Buying or selling a property between private parties often comes with plenty of headaches. Many people prefer to close the transaction without intermediaries to avoid estate agent commissions and have greater control over the process, but many doubts appear along the way.
Keeping all the paperwork, documentation and formalities clear can easily become overwhelming.
This is where one of the most important documents in the whole transaction comes in: the earnest money contract template between private parties.
The earnest money contract is the first formal agreement between buyer and seller. It is used to put the purchase commitment in writing and establish the conditions both parties accept before going to the notary.
The problem is that many people search for a template online and use it without checking whether it really fits their situation. That is where the problems begin.
Not all contracts work for every transaction. Each property sale has its own specific characteristics: financing, deadlines, encumbrances, registry status, suspensive conditions, and more.
That is why it is important to understand what an earnest money contract includes, the risks of using generic templates, and how to draft it correctly.
If you want to avoid mistakes with generic templates, we recommend creating your own earnest money contract online with FirmaVivienda through our platform.
What is an earnest money contract and what is it for
An earnest money contract is a private agreement signed between buyer and seller before the public deed of sale.
This document establishes:
- The commitment to buy and sell the property
- The agreed price
- The amount delivered as a deposit
- The maximum deadline to sign at the notary
- The consequences if either party fails to comply
Normally the buyer pays an amount of money as a deposit. That amount is later deducted from the final purchase price of the property.
The earnest money contract serves several important functions:
It formalises the agreement between the parties.
Although the final sale is signed before a notary, this document records that both parties have already reached an agreement.
It provides legal certainty.
It defines what happens if the buyer or seller backs out.
It sets the terms of the transaction.
Price, deadlines, financing conditions or encumbrances on the property.
As you can see, the earnest money contract is a fundamental document when selling or buying a home, which is why it is not enough to simply grab any template from the internet.
Types of earnest money
Not all earnest money contracts work in the same way. In fact, there are three main types.
Penalty deposits
These are the most common in Spain.
They allow either party to withdraw from the agreement with a penalty:
- If the buyer backs out, they lose the deposit.
- If the seller withdraws, they must return double the amount.
This type of deposit is regulated by article 1454 of the Spanish Civil Code.
Confirmatory deposits
In this case, the deposit works as an advance on the price. It does not allow either party to withdraw freely from the contract.
If one party breaches the agreement, the other may demand performance of the contract or claim damages.
Penal deposits
These include an agreed penalty in case of breach.
They do not allow the transaction to be abandoned freely, but they set compensation in advance.
In summary, there are 3 types of earnest money contract: penalty, confirmatory and penal.
Downloadable earnest money contract template
Many people searching for an earnest money contract template between private parties expect to find a ready-to-download form that they can simply fill in.
But before using a template, it is worth understanding how the document is structured and which clauses it should include.
If you are in the middle of a purchase or sale, we recommend managing the entire private property sale process so that everything stays organised and you can move safely toward the notary signing.
A basic earnest money contract template usually has this structure:
Identification of the parties
The contract starts by identifying the buyer and the seller.
It normally includes:
- Full name
- DNI or NIE
- Address
- Marital status, in some cases
Simplified example:
On the one hand, Mr./Ms. [Seller's Name], of legal age, holder of DNI [number], owner of the property covered by this contract.
Identification of the property
The contract must clearly describe the property:
- Full address
- Cadastral reference
- Registry details
- Approximate floor area
This information makes it possible to identify the property without doubt.
Purchase price
The total price agreed between buyer and seller is stated.
The amount paid as earnest money is also specified.
Example:
The total purchase price is set at EUR 240,000, of which the buyer delivers EUR 10,000 on this date as earnest money.
Deadline to sign the deed
The contract must establish the maximum deadline for attending the notary.
For example:
The parties undertake to formalise the public deed of sale before 30 September 2026.
Consequences of breach
It defines what happens if one of the parties does not comply with the agreement.
In many cases, penalty deposits are used.
