OUR GUIDE TO BUYING IN SPAIN

Why choose us? Buying Procedure  
Legal Process Purchase Considerations  
LEGAL PROCESS

Once a suitable property has been found, you shall be required to reserve it by the payment of a small deposit – this is usually done by credit card at the vendor’s agent’s office. This will temporarily remove the property from the market whilst contracts are drawn up. A solicitor or gestor will organise your NIE (fiscal registration/I.D.) which is required for you to open your Spanish bank account. As with all major transactions, we should establish exactly what is required to be carried out on your behalf, together with an estimate of costs. Please note: it is usual for local taxes and utilities etc to be debited directly from your bank account. It is your responsibility to ensure sufficient funds are always available for this purpose, from day one.
If you are buying a ‘New build’ property, please note that the property shall not become legally yours until completion and all the necessary certificates and permits are issued. Meanwhile, it will be necessary to make agreed stage payments to the developer. These payments should be protected with a banker’s bond or insurance guarantee. Your solicitor should ensure that your new property is registered for tax, that it is registered as a new building and that the Escritura (Title Deed) includes the building, as well as the land. It is now a legal requirement that the developer provides a guarantee of this nature (at his expense) which, in the event of default, may require a full refund to you, plus 6% interest.

If buying a Finca, it is important that your solicitor checks its classification. If it is a ‘finca urbana,’ as opposed to a ‘finca rustica’ then it is regarded as being in an area where building is allowed, otherwise it will be listed as rural, with severe planning and building limitations. This may be a good or bad thing, according to your personal views and plans, of course. Do bear in mind though, that a finca rustica may not be able to raise such a high level of mortgage funding – probably a maximum of 50% over 12yrs...

Once the above is in place, a ‘Pre-Contracto de Compraventa’ (Sale & Purchase Pre-Contract) will be agreed (in consultation with your solicitor) and signed. At this point, the deposit will need to be made up to (usually) 10%. This effectively locks-in both parties through an ‘Arras’ agreement. You cannot be ‘Gazumped’ and, unless there has been some form of misrepresentation or non-disclosure, neither party can back-out without the purchaser forfeiting the 10% deposit or the vendor repaying 20% (the deposit x2) to the purchaser. Prior to the Pre-contract, your appointed solicitor must check the Proof of Ownership (Registro de la Propiedad), any outstanding charges, taxes or debts etc (in Spain these attach to the property not the previous owner). It is important to remember that on registration of the property you will be liable to pay 6% ITP (transfer tax), or 7% IVA (VAT), plus 0.5% stamp duty. Please remember to budget about 10% over purchase price to cover all taxes, charges and fees associated with the purchase procedure of your home in Spain. It is strongly recommended that the purchaser(s) and their partners put in place a Spanish will at this time.

BY NOW IT SHOULD BE CLEAR TO YOU JUST HOW IMPORTANT IT IS TO PAY THE COSTS OF EMPLOYING A SOLICITOR TO DEAL WITH ALL THE LEGAL ISSUES ASSOCIATED WITH YOUR PURCHASE. Apart from saving you much potential aggravation and heart-ache, the financial risks of not doing so, far outweigh the legal costs of this precaution.

The next stage of purchase is the ‘Contracto de Compraventa’ – again incorporating an Arras agreement. This contract is legally binding and will define the property, what is included and excluded, the price, deposit & balance and the terms and timing of such payments. Also, the date of sale, any warranties and liability for taxes & other costs etc. It is highly preferable that all monies paid over from this stage are paid into a ‘Bonded Client Account’ of either the vendor’s agent or your solicitor. Any terms of this contract can be checked, challenged and amended by your solicitor, if required. This contract is officially a private one which may then form the basis of the one to be officially recorded as the Escritura Notarial (effectively the Deed of Conveyance) by the Notary.

The Notary Public, a government appointed legal officer, will examine, explain and validate the purchase contract as public deeds. Please remember that, although an obligatory legal procedure, this is no substitute for the engagement of a solicitor, ideally a locally based, English speaking one, who will carry out all the necessary pre-contract searches and enquiries and pass on the deposit and further payments, through his office on your behalf. It will not be necessary for you personally to be present at the Notario providing you grant Power of Attorney to either your solicitor or gestor. A simplified copy of this Escritura is called a Copia Simple and you can use this to register, as the property owner, for all local services, taxation, bank records etc.

Mortgages are relatively easy, quick and cheap (currently approx. 4.3%) to arrange and the 10% buying costs can usually be factored into the capital sum. The subject of property and land taxes is both very complicated and variable. I will not attempt to explain them all here, nor am I qualified to do so, suffice it to say that, once again, your Spanish solicitor should be entrusted to check, verify and calculate these liabilities for you. With regard to personal taxation, I can recommend to you an excellent asesore (accountant/tax advisor), based in Javea, who is extremely knowledgeable and charges a fraction of his UK based counterparts.