When you buy properties in Spain you need a lawyer!

Buying Property in Spain - conditions..

Choosing your Property

Before choosing a property, you should ask for details of the outgoings payable  every year to maintain the property, namely the annual real estate tax, the community fees, the charges for rubbish collection, water rates, the electricity charges and wealth Tax in respect of the property you wish to buy.

A survey of your property you are thinking of buying, here you should note that there does not exist any legal Spanish surveys. But you do find U.K. qualified surveys that do work here in Spain, make sure that they have the insurance necessary.

Deciding to Buy

Having looked at several properties, one may have a certain feature, which is quite attractive, another different feature and so on.

A perfect property in reality seldom, exists whether it is new or not. Many buyers find once they have added their own personal touches to the property it changes and becomes the home and matches their expectations.

Negotiating the Purchase

Once a suitable property has been chosen, the next step is to negotiate the purchase terms with the seller through your lawyer or agent. The terms should not be limited solely to price but should cover in detail if the property comes furnished or not, take over date, Plus valia, etc. It may be that you are not happy to accept the sellers terms or alternatively you may wish to make a counter offer. You may wish to include subject to mortgage or lawyers approval or that the seller pays the plus valia, or vary final completion dates.

There are many “phantom offers” by potential buyers who are not really making an offer, but trying to feel out the bottom price of a seller, in order to gain market knowledge. It is therefore important to discuss these terms with your lawyer or even put down an amount, to give strength to your offer and prove that you are serious bidder.

Choosing your Lawyer

There are lawyers in England who understand Spanish law and can act for you, also there are English lawyers here in Spain — but still remember that they are not educated in Spanish law. We usually recommend using a local Spanish lawyer, they know the area, the officials, and local people, as well as general information about development belt etc. You will find that many Spanish lawyers speak good English.

Furthermore a lawyer will provide the legal guarantees for the purchase of the property ensuring that Spanish legal requirements are met and the property is bought free of encumbrances, charges, liens, and debt and up to date in all its payments.

Deposit

Normally deposit will be 10% of the sales price.  

Once you have made up your mind to buy, and if you find one, which meets your requirements, secure it by immediate payment of reservation deposit, thereby ensuring that the property is not sold to another purchaser. You will have to pay min. 1% of the sales price, and then have a period of 15 to 20 days to exchange contracts.

Private Contract

Exchange of contracts, prevention is always better than cure; never sign any contract without first discussing this with your Lawyer, furthermore your lawyer will have to have completed his / her searches and investigations of the property and will have arranged with the owner the procedure for the cancellation of any outstanding debt. The private contract will reflect all the agreed terms, like who pays plus valia etc. and set the final date for completion at the Notary. It is customary practice at this stage to pay 10% percent of the purchase price which is normally non-refundable in case the purchaser should choose not to proceed. If it is the seller, which chooses not to proceed the deposit, will be refunded and a penalty will be paid in the form of 100 % of the deposit paid. All contract should always be written in Spanish, but recommend to be translated, so all parties are completely sure of what they are signing.

The Community of Owners

When there is common ownership or sharing of facilities between owners, in every development in Spain a Community of Owners must be established through which community charges can be shared. If your development is contained in an apartment block then the law is that relating to the Horizontal Division ("Ley de la Propiedad Horizontal").

Conveyance (Escritura de Compraventa)

The sale and purchase of all property in Spain requires to be registered in the Land Registry. They maintain details of the property and record financial charges and other matters which may affect the title. The Notary - el Notario - prepares the Conveyance - la Escritura. He will check compliance with Spanish law. However, the Notary does not check the title to the property, although he will make a check at the Land Registry immediately prior to the signing of the Escritura to ensure that there are no undisclosed charges on the property.

Completion

Final completion & exchange at the Notary, a sale is formally completed in Spain when the public title deeds of purchase are signed by the seller, buyer and the public Notary.

Here the rest of the agreed payments are made and possession of the property is given to the buyer. All keys have to be handed over.

Costs

As a thumb rule, budget 10-11 % percent of the purchase price for expenses.

Transfer tax ITP is 7% from the year 2003 of the deed value or when your are buying new property from a developer it will be 7 % IVA, Plus stamp Duty 1 %.

The IVA rate at 16% is applicable when purchasing parcels of land, commercial premises, or garage spaces.

Further to these expenses there are other costs to bear in mind :

Land Registry Fees

The fees of the Property Registrar for registering your Escritura in the Register will be assessed on a scale fee related to the Escritura value.

Plus Valia

In the case of land purchase or new construction VAT will be payable. This tax is paid to the Local Authority and is a form of Capital Gains Tax that is payable on the notional increase in value of the land since the last purchase. It should be stressed that this tax is based on the increase in value of the land, and not on any buildings erected upon it. The obligation to pay this tax falls upon the Seller.

Notarial Fees

A fee is charged by the Notary to prepare and legalise the Escritura. This is also a scale fee based on the declared value.

Legal Costs

The estimate will be based on the true value of the property and the complexity of the work to be done. As a general guide, where the lawyer are instructed you should normally expect the legal costs for the purchase to be in the region of 1,5% of the purchase price, plus any additional fees and disbursements that arise. There is a minimum fee that they charge, depending upon whether you are buying a re-sale or new property. However, in advance of receiving instructions, they will always provide you with a detailed estimate of the costs and disbursements that are likely to arise in the proposed transaction.

Wills

You are advised to make a Spanish Will to cover your Spanish estate. Whilst a foreign Will is recognised this may lead to delays and prove more costly in the long run. Wills in Spain are usually drawn up by a lawyer and executed before a Notary.

Water & Electricity

Normally your lawyer will offer to arrange for the transfer of accounts with the local suppliers of utility services such as water and electricity and organise their payment by direct debit from your bank. For these purposes it would be recommended to have an account in a local bank.