Deeds of Sale with Deferred Payment
The deeds of sale with deferred payment have provided facilities for many in the purchase of properties. That is why we want to explain to you, from our Notary Office in Barcelona specialised in real estate services, the benefits they can offer.
Carrying out the sale of a property in comfortable instalments over time means peace of mind for many buyers in terms of avoiding a large outlay. It is especially interesting for people who do not have enough money to make the purchase and is offered as an alternative solution to a mortgage on the market.
What is a sale with deferred payment and how does it work?
In this type of product, a deed of sale with deferred payment (also known as sale with deferred price) is processed, through which a payment schedule is agreed with the seller and the duration of the amortisation is set in said agreement. The contract may also establish a guarantee to ensure solvency in case of payment default and clauses such as the resolutory condition or the suspensive condition, which we will explain later.
Differences between mortgage and sale with deferred payment
There are substantial differences between a mortgage and a sale with deferred payment. Among them, and perhaps the most significant, is that in a mortgage the money comes from the bank in the form of a loan due to a mortgage deed. However, in a sale with deferred payment, the money comes from the buyer themselves, setting the payment to the seller according to their financial possibilities, without the obligation to pay interest to the bank and with amounts agreed upon with the seller.
If you want to learn more about mortgages, we recommend this article:
What does the contract of sale with deferred payment include?
The deeds of sale with deferred payment are carried out before a Notary and become a legal document detailing the conditions established for the sale to take place, as well as the agreed price, the schedule and the guarantees for the payments to be made.
Furthermore, they must be registered in the Property Registry to provide legal security to those involved in the transaction.
Types of Deferred Sale Contract
We also identify contract typologies defined by their clauses: the deferred sale with resolutory condition, with suspensive condition and the retention of title.
Deferred sale with resolutory condition
Previously, the figure of the guarantor to guarantee payment has been mentioned, although there is also the possibility that in the deeds of sale with deferred payment a resolutory condition is included. These add a clause whereby, in the event of non-payment, the sale is resolved, both parties involved return both the property and the full amount of the money already paid.
You should know that this resolutory condition is also registered in the Registry, so it is an important protection for the seller, since if the deferred payment is not made under the terms recorded in the Registry, the seller may rescind the sale and regain ownership.
Furthermore, it is almost always established that if the buyer does not pay on the agreed dates, the seller will not only have the power to rescind the sale and recover the property, but may keep all the amounts received, so that the buyer who defaults will lose the property and all the amounts paid.
Deferred sale with suspensive condition
In this case, the sale and purchase makes the contract subject to the fulfilment of some condition (such as receiving an inheritance or a licence). Once fulfilled, the delivery of the property and the obligation to pay take place.
Therefore, if a sale and purchase is made with a deferred price and a suspensive condition, the sale and purchase will be registered in the Land Registry along with the deferred payment and the suspensive condition. Therefore, the transfer of ownership will not occur until the buyer has fully paid the price and until that moment the ownership will belong to the seller. Therefore, the buyer will only receive ownership when they have fully paid the price and if they do not fully pay the price, the ownership will never leave the seller.
Sale contract with deferred payment and retention of title
In the sales contract, it is possible to establish the possibility of a agreement with retention of title. This implies the reservation of the property by the seller until the buyer has made all the payments.
Taxation of deferred home purchase
This type of deferred home purchase also involves taxation that must be considered. The taxes on sales with deferred payment terms are as follows:
- IRPF and municipal capital gains tax for the seller: the capital gain or loss is declared in the IRPF and the capital gains tax when it is fulfilled.
- Property Transfer Tax for the buyer when the property is transferred.
Additionally, in each case it is necessary to assess whether the suspensive or resolutory condition is subject to taxation or not. This is something that must be studied on a case-by-case basis and which we can calculate for your sales transaction at the notary's office.
JLA Notaries, specialists in sales deeds with deferred payment
At JLA Notarios we specialise in real estate and contractual services in Barcelona. We can inform and advise you on the best clauses to process deeds of sale with deferred payment, based on our training and experience as Notaries in Barcelona and professionals in Law and sales. So please contact us via our email bcn@jlanotarios.com or through the contact form on our website and we will assist you with whatever you need.
