There are fundamentally two types of documents that the sale may take the form of, although they both have the same main result, that is to say they transfer the ownership of the property. However, their effects, forms and characteristics are very different:
1. Private contract of sale: Its main characteristic is that this only affects and binds the parties who sign it, NEVER third parties. In this document, the vendor is bound to hand over the property and the ownership of it, and the purchaser is bound to pay a price for this. Since it is a document of a private nature, it cannot be entered in any register of a public nature. Therefore, the announcing of this contract will be quite restricted. This contract is not the usual form of sale because of the risks that it carries with it, and those we will mention later on. It is used, amongst other cases, in those situations where there are difficulties in the executing of a public deed. However, when these difficulties disappear, the standard procedure is for a public deed of sale to be executed or the private contract of sale to be publicly recorded, with a view to being able to record the transfer of the real estate in the property register. The main risk that comes with this legal form of property transfer is that since there is no access to the property register, its effects are not protected against third parties. That is to say, they are not affected by this. Therefore, it is possible for the vendor to re-sell the property to a third party who is unaware of the existence of the previous sale. The latter then enters it in the property register, transforming himself into the new owner of the property, even though we have bought it first. That is to say we have been the subject of a fraud. We will also have problems when it is time for us to sell the property, because if our purchaser needs financing, he will not be able to obtain it since the registered owner of the property will not be the true one, since we have not been able to gain access to the registration of the sale that we carry out. Therefore, no bank will be willing to provide financing.
2. Public Deed of Sale: The main characteristic of this, in contrast to the private contract, is that apart from affecting and binding the signatory parties, it does have an effect on third parties, when this is combined with the effect of registering the property. Let us say, in a straightforward way, that this is a contract that is made in from of a state attesting official, a notary – that means it is not of a private nature. This is the usual and ordinary way of carrying out a sale since it provides a high degree of legal security, and it is also a document that can be entered in the property register.
Once either of these contracts has been signed, it only remains for us to wait to be able to execute the public deed. In the first case, this involves being able to enter the transfer in the property register. This makes us the owner in everyone’s eyes. In the second case, the transfer is entered by the R.E.P.A. on our behalf, in the case in which his services have been used.
fuente: COAPI Madrid