Tuesday, 17 June 2014

Reservation fees for property purchases in Spain

Often a big question for a buyer in Spain is should I pass over a reservation fee.

The reservation fee is the sum of money requested by estate agents and vendors in Spain to secure the property and remove it from active marketing until contracts are exchanged.

In the last few years the question as to whether to pass this or not rarely reared its ugly head as buyers were scarce and property plentiful. To this end reservation fees almost became obsolete as part of the buying process in Spain.

Have things changed in Spain in recent weeks

The question of whether to pay a reservation fee and the risks of doing so or not doing so have not changed but in ceratin hotspots like Barcelona, the Balearics and Marbella for the first time in a long time Spanish Lawyers are reporting a number of instances of gazumping. Techinically paying the reservation fee avoids this happening but it should be borne in mind the reservation document is not legally binding in the truest sense of the word.

Most sellers in Spain will, if a reservation fee is passed remove the property from active marketing but the fee by no means prevents them from selling the property to someone else at a higher offer, it is only at Private Purchase Contract this becomes the case.

What steps should I take to minimse the risk of losing my money or the property

Ensure before you pass over and sgin anything you have appounted a Spanish legal representative to work on your behalf. Never pass the monies directly yourself wait until the lawyer working for you requests and advsies you do so.

Make sure your finances are in place and you have undertaken applying for a mortgage before you make an offer on a property so as to ensure you will be in a position to proceed once basic legal checks are undertaken.

There is with reservation fees no right or wrong answer each buyer must decide in their circumstance which risk they are most happy with ultimatley accepting in the worst case scenario, losing the property or losing some of their hard earned cash

Read the full article:Reservation fees and the part they play in buying in Spain

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