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Paying for a purchase in instalments is an interesting alternative for valuable chattels. Formalising the purchase implies some considerable administrative procedures, and these documents may contain information that may not sound familiar, such as the reservation of title. What are the main aspects that we should take into account when carrying out these types of purchases and how can Viafirma help us?
When we decide to purchase a chattel that requires a high investment, we usually consider the option of paying in instalments to make it easier for us to face this disbursement.
These types of operations involve a high load of administrative procedures, so they must be perfectly regulated. For these situations we must pay special attention to Law 28/1998 of 13 July on the Sale of Goods and chattels, which aims:
‘’ to regulate instalment sale agreements of non-consumable and identifiable chattels, loan agreements intended to simplify their purchase, and guarantees to ensure the fulfilment of obligations arising therefrom.”
One of the most important features of this law is that it establishes the obligation to be registered in the Registry of purchase-sale of chattels, which will be carried out by the Mercantile and Personal Property Registrars of Spain.
This law also stipulates the information that must be included in the sales contract, which is:
- The name, surname, company name and address of the parties and, in the case of financing contracts, the name or company name of the financier and his/her address.
- The tax identification code of the parties involved.
- The description of the item sold, together with any necessary features to facilitate its identification. The selling price in cash, the amount of the down payment if there is one, the amount to be deferred and, if applicable, the amount financed by a third party.
- Financing contracts shall include the amount of the loan.
- In the case of fixed or variable interest operations, a statement of the amount required, the number and frequency or the date of repayments to be made by the purchaser for reimbursement of the instalments or the credit, and the payment of any interest arising or other charges, as well as the total amount of these payments, whenever possible.
Within these contracts, the law also includes a very interesting and widely applied concept which is the reservation of title, which we will now discuss in more detail.
What is the reservation of title in a chattel purchase-sale agreement?
One of the main features of a financing contract is the so-called reservation of title, which will be present until the payment is completed. Therefore, it is worth knowing its fundamental aspects, together with the possibility of digitizing the whole process.
Reservation of title is a very common clause for purchase-sale agreements of different types of goods like vehicles, household appliances, etc. The reservation of title occurs when there is a payment in instalments for such goods.
With the reservation of title, the seller remains the rightful owner of the good until the buyer has paid the last instalment and withdraws the clause. Consequently, the buyer cannot resell or transfer the property, since it is not his property, but he can benefit from its use.
The reservation of title is a guarantee for the seller, so that it is covered against any defaults by the buyer. Thus, the seller will keep the ownership of the good, securing the whole process.
How to withdraw the reservation of title?
Once all payments have been completed, the buyer can withdraw the reservation of title clause in the Registry of Personal Property. However, this will not be done automatically with the payment of the last instalment, but the buyer will have to claim it in person at the seller’s headquarters, together with his/her corresponding documentation and his/her signature.
Viafirma allows you to send contracts to the property registry online
Viafirma complies with the telematic presentation system of the Property Registry for financing and leasing contracts, including any modifications and cancellations.
The system was regulated according to the instructions given by this Management Center on October 23, 2001 and December 3, 2002 and by the Circular-Resolution of September 13, 2011.
Viafirma solutions allow to submit these documents with full guarantee and validity to the Registry, since the conditions required for the admission of this type of consent form have recently been regulated, exclusively for private financing contracts that must be presented for the inscription of the corresponding guarantees in the Property Registry.
Viafirma’s tools allow to present these documents without the need to move around and without having to consider any office hours. All this with full security guarantees, which are required for these types of operations.