We would like to clarify, in a simple manner, the difference between the “escritura publica” (public deed) and “contrato privado” (private contract) when buying a property in Spain.
The preliminary agreement for sale is usually signed in a document known as contrato privado. Spanish law does not require this preliminary written agreement, but this is a common practice, which benefits more specifically the interests of vendors than those of the purchasers. The reason for this is that vendors wish to close the deal as soon as possible. But the reality is that there are much more properties on sale than purchasers to buy. Especially now, it is not expected to find a long queue of people interested in buying. Very very rarely, someone will go ahead to buy the property you are interested in before you.
The possible troubles you can face in the future if someone on your behalf does not take the preliminary checks from the official records before signing the contrato privado could be very difficult to solve later. We always recommend purchasers calm down and let a lawyer work for your benefit. That is, a lawyer will check the title and the Land Registry, as it is extremely important to know who the real owner of the property is, in case the one appearing in the contrato privado is married, for example, then, both man and wife should sign the contract. In case the seller is a company, only some members of the board would have the legal capacity to bind the company in the sale of the property, and most importantly, the lawyer would also check if there is any mortgage outstanding.
Legally, this contrato privado creates a legally binding contractual relationship between vendor and purchaser but, only between them both. However, this contrato privado does not prevent the vendor from selling to another buyer or mortgaging the property, even though this would be a criminal offence. Nor do they prevent the vendor’s creditors from making a prior claim on the property.
On the other side, the escritura is the only document that can enter into the Land Registry. The escritura is signed by the vendor and purchaser before a Public Notary. Your lawyer or anyone holding power of attorney can sign the escritura on your behalf so that you do not need to be present at the notary. A holder of an escritura has a better title than the holder of an earlier contrato privado. It is not possible to inscribe the contrato privado in the Land Registry. Your title to the property becomes final when its details are inscribed in the Land Registry and this happens after signing the escritura before the notary.
The Land Registry returns your escritura containing its official stamp and inscription reference. So now, even if you lose your escritura you have the title on the property. As long as your escritura is registered you are the true owner of the property.