Buyer’s Guide

If you´re thinking of buying a house in Spain it is important to know the Spanish purchase process is different from most other European countries. Buying a house, holiday home, apartment or other property is one of the largest investments in a person´s life and the consequences of any legal problems can be severe. Therefore it´s advisable to hire an independent lawyer/solicitor in order to conduct the very important legal investigation. Working with Costalets will help you find the right property, advising and guiding you in the right direction at all times.

Finding a Property – Negotiating the Price

When you have found the right property, ensure you request all the details relating to the outgoings payable every year to maintain it; namely the charges imposed by the Town Hall, community fees, charges for waste collection, water rates, electricity charges, and Property Income & Wealth Tax. It’s very important you understand the annual running costs associated with the property and its purchase.

When you have then made a decision as to the property and agreed a price, you will be asked to make an immediate deposit payment, this deposit ensures that the property is taken off the market showing the vendor that you are serious about purchasing their property and ensuring that it is not sold to another purchaser whilst the negotiations take place. Once a price has been agreed the deposit is non refundable. From here on, until completion of the purchase, the lawyer will assist you in all the different steps involved in the transaction. During this time your lawyer will carry out all the necessary legal searches.

Choosing a Lawyer

There are many excellent English-speaking Spanish lawyers in Spain and choosing the right lawyer is your guarantee that Spanish legal requirements are met.

All the legal work when buying a house in Spain can efficiently be carried out by a public power of attorney (p.o.a.) signed at the –preferably Spanish- notary. Once the purchaser and vendor have reached a price agreement the responsibilities of the lawyer are as follows:

  • Reservation contract:
    If desired your lawyer can already check (or even sign on the client´s behalf) the reservation contract of the real estate agent. This short contract takes the property off the market during the legal investigation and with the signing usually a down payment is made.
  • Fiscal N.I.E. number & Spanish bank account:
    Through the power of attorney the lawyer can apply for the necessary fiscal N.I.E. number and he can set up a Spanish bank account with a bank of his client´s choice.
  • Legal investigation:
    The most important task of the lawyer during the purchase process is conducting the legal investigation for the urban or rustic property. This includes checking:

    • Land Registry (Registro de la Propiedad)
    • Cadastre (Catastro)
    • Town hall archives
    • Building licence
    • Licence of First Occupation
    • Urban planning
    • Juridical correspondence, etc.
    • Outstanding debts: Within the legal investigation also all kinds of possible outstanding debts are checked (mortgages, seizures, non-paid taxes, etc.) as these would automatically be transferred on to the new owner through the sale.
  • Legal, financial and fiscal advice:
    Your lawyer can provide you with the necessary legal, financial and fiscal advice you need for your Spanish investment.
  • Negotiations with the vendor:
    After the client has reached an agreement on the purchase price, there are still a lot of important terms and contingencies to negotiate before completion. The lawyer will take care of all communication and will defend his client´s interests in these negotiations.
  • Spanish mortgage:
    As an extra service Costalets can apply for a Spanish mortgage on your behalf and arrange for your solicitor to complete the obliged taxation. If the mortgage is approved, your solicitor will then arrange the signing of the public mortgage deeds at the notary which has to take place on the day of completion.
  • Technical surveys:
    • Architectural survey of the construction: Depending on the situation and state of the property your lawyer can arrange an architectural survey for the construction by a certified architect.
    • Technical survey for the boundaries of the land: Besides of this, for rustic properties there´s also the option to have a certified surveyor check the exact boundaries of the land. This is advisable as the registration at the Land Registry (Registro de la Propiedad) and Cadastre (Catastro) often aren´t correct.
  • Private purchase contract:
    Halfway during the legal investigation a private purchase contract might be signed, which is set up by the lawyer and which contains important clauses and contingencies for the final sale. With the signing of the private purchase contract a down payment is paid.
  • Title deeds:
    Once the lawyer is a 100% sure that all legal requirements are met, he will arrange the necessary documentation for signing the public title deeds at the notary (completion).

 

purchase-process

The Purchase Process – Fees

Costs paid by the buyer are typically around 10–14 percent of the property value and include

Step Description
#1 Property transfer tax: 8 percent (existing properties)
#2 VAT (or IVA) at 10 percent (new properties)
#3 Notary costs, title deed tax and land registration fee 1–3 percent
#4 Legal fees 1–2 percent (including VAT).