If you want to avoid mistakes at this stage, a good option is to generate the contract from a specialised platform for private property sales such as FirmaVivienda. There, the document is created with all the necessary clauses and adapted to each transaction.
Essential clauses that must be included
A good earnest money contract template between private parties should include certain basic clauses. Without them, the document may be incomplete or create disputes later on.
These are some of the most important ones.
Full identification of the parties
It is essential to identify buyer and seller correctly.
If the property belongs to several owners, all of them should appear in the contract.
It is also advisable to include:
- Address
- Marital status
- Matrimonial property regime
This helps avoid legitimacy issues.
Exact description of the property
It should include:
- Full address
- Cadastral reference
- Registry details
- Annexes, such as garage or storage room
The more detailed the description, the fewer chances there are of a conflict.
Total price of the property
The contract must reflect the final agreed price.
It should also specify:
- Amount of the earnest money
- Payment method
- How the remainder of the price will be paid
Deadline to sign before the notary
This clause is very important.
It defines the time limit for formalising the purchase.
Without a clear deadline, delays and disagreements may arise.
Penalties for breach
Depending on the type of earnest money chosen, the contract must establish what happens if one party backs out.
In most cases, the penalty deposit system is applied.
Mortgage approval condition
In many transactions, the buyer needs bank financing.
That is why a suspensive financing clause is often included.
For example:
This contract shall be rendered without effect if the buyer does not obtain mortgage financing within a specified period.
This point is key to protecting the buyer.
If you want to see how to integrate all these clauses correctly, a safe option is to generate the document directly from the online earnest money contract system of FirmaVivienda, which guides you step by step throughout the process.
Common mistakes when using free templates
The internet is full of free earnest money contract templates.
The problem is that many of these templates:
- Are outdated
- Are too generic
- Do not cover common real-life situations in a property sale
These are some of the most common mistakes.
Using a contract that does not match the chosen type of deposit
Many templates mix clauses from different types of earnest money.
This can create legal ambiguity.
Not including the financing condition
If the buyer needs a mortgage and the contract does not mention it, they could lose the earnest money if the bank refuses the loan.
Missing registry information
Some templates do not include registry details of the property.
This can make the home harder to identify properly.
Not addressing encumbrances or debts
The property may have:
- Outstanding mortgage
- Registry encumbrances
- Community fee debts
The contract should reflect how these situations will be resolved.
Poorly defined deadlines
Many templates include vague phrases such as:
“The deed will be signed within a reasonable time.”
This can create disputes later on.
That is why it is advisable to always use a well-structured earnest money contract template between private parties that is adapted to the specific transaction.
When it makes sense to customise the contract
Although many transactions may look similar, every property sale has its own circumstances.
It is advisable to customise the contract when there are factors such as:
- Mortgage-dependent purchase
- Property with registry encumbrances
- Several owners
- Long delivery timelines
- Off-plan purchase
- Deferred payments
In these situations, a standard template may fall short.
Customising the contract allows you to:
- Adapt the clauses to the specific case
- Avoid later disputes
- Protect both parties more effectively
In addition, a well-drafted contract provides greater confidence throughout the whole sale process.
A tool to formalise your home purchase
The earnest money contract template between private parties is a fundamental tool when buyer and seller reach an agreement on a property.
This document sets the foundations of the transaction and protects both parties before going to the notary.
Although there are many templates online, they are not always suitable for every situation. Using a generic form may create problems if important clauses are missing or if the document does not reflect the real circumstances of the deal.
That is why it is worth understanding how the earnest money contract works and making sure the document is properly structured.
Generate your earnest money contract safely
If you want to generate a contract adapted to your specific case with human support, you can do so easily from the FirmaVivienda platform.
The system guides you step by step to create your contract with all the necessary clauses and prepared for a private property sale, avoiding common mistakes found in generic templates.
This way, you can formalise the agreement between buyer and seller more safely and move toward the notary signing with peace of mind.
And if you have questions about your specific case or want to avoid mistakes before signing, you can speak directly with our team through the contact page.