The "two-step structure" has become an almost universal paradigm in the Spanish market, so that most real estate transactions, whatever their level, are usually articulated through two legal documents: the private contract and the public deed.

Difference between perfection and consummation

In legal terms, where selling and buying is not the same as transferring and acquiring, it is often said that with the private contract, one sells and buys, and with the granting of the public deed, property is transferred and acquired.

This nuance comes because, in legal terms, the moment of the birth of an obligation is not the same as the moment of its fulfillment. Thus:

• With the private contract, the perfection of the obligation occurs. Perfection is the birth of the obligation. This obligation can be of different nature (purchase, promise to purchase, option to buy, etc.), although all of them are contracts aimed at the transaction of a property, with greater or lesser legal force.

• With the public deed, the consummation of the obligation occurs. Consummation is the death of the obligation, the moment in which the obligations born with the perfection are fulfilled, extinguishing themselves. Thus, with the consummation of the sale, the seller transfers and the buyer acquires the property—fulfilling the seller's obligation to transfer ownership—and the buyer fulfills by paying the price.

As we see, the private contract is the document in which the parties establish all the terms of the operation, establishing the obligations of each of them. It is important to note that what has not been established in the private contract cannot be demanded from any of the parties later.

Importance of customizing the private agreement

Thus, the private document is the structuring contract of the sale operation. It is important to avoid standardized documents and make contracts adapted for each of the operations, after an exhaustive analysis of the legal situation of the property. Only in this way can the operation be articulated to achieve the objectives of each of the parties.

Generic Contracts Offer Generic Solutions

A generic contract can only address generic issues, which means it will not provide legal answers to specific situations that may arise in a real estate transaction.

It is true that in the world of real estate transactions there are "common standards" for most operations. Starting from these common standards, which offer minimum levels of legal security, we can build to adapt the contract to both the needs and objectives of the parties involved and the specific property.

This customization allows us to proactively address any particularity or complexity that may arise, thus minimizing risks and maximizing opportunities for all parties.

Legal Due Diligence

By Legal Due Diligence we refer to the phase of analysis of the legal situation of the property. This analysis begins with the request to the counterparty and to the various public registries of all available information about the property. It is a phase of "discovery," in which the lawyer has to get to know in detail the legal situation of the property.

Legal Due Diligence not only identifies risks and opportunities but also provides the necessary framework for a contract that is both complete and specific and, on many occasions, Legal Due Diligence is decisive in the client's purchase decision, which is why it is necessary to convey the information in a simple and objective manner, explaining without alarmism the possible legal consequences of the possible contingencies detected, so that he has the necessary tools to make his decision.

The analysis cannot be limited to the review of a simple note, as it would be manifestly insufficient. Adequate Legal Due Diligence in real estate must be much broader and cover different areas of Law (civil, registry, tax, urban planning, administrative). We must remember that Real Estate Law is a specialization by reason of the object, which is why our lawyers competently cover the areas mentioned above.

Legal Advice from a Party's Perspective

Legal advice from a party's perspective is another crucial element in customizing the contract. A lawyer in this role exclusively defends the interests of his client, which adds an additional layer of trust and legal security to the process. The client can convey all his concerns and expectations to the lawyer, who must translate them into legal language and incorporate them into the contract.

In addition, legal advice from a party's perspective can include aspects such as optimal tax planning and the adaptation of the property to the specific needs of the client, which adds invaluable value to the transaction.

Anticipating Contingencies and Conflict Resolution

Finally, customizing the contract provides an additional advantage, which is the ability of the contract itself to anticipate contingencies and establish specific methods for conflict resolution.

The contract must not only cover the positive part of the operation but also the negative one. It must clearly establish the obligations of the parties to achieve the intended purpose and establish the relevant legal consequences for possible breaches. A clear and complete contract will close the door to possible partisan interpretations, thus avoiding potential conflicts.

This proactive approach not only adds an additional layer of security and trust to the transaction but also reinforces the importance of having specialized legal advice from the early stages of the process. By anticipating and planning for various contingencies, the lawyer can offer added value that goes beyond the simple drafting of the contract, contributing to the long-term success of the real estate operation.

In summary, the two-step structure in real estate operations, which ranges from the private contract to the public deed, is not a mere formality. It is a process that requires a personalized approach and specialized legal advice to guarantee the success of the transaction. Legal Due Diligence and advice from a party's perspective are crucial elements that add layers of security and trust, allowing for the anticipation of contingencies and minimizing risks. A well-crafted and adapted contract not only meets legal obligations but also maximizes opportunities for all parties involved. Therefore, it is imperative to have a legal team that deeply understands both the client's needs and the specificities of the property in question.

desalvador | Real Estate Lawyers Mallorca