Once you accept an offer from a buyer the next step is to sign a Sales Contract. The contract sets out the responsibilities for both parties, the details of the deposit, conditions of sale, and terms of the transfer.
This is private document that does not transfer title, but obligates the parties to act based on the agreed terms. The contract can be in Spanish or English, provided that the parties that sign it understand the language. The contract can be enforced under Nicaraguan Law, but its enforceability is more difficult than a contract that has been prepared as a public document (before a Notary). Most attorneys recommend using a private document only for short term contracts. For longer term agreements and payment plans a public document signed before a notary is preferable.
Contracts vary from sale to sale but here’s a list of typical clauses we’ve seen in Nicaragua property sales:
- A clause indicating that the deposit will be held by a third party in escrow and will only be released subject to confirmation of title and absence of all liens and encumbrances..
- A clause indicating that the contract is assignable. This is particularly important if the buyer is using funds from a self-directed retirement fund (e.g. Traditional, Simple, SEP or Roth IRA) for the purchase. It also adds flexibility if the buyer decides to buy via a corporation or with a partner.
- A clause that allows time for the buyer’s lawyer to conduct due diligence. The buyer may also wish to add time for other professionals to conduct their checks. Most buyers will want to make the deposit contingent on these checks.
- A clause indicating that the seller will have property taxes, utility costs and home owner association fees paid up to date.
- If you are selling an off-plan property, where progressive payments are made against a construction schedule, most contracts will set out what will be completed at each payment phase.
- If you are selling a condo or a unit in a duplex, triplex or apartment building, the contract may include a clause that requires the existence of a strata title or Horizontal Property Regime (HPR).
- If selling in a real estate development there will usually be a clause making reference to the Codes Covenants and Restrictions (CC&Rs) and Home Owner Association (HOA) bylaws. All relevant documents should be included in an Appendix.
Click the button below to review a draft template.
But please note that we are not your attorney. This means we can’t give you specific advice about the legalities of your property for sale in Nicaragua, advise you on what should be in the contract for your specific situation, the form that this contract (private or public) should take or its enforceability. If you have any doubts about this step we suggest you hire a lawyer. Feel free to contact us for an introduction.