A recent Supreme Court ruling of 15 November 2021 has sent an estate agent to prison for fraud for having drawn up a fraudulent earnest money contract (arras) in order to obtain a deposit of €6000 from prospective purchasers.
Specifically, the High Court considered it proven that the agent signed a contract with the buyers for a property whose owners had rejected the purchaser’s offer and, moreover, had deposited the money into his account and used it for purposes other than those related to the prospective sale.
Sadly, this type of case is not unusual and so, once the decision to buy has been made, buyers can avoid losing their deposit with a few simple precautions:
1: Ask the owner’s representative or the estate agent for a simple informative note from the Land Registry to check the ownership of the property and any charges entailed on it;
2: Ask the owner’s representative for the Power of Attorney under which they are acting;
3: Ask for a copy of the arras contract to review prior to signing it;
4: Consult a wholly independent qualified professional (abogado);
5: Do not pay any deposit until the abogado has reviewed the documentation and once they are satisfied, ask the agent to have the vendor sign the contract first, on all pages and attaching a copy of their or their representative’s ID.
Always bear in mind that many vendors put their property up for sale with several estate agencies at the same time and it is essential to obtain proof of the owner’s acceptance of the offer before paying the deposit, however much an agent insists that a deposit has to be paid urgently on the grounds that someone else is interested in the purchase.