Real estate agencies or intermediaries in Mallorca may only transmit a buyer’s offer to the seller if the buyer first pays 1% of the purchase price. In practice, this means that you may be asked to pay before the offer is passed on, and the seller may never know you are interested if you refuse.
Summary
This article explains the problems that may arise from this practice, which may conflict with Article 31 of the Housing Law that came into force in 2023.
Problems with making a down payment before the offer is passed on
No deadline
Many estate agencies that require the buyer to pay 1% in advance use a document that gives the seller no deadline to reply. Once the seller accepts the offer, there is usually a deadline to sign a reservation or earnest-money agreement.
If the seller takes two weeks or a month to reply, however, the buyer’s 1% remains blocked and the buyer cannot safely make offers on other properties. If another offer is made and the first seller later accepts, the buyer may lose the 1% if the purchase does not proceed.
Auction risk
Some estate agencies may use the signed document and the 1% down payment to negotiate with other buyers and obtain a higher purchase price.
Your offer may therefore be shown to other potential buyers to encourage them to increase theirs.
Legal position when a buyer is required to pay 1% before an offer is passed on
There are no specific regulations stating that a buyer must pay 1% of the price before an agent may pass the offer to the seller.
However, a practice that obliges a buyer to commit quickly before carrying out due diligence may conflict with existing legislation. Article 31 of Law 12/2023 of 24 May on the Right to Housing states that a person interested in purchasing a property may require certain information before formalising the transaction and before paying any amount on account.
This information is often not included in the document signed by the buyer so that the offer reaches the seller. It includes:
- Identification of the seller or lessor and, where applicable, the person acting professionally as intermediary.
- The total price, the items included and any financing or payment conditions.
- Essential characteristics of the dwelling and building, including the habitability certificate, usable and constructed areas, age, services and installations, energy-efficiency certificate, accessibility conditions and occupancy status.
- Legal information about the property, including its Land Registry identification and any charges, encumbrances or other restrictions.
- Whether the property is protected housing and the applicable legal regime.
- For buildings with official architectural or historical protection, the degree of protection and limitations affecting renovation.
- Any other relevant territorial, planning, technical, heritage-protection or administrative information.
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