Buying New and Resale Property in Spain
Do not sign an "Option to Purchase" agreement!

Buyer Beware!!  Don't sign this Contract!

This is a true story.....

In early 2006, a couple who live in Javea on the Costa Blanca (we will call them Mr and Mrs Buyer) saw a private for sale sign in the town. They contacted the property's owner, explaining that they were interested in the property, but had a house to sell first.

The owner, quite rightly, advised that the property would have to remain on the market, but that she would let them know if there were any further enquiries.

It was a Private Sale - but now there's an Estate Agent

Mr and Mrs Buyer then received an offer on their house, which they accepted. They contacted the seller in the town, but were told that it was now being marketed with an estate agent, on a three month exclusive basis. They had no choice but to go through the estate agent and pay his commission.

Mr and Mrs Buyer were devastated, because they now had to pay commission to an estate agent, despite previously seeing the property privately. However, when they contacted the estate agent, he assured Mr and Mrs Buyer that because they had already seen the property privately, only a small sum of commission would have to be paid.

Satisfied with this, Mr and Mrs Buyer signed a "simple" contract, and paid a deposit of 5,000 Euros, which they were told would be passed directly to the owner.

Now, Mr and Mrs Buyer are very astute people, and because they had lived in Javea for over 8 years they were very well aware that a lawyer must be engaged. In fact, Mr and Mrs Buyer are so astute, that they had already obtained a copy of the Nota Simple, to confirm that the property was in good order. And everything checked out OK.

Estate Agent wanted an Option to Purchase Agreement

Mr and Mrs Buyer’s lawyer contacted the estate agent, and advised that "legal’ contracts were being drawn-up for signing by the Buyers and the Seller in a couple of days. The estate agent advised the lawyer that he had an "Option to Purchase" Contract in place.

Option to Purchase Contracts means that he required two contracts, not one. The first contract would be in the name of the estate agent, selling the property to Mr and Mrs Buyer. The second contract would be in the name of the current owner, selling the property to the estate agent.

The first contract (in the name of the estate agent) shows a sale price of 227,000 Euros, which is the price Mr and Mrs Buyer will pay to the agent for the property. The second contract (in the name of the seller) shows a sale price from the agent of 220,000 Euros, with a further figure shown of 214,300 Euros - which is the price the seller will receive after paying commissions.

Estate Agent fraudulently taking higher commissions

This means that the estate agent is attempting to earn higher commissions, by selling at a much higher price than he is telling the seller. In this case, the agent was attempting to take 12,700 Euros.

Because neither the buyer nor the seller see both contracts, they are unaware of the fraud that is taking place.

This is a true story. The only reason you will be asked to sign an "Option to Purchase" agreement is to enable a similar fraud to occur.

But what makes this story even more outrageous, is that the agent never had an "Option to Purchase" in the first place. So, buyer beware!!