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terms, reps & warrants, etc. A minimum of 10% of the agreed price must be paid upon signature of the Arras Agreement, but the Parties may agree to increase this percentage. Upon completion, this amount shall be deducted from the total price. There are two types of Arras Agreement according to Spanish Civil Code, each of them provides different enforceable scenarios. E.g., if the Seller refuses to sell upon closing date, the Seller must pay the Buyer two times (x2) the received arras amount or even enforce the Seller to sell or the Buyer to buy. 10 C. In Spain, real estate transactions are notarized by means of a Purchase and Sale Public deed. This public deed is registered in the Land Registry and that the ownership title is recorded as well as any lien or encumbrance (e.g. mortgage) so anyone has certainty about who is the owner and the existence of any liens or encumbrances that may affect the property. Land Registry info is publicly accessible. The Buyer must consider that notarial and Land Registry fees shall be accrued. Once executed, the last requirement before its registration is the clearance of all taxes related to the transaction. (Please see Section III for further details). 4. Form of Deed Spanish law stablishes a property conveyance system (teoría del título y
del modo) based on two requirements, namely, a valid agreement between the parties (title) and the subsequent handing over of the property (traditio). Therefore, for the conveyance of the ownership of a real estate property to occur, both requirements must be fulfilled. In practice, this system entails an agreement to convey and, afterwards, granting a deed before a Public Notary, since this granting is considered a handing over by law and notary documents provide legal recognition and protection. Therefore, the most secure form of transferring real estate property in Spain is via the granting of a Public Deed of Sale before a Spanish Public Notary. 5. Spanish legal system in Spain permits different sorts of ownership like ownership of the whole land and construction or ownership for example only of one unit or lots of units (condominium) of the improvements. In Spain there are different ways to own property: it is possible to own the whole piece of land or only a fraction of the land (plot) after segregating the land. It is also possible to own the building without owning the land where it was built if the land / building is subject to an allotment permit / horizontal property regime. Residential property in Spain is typically held under freehold tenure, granting the owner full ownership rights, obviously there may be more than one owner, and the owner may be a natural and/or a legal person. However, it is important to note that these rights can be restricted through the establishment
10 These contracts may have nuances in some parts of Spain.
ILN Real Estate Group – Buying and Selling Real Estate Series
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