Spanish Arras Agreement and Portuguese CPCV
Everything you need to know about the role of Spain’s Arras Agreement and Portugal’s CPCV when purchasing real estate
What is an Arras Agreement and a CPCV?
They are both contracts that real estate investors in Spain or Portugal must use when making a property purchase.
An Arras Agreement is for Spanish property, while a CPCV is used in Portugal. These contracts are between the the property owner and the buyer and includes details such as the sale/purchase price and signing agreement. Whether you’re in Spain and use an Arras or in Portugal and need a CPCV, they are both essentially pre-agreements to complete a real estate transaction.
They act as a formal way to reserve a potential real estate transaction in Spain or Portugal when the buyer has yet to complete formal requirements for completing the entire transaction. This can include: finalising mortgage approval or ending a licensing procedure.
How do they work?
Typically, the buyer will pay around 10% of the final price as a down payment. The exact percentage depends on the country and region, and both parties can negotiate a higher or lower percentage.
If a signed Arras Agreement or CPCV is not fulfilled by the purchaser, the seller can claim the down payment. This occurs when the buyer refuses to sign the final contract.
Conversely, if the seller fails to sign the final contract, the potential purchase has the right to receive double the original Arras down payment from the seller.
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How can a lawyer help me?
Our lawyers have a deep understanding of what should be covered and omitted in an Arras or CPCV. Lexidy’s Real Estate experts will ensure the appropriate clauses are used in all documentation to protect your best interests.
Our Real Estate lawyers are here to prevent specific risks. These can include the property’s characteristics and issues with the documentation.
¨Don’t get lost in translation. Buy Spanish real estate with confidence¨
– Real Estate Team
What are the requirements?
While there no mandatory requirements to complete and finalise an Arras Agreement or CPCV, it is vital that you carefully review all documentation with a Real Estate expert before signing any paperwork. These documents are essentially promissory contracts where both parties agree to specific rights and obligations that have financial consequences.
For example, if you encounter an issue after signing the Arras Agreement and withdraw from the purchase, you will lose the 10% down payment you made.
We recommend that the buyer awaits for the following documents to be verified for proceeding:
- Permanent Certificate or Simple Note
- Urban Land Register
- Property’s utilisation license;
- Energy Certificate.
What's the Process for an Arras or CPCV?
- Gather the relevant documentation, which typically takes clients up to 15 days.
- Verify the viability of the property and the paperwork, such as the Arras or CPCV. We suggest allocating up to 30 days for this.
- Draft the deed. We will spend up to ten days on this step, depending on the other party demands.
- Sign the contract. You can do this is absentia by granting a Real Estate expert “Power of Attorney”
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Frequently Asked Questions
In Spain, the contract is considered resolved and the buyer has the right to receive the 10% down payment.
In Portugal, it’s up to the buyer.
You can prevent the loss of fees and deposits by making the loan’s approval a condition of the contract.
The party who hasn’t signed must compensate the other party with the amount agreed in the Arras Agreement or CPCV.
However, if both parties are still interested in signing the contract, they can agree to proceed and forego compensation.
Usually, the parties agree to 30 months but it’s possible to include a time extension clause. However, it depends on the arranged agreement.