Validity of a private contract in the sale of a property

13 de January de 2021

The usual and safest way to carry out a sale of a property is by means of a public deed before a Notary Public, and subsequent registration in the Property Registry. However none of these formalities is mandatory.

So, is a private contract valid for the sale of a property? We will try to solve all the doubts about it in this article.

What is a private sales contract?

A contract is a bilateral agreement, that is, between two parties (seller and buyer) that collects in writing the data of the two interested parties, as well as the conditions of the operation: the price, method of payment, form and time of the delivery of the good, etc.

The agreement is reflected in a document signed by both parties, in recognition of the obligations that derive from the contract for them. If the contract is not executed before a Notary to give it the form of a public deed, we will be dealing with a private contract.

Validity of a private contract for the sale of a property .

The private contract for the sale of a property is fully valid for legal purposes, as provided in article 1278 of the Civil Code: “ the contracts will be binding, whatever the way they have been concluded, provided that they meet the essential conditions for its validity ”. However, it does not have the same legal guarantees for the parties.

For example, if the previous owner of a home accumulated debts, and the property continues to appear in his name in the Land Registry, it is possible that it will be seized in order to settle the debts.

With a private contract, the new owner will be able to prove ownership, but will have to go through a longer and more tedious legal process. On the contrary, if the contract has been granted before a notary, by means of a public deed and has been registered in the Land Registry, the seizure would not take place.

It is highly recommended that the sale contract be made in a public deed and that it be registered in the Property Registry, in order to secure the positions of the parties, in this way the seller will be released from the obligations arising from the ownership of an asset (payment of taxes, maintenance of the farm, payment of community fees, etc); and the buyer will be able to easily and indisputably demonstrate ownership of the real estate.

It is also advisable to have adequate advice from a real estate law professional when you are going to enter into a sale contract. The intervention of this professional guarantees that the document conforms to the law, that the intentions of the parties are correctly reflected, without ambiguities or inconsistencies, and that the obligations and rights that derive for the seller and the buyer are clearly stated.

Differences between a private and a public contract

If you decide to enter into a private contract, all interested parties must sign it. The private contract does not have access to the Registry, it cannot be registered in the Property Registry. In other words, the contract cannot be registered and the property will not be registered in the name of the new owner, with the legal uncertainty that this entails.

In the case of a public contract, in addition to signing both parties, the signature of the Notary will also appear in the document.

Delivery of possession of the property

Although a private contract for the sale of a property is fully valid, in order for the buyer to be considered as a new owner, the possession of the property must be handed over.

Therefore, in the private contract it is necessary to specify the date of delivery of the possession  On the contrary, in the case of a notarial contract, the deed itself before a Notary Public serves as the act of handing over possession of the property.

Reasons for not raising a private sale contract to public status

There are different reasons why some people may decide to enter into a private real estate sale contract, without making it public.

These reasons may include the lack of registration of the seller’s title (for example, a person inherits a home and wants (or needs) to sell it before the inheritance has been registered in the Registry) or the simple ignorance and lack of experience.

However, the absence of the guarantees that are linked to a public deed may cause more harm than good, nullifying the advantages of the private contract.

In short, a private contract for the sale of a property is valid, but it is necessary to carefully weigh the reasons for choosing this contractual form.

For this, it is convenient to have adequate professional advice, which can save you future problems or conflicts derived from an inappropriate, imprecise contract or one that has not been entered into with the necessary guarantees.

At VBB Abogados , we are specialists in real estate law. You can find our contact information at this link.