What is a Sale and Purchase Agreement?
A Sale and Purchase Agreement (SPA) is a legally binding contract between a buyer and seller that defines the terms and conditions of a property sale. It specifies the price, payment method and schedule, completion date, property description, and the rights and obligations of both parties.
In different markets, this document goes by different names — SPA in Dubai and Southeast Asia, exchange of contracts in England, escritura de compraventa in Spain. The legal principles are similar across jurisdictions.
Key Clauses to Review
| Clause | What to Check |
|---|---|
| Purchase price | Total amount, currency, whether inclusive of VAT/fees |
| Payment schedule | Deposit amount, milestone payments (off-plan), completion balance |
| Completion date | Fixed date, conditions precedent, penalties for delay |
| Property description | Unit number, area (sq ft/m), parking, storage, specifications |
| Default/cancellation | Consequences if either party fails to perform |
| Warranties | Defects liability period, handover condition guarantees |
Once you sign an SPA, you are legally bound by its terms. Verbal promises from agents or developers that contradict the written agreement have no legal standing. If a commitment is not in the SPA, it does not exist. Always ensure all agreed terms are documented in writing before signing.
SPA in Dubai (Form F / MOU)
In Dubai, the property sale process begins with a Memorandum of Understanding (MOU), known as Form F — a DLD-standardised template. Key elements:
- A 10% deposit is typically held by the listing agent upon signing
- The MOU specifies the timeline for obtaining the NOC and completing the transfer
- Agent commission (typically 2%) and who pays it is specified
- If the buyer defaults, they forfeit the deposit. If the seller defaults, they typically must return the deposit plus an equal penalty
Off-Plan SPA Differences
Off-plan SPAs are significantly more complex than resale agreements because they govern a property that does not yet exist. Additional clauses to scrutinise:
- Handover date: Is there a grace period? What compensation applies if the developer misses the deadline?
- Payment plan: Are payments linked to construction milestones or calendar dates?
- Specification changes: Can the developer change materials, layout, or unit size?
- Cancellation rights: Under what circumstances can you or the developer cancel?
- Defects liability: Duration and scope of the developer's responsibility for defects after handover
Independent legal review before signing
A local lawyer is not optional in this market. In Spain the notary is neutral — not your adviser. In Thailand title verification requires a licensed Thai lawyer. Connect with a verified independent legal adviser via our contact page.
Connect with a legal adviserRed Flags in SPAs
- No cancellation clause for developer delay: You should have the right to cancel if the project is delayed beyond a reasonable period
- Unlimited specification changes: Clauses allowing the developer to alter the unit without your consent
- Dispute resolution in developer's jurisdiction: Ensure disputes are resolved locally, not in a foreign court
- Hidden fees: Additional charges for connection fees, snagging, or handover processing
- No escrow reference: Off-plan SPAs should reference the RERA-registered escrow account