Spanish Property Buying Procedure
Once you have found your new Spanish property the purchase procedure is as follows...
Land Registry Searches
Your lawyer will perform a land registry search to confirm the status of the title to the property and if the property has any charges and/or encumbrances.
Professional and personal advice
Your legal firm will then advise you of the most advantageous vehicle for acquiring the property; i.e. through a national or foreign company, in your private name, jointly with your spouse etc., how to transfer the funds correctly in order that they may be later repatriated when you sell, and will help you apply for your fiscal number to enable the property to be registered in your name.
Property Reservation
A reservation document allowing you to secure the property by paying a small deposit may often be required by the vendor. This deposit is normally non-refundable, therefore should you change your mind concerning the property you would lose your deposit. This deposit effectively fixes your agreed purchase price and takes the property off of the market.
Private Purchase Contract
Once you have paid you deposit and signed the reservation document you will be expected to pay a larger deposit, usually 10% of the purchase price , within a reasonable period of time (7-10 days). At this time, your lawyer will draft a private purchase agreement which reflects all the conditions of the purchase.
Escritura / Title Deed
Once all of the searches and checks are complete, a new Title Deed (Escritura) will be drawn up for signature before notary, who will previously, on the instruction of your lawyer, have gained a certificate from the Land Registry that the property is free of charges. Once signed, this deed will be sent by the Notary to the Land Registry who will immediately make a preventative inscription in your name, thereby ensuring no charges relating to the previous owner can be made against your new property.
Power of Attorney
If you are unable to attend the final transaction, you lawyer will advise you how to obtain Power of Attorney in your country of origin.
Legal Fees Explained
Apart from the purchase price of the property, you must take into consideration the costs involved in the transaction. These include:
- Transfer Tax or VAT, depending on whether it is a new or re-sale property.
- Notary's Fees. These will depend on the value of the property/transaction.
- Land registry fees.
- Stamp duty which is 1% of the value of the property/transaction.
- Municipal Plusvalia Tax. A tax on the increase in the rateable value of the property since the last transaction and paid to local authorities.
As a general guide, when buying a residential Property in Spain, you should account for costs of about 10-12% of the purchase price. In the case of a commercial property or land purchase, the costs may be higher if VAT is to be applied.
Once you have completed your purchase and your Title Deed has been presented to the Land Registry for final inscription, you lawyer will continue giving you further advice and assistance with, for example, opening back accounts, arranging contracts with the local utility companies and informing the Community of Owners where the property is located, of the transfer of ownership.
As a property owner in Spain, you are also required to make certain tax returns each year, which your lawyer will also prepare for your on your instructions.
In order to protect your interests when buying a property in Spain, it is fundamental that you engage the services of a Spanish Lawyer. Most of the lawyers that Livingstone Estates recommend are fluent in English and are accustomed to helping people like yourselves through all of the potential difficulties.
