How to differentiate the purchase-sale contract of deposit and reserve

The earnest money purchase and sale contract and the reserve contract may seem similar to each other, but in reality they are very different. Many people often confuse one with the other when establishing to acquire a property. That is why we want to show you in this new blog article the difference between these two types of documents.

The reservation contract is usually used to acquire a property through a developer; that is, a property that is still under construction or that has just been completed. As its name says, in the reservation contract a reservation is usually made as a sign. This amount is almost always between 1% and 5% of the total cost of the property. Then, in the document, the different payments are established until the total established cost is reached, which closes with the signature of the notary.

It is important to know that this type of contract is not usually terminated. This means that the buyer has the right to receive the property for the pre-established price and within the period pre-established in the document. Thus the seller is obliged to sell you the property as agreed. In exceptional cases, the contract can only be terminated when the two parties fail to comply with the provisions of the document.

Now let's see the difference with the deposit contract. The first thing to say is that this document is regulated by the Spanish civil code, where three types of contract are indicated: the penitential (which is usually used more), the criminal, and the confirmatory. In the penitential deposit contract, if the buyer does not comply with what is established, he usually loses the money invested. On the other hand, if the seller is the one who defaults, he has the duty to reimburse the buyer twice the amount invested. It is clear that for this type of agreement, compensation can always be paid to the buyer if the seller decides to terminate the contract.

We hope that this clarification serves to differentiate these two types of documents, which may be very similar but are actually very different from each other.