When buyer and seller reach an agreement on a property, the next key step is to formalise that agreement. It comes before the final sale itself, but it is essential to get it right: this is the earnest money contract.
This is where all the transaction terms are defined, which is why it is so important to know exactly what must be included in an earnest money contract.
And believe us, this is not a minor detail. It is what can prevent problems later on or, on the contrary, create them if it is not drafted properly.
Many people rely on generic templates without checking whether they really fit their case. The problem is that every transaction is different. A property with a mortgage is not the same as one without encumbrances, and an immediate sale is not the same as one with long deadlines.
That is why, rather than copying a template, the key point is understanding what must appear in the document no matter what.
If you want to see how a real contract is structured, you can check this earnest money contract template between private parties, where its parts are explained in detail.
To avoid mistakes and generate a complete contract without making things more complicated than necessary, you can create your contract directly through Firma Vivienda. We built this tool so you can generate the document automatically with all the necessary clauses.
Buyer and seller details
One of the first points that must appear in the contract is the identification of the parties. It may seem basic, but it is essential that it is clearly stated.
The contract should include the full details of both buyer and seller: full name, DNI or NIE, address and any other relevant information. If there are several owners, all of them must appear in the document.
This point matters because any mistake or missing information can create problems later on. The contract must make it clear who is selling and who is buying, with no room for doubt.
Exact description of the property
Another essential point when we talk about what to include in an earnest money contract is the identification of the property. Writing only the address is not enough.
It is advisable for the description to be as complete as possible, including, for example, the square metres, the rooms that make up the property and also any furniture or appliances included in the deal.
It is common to include details such as the cadastral reference, land registry details or annexes if there are any, such as a garage or storage room. The more detailed the information is, the less chance there is of confusion.
This point becomes especially important when there are several similar properties or when the home is part of a building with shared characteristics.
Total price and deposit paid
The contract must clearly state the total purchase price and the amount paid as a deposit. This is one of the most sensitive parts of the document, because it involves money from the very beginning and also creates economic obligations.
The amount paid is usually between 5% and 10% of the price, although this is not mandatory. If you want to go deeper into this point, we explain how much money is paid in an earnest money contract in this related article.
What matters here is that the contract makes clear how much is paid, how it is paid and that the amount will be deducted from the final price when the deed is signed before the notary.
Deadline to sign the deed
One of the most common mistakes is not defining the deadline to sign the public deed properly. Many contracts use ambiguous expressions that can later cause problems.
When analysing what must be included in an earnest money contract, this is a very important point, because getting it wrong can put your savings at risk.
There should be a specific deadline or, at the very least, a clear period within which both parties commit to completing the transaction.
This deadline often depends on factors such as obtaining financing or preparing the documentation needed to complete the sale, but in any case it must be clearly defined.
Consequences if one party breaches the contract
The earnest money contract does not only record the agreement, it also defines what happens if one party fails to comply. That is one of the features that gives the document real value.
In most cases, the agreement uses penalty earnest money under Spanish practice. This means that if the buyer backs out, they lose the deposit, and if the seller breaches the agreement, they must return double the amount.
This point must be clearly explained in the contract, without ambiguity. Otherwise, disputes can arise that are difficult to resolve.
Financing clause (very important)
This is one of the most important sections and, at the same time, one of the most frequently forgotten.
If the buyer needs a mortgage in order to buy the property, it is essential to include a clause dealing with that situation. Otherwise, if the bank refuses the loan, the buyer could lose the deposit.
That is why, when we talk about what must be included in an earnest money contract, this clause is key in many transactions. It makes it clear that the agreement is conditional on obtaining financing.
It is a way to protect the buyer and avoid problems if things do not go as planned.
Example wording
To understand how all these elements fit together, it helps to look at a simple example of wording. An earnest money contract is usually structured in several parts identifying the parties, describing the property, setting the price and defining the agreed conditions.
All of that is supported by clauses that regulate the deadline, the payment method and the consequences of breach.
A simple example of wording could be:
The buyer delivers in this act the amount of [X] euros as earnest money, which will be deducted from the final purchase price. The public deed must be signed before [date]. If the buyer does not obtain mortgage financing within the agreed period, this contract shall become void, provided that this condition has been expressly agreed.
If you want to start from a reliable base before adapting it to your case, you can review this earnest money contract template between private parties.
Common mistakes when drafting the contract
Even if you already know what must be included in an earnest money contract, there are several recurring mistakes.
One of the most common is using generic templates without adapting them. That can mean leaving out important clauses or failing to address specific situations.
It is also common not to review the legal status of the property properly before signing or not to define the deadlines clearly enough. These may seem like small details at the time, but they often create complications later.
That is why, beyond including all the required elements, it is important for the contract to be properly structured from the outset.
How to simplify the whole process
By now, you have probably realised that knowing what to include in the earnest money contract is not difficult, but it does require attention to detail.
The good news is that today you do not have to handle everything on your own. There are tools that guide you step by step, help you avoid mistakes and make sure the contract fits your case.
For example, you can manage the entire private property sale from our platform. The process is designed precisely to cover all these points.
Create your earnest money contract without mistakes
Knowing what to include in the earnest money contract is the first step. The next one is making sure everything is properly drafted and adapted to your specific case. To do that, you can see how Firma Vivienda works before you start.
That way, you make sure nothing important is missing and that the contract reflects the conditions of the transaction correctly.
And if you have questions before signing, you can always contact our team and receive personalised guidance for your case.