Sparkes Spanish Lawyers

The Dangers of Giving Reservation Deposits without a Contract

John Biddle's Letter

We saw a small flat for sale with an estate agency, for which we put a holding deposit of two thousand pounds. We were told on the phone it was not refundable but could be moved to an alternative property when we visited Spain and decided the flat was not suitable. We have never signed contracts of any type.

Our property in the UK is not selling too well so we decided the thing to do when it is sold , is to go to Spain and rent so we asked the agent for our deposit back which they refuse to do. Can you tell us if this is legal, as we never signed contracts?

Des Sparkes’s Answer to John Biddle’s Spanish Legal Problem

It is always unadvisable to hand over any deposit money without having a written reservation/deposit contract which sets out in its terms the circumstances in which the deposit money is returned. In your case you were told verbally on the telephone that the money was not refundable but could be transferred to another property. This could be argued to be term of the contract that was made verbally.

I would write a formal letter to Atlas stating what you were told, and by who, and demand either the return of your deposit, or their agreement to allow you to transfer the deposit to another property. At the end of the letter state that if they do not resolve the matter within 3 weeks from the date of the letter you will be passing the matter to your Solicitor. If the matter is not rectified within this timescale ask a lawyer in the country where you dealt with the estate agency to write a letter to the company on your behalf. Hopefully this sort of pressure will get you the result you require.

It is understandable that buyers in their interest and enthusiasm to buy a Spanish property hand over deposits to agents/developers to reserve properties they are interested in. Estate agents can be very persuasive as they are trying to secure a sale. If they are a professional agent they will always allow you to have their deposit contract checked by an independent Spanish lawyer. Or if they do not have their own deposit contract allow your Spanish lawyer to draft one. Be wary of using lawyers employed or recommended by the agents or developers, as it is difficult for these lawyers to be independent due to their relationship with the vendor.

In the deposit/reservation contract you want clear terms that state the deposit contract will be returned if your lawyer finds anything untoward with the property during the course of his legal checks. Ideally you would want your lawyer to hold the deposit money under the terms of the contract if this can be agreed. Another essential reason for deposit/reservation contracts to be checked by an independent Spanish lawyer is that these contracts can bind you to terms in the main purchase contract which may not be favourable to you.