How to read a property purchase contract abroad

Almost every purchase abroad passes through three documents, and people often treat the first two as formalities. They are not. The point at which you become legally bound, and what it costs to walk away, depends on the country and on the exact words of the paper in front of you.

What buyers fear

The usual fears are practical. That you will sign something in a language you do not read well and discover later that the deposit is gone. That a small reservation payment turns into a binding contract. That the seller can walk away but you cannot. That a missing condition (a mortgage, a permit, a clean title) leaves you stuck with the property or with a lost deposit. These fears are reasonable, and most of them are handled by reading three or four clauses carefully with a local lawyer.

What the risk really is

Most countries use a sequence. First comes a reservation or booking step: a small payment that takes the property off the market for a short time, usually with few legal consequences either way, but not always. Second comes a preliminary contract, which is often the real commitment: it fixes the price, the deadline, the deposit and the penalties. Third comes the final deed, normally before a notary or at a land registry, when ownership actually transfers and the balance is paid.

The risk sits in the middle document. Two features decide most outcomes: whether the deposit is a pure guarantee or a price for the right to withdraw, and which conditions allow you to leave without loss. A deposit can protect you or trap you depending on a single sentence. This is why the same payment of, say, ten percent can be recoverable in one contract and forfeited in another.

How it works by country

Spain. The reserva is a separate small payment, and what it means depends on its wording. The contrato de arras follows. Under the Civil Code (art. 1454), penitential arras let either side withdraw: the buyer loses the deposit, the seller returns it doubled. Case law requires that this be expressly agreed; if the contract does not say so clearly, the arras are usually read as confirmatory, which means the contract is binding and the ordinary rules on breach apply (art. 1124). The text of the Civil Code is on the BOE site. Confirm which type your contract uses before paying.

France. The compromis de vente, or a unilateral promesse de vente, is the binding step. A buyer who is not a professional and who buys a residential property normally has a 10-day withdrawal period after the day following notification of the signed document, and may withdraw at no cost. The final deed (acte authentique) is signed at the notary. If you need a loan, ask whether the contract has a clause making the sale conditional on obtaining it; this is standard practice, but check the wording and the deadline.

Italy. The proposta di acquisto, once accepted, can bind the parties, and then comes the compromesso (preliminary contract) and finally the rogito before a notary. A deposit called caparra confirmatoria (Civil Code art. 1385) is kept by the seller if the buyer defaults and returned doubled if the seller defaults; a caparra penitenziale (art. 1386) is the price of withdrawal. Ask your lawyer whether the preliminary can be recorded in the land registers, which is reported to protect the buyer against later sales.

Portugal. The Contrato-Promessa de Compra e Venda (CPCV) usually carries a sinal. Under Civil Code art. 442, if the buyer defaults he loses the sinal; if the seller defaults he returns it doubled. Reported case law also gives a consumer who has already received the keys the choice of the value increase of the property. Remember that the escritura (deed) or an equivalent document is required for the final transfer.

Greece. A preliminary agreement is common, signed through a lawyer, with a deposit; the notary drafts and certifies the final deed after the lawyer has checked the title at the land registry or cadastre. We did not find an official source for typical deposit terms, so ask for the deposit mechanics in writing.

Cyprus. The sale contract is the central document. Depositing it at the Land Registry (under the specific performance law, 81(I)/2011) creates a charge on the property and protects the buyer against later dealings; the time limit applies, so ask the lawyer to state the deadline. Contracts that are not deposited leave the buyer with a weaker position.

Bulgaria. A preliminary contract (Art. 19 of the Obligations and Contracts Act) must be in writing; notarising the signatures is not required but is recommended as proof. A customary deposit with a double-return clause is reported. The final transfer is a notarial deed. A notary escrow account is available for the balance, which many buyers choose.

Turkey. A promise of sale (satis vaadi) only gives you a right to compel the sale if it is made before a notary, and it can be annotated on the title deed at the tapu office, which protects your priority. Ownership moves only when the title deed is registered.

UAE. For ready homes the standard resale contract is the Form F, with a deposit often reported at 10% and forfeited if the buyer withdraws without a contractual reason. For off-plan, the sale and purchase agreement is registered with the Dubai Land Department through Oqood, and payments should go to the project escrow account. See Dubai off-plan investment risks.

How to protect yourself

• Get the contract in a language you understand and a certified translation of the clauses on deposit, penalties and dates before signing.
• Ask what the deposit is: pure guarantee, advance on the price or price of withdrawal, and who may withdraw.
• Make sure the contract lists conditions precedent that let you leave without loss: financing, a clean title search, building permits, a certificate of no debts, a completed inspection.
• Check delivery dates and what happens if they are missed: fixed penalty per month, right to terminate, refund with interest.
• Never sign a blank or half-filled form, a power of attorney broader than you understand, or a document that mentions a price different from the real one.
• Never pay a deposit before the seller's ownership and the absence of mortgages have been checked by your own lawyer.
• Keep every payment traceable, by bank transfer to an account in the seller's or escrow agent's name.

When to involve a lawyer or notary

Before any binding step. The lawyer should read the preliminary contract before you sign and check the title, debts and permits. In many countries the notary is neutral and cannot take your side, which is why an independent lawyer matters. See notary or lawyer: who do you need abroad and pre-purchase checklist. Related risks: double sales and hidden debts and deposit protection when a developer goes bankrupt.

FAQ

Is a reservation agreement binding? It depends on its wording and on the country. It can be a simple holding payment, or it can be treated as arras or a binding promise. Ask whether it is refundable and on what conditions before paying.

Can I lose my deposit if I change my mind? Often yes. Under penitential-type deposits the buyer who withdraws loses it, while a seller who withdraws commonly owes it back doubled. Some countries give a short cooling-off period, for example 10 days in France for residential buyers who are not professionals.

What is the difference between arras penitenciales and confirmatorias in Spain? Penitential arras let a party withdraw by losing or doubling the deposit, but only if the contract clearly says so. Confirmatory arras reinforce a binding contract, and the other side may demand performance or terminate under the general rules.

Do I need to be present to sign? Not always: a notarised power of attorney or remote signing is possible in many countries, but it must be drawn up properly. See power of attorney for buying property abroad.

What should I never sign? A contract you have not understood, one with a blank price or date, one without any exit condition, and anything under time pressure from an agent.

How we help

We are a trilingual platform (Russian, Polish, English) that finds properties and coordinates independent local lawyers and tax advisers who read the contract with you. This text is informational and is not legal, tax or investment advice. Rules change, so verify current provisions with a lawyer or notary in the country concerned before signing.