan. For that reason the seller authorises the buyer to receive that amount from the Bank, and the buyer commits to assume in the moment of the signing of both public deeds of sales and mortgage loan, the legal condition of debtor and, therefore, to pay the loan an its corresponding interests, commissions and repayments within the agreed deadlines and conditions, subrogating also the personal obligations of the mortgage loan, provided the Bank accepts it  express or tacitly  according to provision 118 of the Mortgage Act.   
 4.2. Granting and modifications of granted mortgage
 The buyer asks the seller to sign a mortgage loan, according to the conditions which are mentioned in clause fifth of the contract, this mortgage will be subrogated by the buyer
For that purpose, the buyer authorises in the legal required way that the seller can sign a mortgage loan (always related to the house being sold). He also allows the seller to modify, renovate and divide the mortgage loan according to the payment conditions which has been agreed in this contract, making the distribution of liabilities, signing liquidations and receiving the loan amount in one or more stages, to pay amounts and finally, to execute any kind of acts and grant all sorts of public or private documents. All the expenses derived from subrogation will be paid by the buyer.
 
4.3. Expenses derived from not subrogation or delay.
4.3.1. If subrogation does not happen by buyers fault, he will have to pay the cancellation expenses.
4.3.2.  Regarding interests:
1.- The seller will pay those accrued before the signing of the public deed and mortgage subrogation.
2. - The buyer will pay those interests accrued after the delivery of the house if the signing of the deed and mortgage subrogation does not happen timely by his fault.
 
4.4. Fire insurance.
 As a condition of the mortgage loan, the buyer will hire fire insurance, for a value amount which cannot be inferior to the loan.
The fire policy will express that if a fire happens, the insurance amounts will not be paid to the owner without the consent of the loaner, which will acquire the owners’ rights in the amount equivalent to the amount which is owed at the moment of the fire.

 

FIFTH.-  BUILDING PROJECT AND MODIFICATIONS.
 
5.1. Search of the building Project.
The building Project, signed by the architect mentioned in the contract, to which accordance the works are being carried out, has been and is available to the buyer so he can consult and ask anything related to this till the house is delivered. These queries can be made in a way which will not suppose an inconvenience to the regular activity of the seller. Any relevant modification in the architect’s Project will be communicated to the buyer.
 
5.2. Modifications of the work Project.
 The seller can carry out those modifications which are imposed by the Authorities, or those other ones which derives of technical or legal obligations, provided they will not produce a significant alteration of the contract object. If the alterations bring a price variation and are due to no foreseeable causes, need this approval of the buyer.
In those cases, the buyer authorises the seller to change the deeds of New Work Declaration and Horizontal Division before the delivery of the house so that the tittles are according to the physical reality of the building.
 
5.3. Right to cancel.
If those variations produce an important change of the contract object or the price, the buyer can cancel the contract with full devolution of advanced amounts.
5.4. Modifications requested by the buyer.
Any modification or refurbishment, requested by the buyer and accepted by the seller, will be duly documented with full description of the same and the changes that this produces in price and completion deadline.
SIXTH.- DELIVERY.
 6.1. Completion deadline and signing of deeds.
The delivery will happen at the most, at the date stated in the contract, provided the buyer meets all the contract obligations by that date. The delivery will happen on the same day of the signing of public deeds. The deeds will be signed before the Notary who has been chosen by the buyer.
If the completion deadline is met with no delivery of the house, the buyer can choose between an extension or the cancellation of the contract. 
6.2. Cancellation
When a contract is cancelled the devolution will be of the 100% of the amounts handed over and legal interests
The fulfilling of this obligation to reimburse will be guaranteed by Bank Guarantee or Insurance Policy.
6.3. Extension
 If the buyer grants an extension, the house will be delivered in three months time from the obtaining of the First Occupation License, provided the buyer meets his respective obligations and unless there is a reasonable cause.
Nevertheless, if the delay is higher than three months from the grating of the extension and it is by fault of the seller, this must pay the buyer the amount resulting of applying the interest rate of clause fourth of the contract to the amounts already paid by the buyer.
SEVENTH.-  COMMUNITY OF OWNERS.
 The buyer commits himself to the meeting of those rules established in the Statutes of the Community of Owners for the regulation of the horizontal Property and authorises the seller to call the first meeting of Owners for the forming of the Community and to designate the President and the Property Manager.
The seller, according to what is provisioned in the Horizontal Property Act, will prepare the agenda, place, date and time of the meeting. If the buyer does not attend the meeting, he will be represented by the seller.
The buyer authorises the seller to hire, for an initial period of time and on the Community’s behalf those services which are needed for the functioning of the building and, in its case, of the development, including the insurance policy for fires. The buyer is committed to the payment of these services from the moment of the delivery of the house.
EIGTH.-DEFAULT OF PAYMENT.
 In case of default of payment of any of the instalments, the seller can ask for the payment through the pertinent legal actions, being in a position to choose between the cancellation of the contract or the requirement of payment. Said cancellation will happen just with the notification of the cancellation by Notary or Judicial means. The address which will be relevant to these effects is that which is stated in the contract.
If the cancellation is chosen, the seller will give back to the buyer all the amounts less that percentage which is applied as penalty for breach of contract.
The delay interests will be accrued from the deadline date.


NINETH. -  EXPENSES ON THE BUYER FROM DELIVERY OF HOUSE.
 
The following expenses will be on the buyers from the moment the house is available to him/her:
1. - Maintenance (according to his quota of share) of common elements of the building   and common areas of the development.
2. - Expenses, taxes and fares related to the house and common elements/areas.

TENTH: TAXES AND OTHER EXPENSES.
 Are on the seller’s:
•  Expenses for the New Work Declaration’s Deed, Horizontal Division public titling and registering.
• Expenses for the granting and division of the mortgage loan, and cancellation if the buyer does not subrogate the mortgage
• The Plusvaslia Tax.
   Are on the buyers´:
• If the buyer subrogates the mortgage, the cancellation expenses.
• The Stamp Duties for the sales deed and the subrogation of the mortgage loan.

The rest of taxes and expenses deriving from acts, legal operations and deeds related to this contract will be on the party who causes it.
 
ELEVENTH- AMENDMENTS OF DEFFECTS.
 
Once the house is delivered, the seller can ask the buyer to put forward the differences or defects observed ion a fifteen’s days deadline. Therefore this can be amended, with no prejudice of the application of the General Building Act and any other act or statute in force.

 

TWELVETH.- JURISDICTION
 
 The parties agree to submit every controversy regarding the contract to the Jurisdiction of (buyer’s address, location of the house, and place for the contract to be met).
The parties have executed this buy and sell agreement on _________ [date], at _________ [place of execution].

BUYER      SELLER
Special clauses for sales of state-subsidized house (VPO: Viviendas de protección oficial)
 
The house has been provisionally classified by the Autonomous Community of…………………….. as a subsidized house under the general/special regime. File number ………………….
The buyer declares that he knows the benefits and obligations of this kina of properties and, specifically:
According to provision 115 of Decree 2114/1968 of 24th in July, the house will be subject to all the prohibitions and limitations derived from the special regime of subsidized houses and, therefore, that its use conditions will be those which are established in the definitive classification and that the sales prices can not be higher than those established by Law. The buyer commits to maintain the house in a good state of conservation, safety and health and he also commits to not use, by any title, and other subsidized house, neither as owner, tenant or user
1.  According to Order of 26 January 1979: 
•  The seller must grant public deed and to deliver the house in three months time from the date of definitive classification or from the contract’s date.
• The seller needs to make available to the buyer a copy of the contract duly endorsed by the Autonomous Community.
 
•  The buyer will have to occupy the house within three months from the delivery, unless fair reason

• Expenses for deeds of New Work and Horizontal Division, as well as those related to the mortgage loan’s signing and division will be on the seller’s.
• The buyer can ask for the cancellation of this contract if the definitive classification is denied or the works are not finished within the fixed deadline or the legally granted extensions, or if he does not obtain a qualified loan.
It is also stated that the seller has obtained the legally required authorisation from the Autonomous Community in order to receive the advanced instalments/amounts from the buyer during the building period according to provision 114 of Decree 2114/1968 of 24th in July.
The buyer asks the seller to obtain a mortgage loan
The buyer has been informed of his right to ask for a direct loan
The buyer status that his family unit is made of……………… people, according to the Income Tax Act.
In every case, he declares that his family incomes are over the …………..% of the house price.
According to Royal Decree 2569/1986, of 5th in December, it is expressly stated that: 
•  The buyer has his permanent address in the same municipality as the location of the house. This is proved by the municipal certificate which is attached to this contract and he commits to use the house as permanent address and to occupy it within three months time from the delivery.
• If the house is not used as permanent address, a penalty can be imposed and the unclassification can happen as a sanction. This unclassification will involve the reimbursement of financial benefits with an increase derived of the application of interest rates. 
• According to provision 12 of Royal Decree 1186/1998, the buyer can not sell the house within five years from the granting of he qualified loan.  The Autonomous Community can suppress this prohibition of sale under the conditions of devolution of financial benefits plus interests. After those five years, if the house is sold, the bank can cancel the qualified loan granted.
At second or subsequent sales, the sales cannot be over what is established in provision 16 of said Royal Decree for houses of same year of classification and same location. This special regime of price limitation will be enforceable as long as the house is under the special subsiding regime.
These limits will be mentioned in the sales deed for the registration in the Land Registry. The prohibition of sales will be mentioned in a marginal note
 (BIS) According to provision 12 of Royal Decree 1186/1998, of 12th in June, the buyer cannot sell or transfer use rights over the property which is being granted a qualified loan for ten years from the granting of that. This prohibition to transmit can be cancelled, by public auction and judicial award by execution of the loan, by change of address municipality of the owner or by any other reasons justified by authorisation of the Autonomous Community, provided the cancellation of the loan and reimbursement of helps received by the Administration plus legal interests from granting. 
 The house cannot be voluntarily unclassified by petition of the owner till fifteen years the definitive classification.
 When second or subsequent transmissions, the maximum price cannot overcome what is established in provision 16 of the said Royal Decree for those houses which have been classified on the same year as the transmission and in same municipality. This price system will be enforceable as long as the house is under the protection legal regime.
 Prohibition to transmit and those other mentioned limits will be stated in the sales deed, so that they will be registered in the Land Registry, which will express the prohibition by marginal annotation.
In witness whereof, the Parties have entered into the present agreement in ……………………………….. Originals in …, on the…… of…………………….of……………………… A duly visa copy is handed to the buyer.

BUYER      SELLER

 

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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Comments:

normansands said:
14 December 2008 @ 14:38

Is this the contract that allows developers to supply sub-standard affordable housing on overcrowded sites with no useful drying areas, exercise areas, or gardens, just a few pools; when the development brochure promised top luxury spacious apartments on a closed and secure, front-line golf holiday complex with every possible facility??????
Is it the contract that is at fault or the courts and judges???????


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