Legal Advice
We normally recommend that buyers should use an independent lawyer to assist and supervise in the legal and administrative aspects of their purchase.
We are able to recommend a number of multi-lingual lawyers based locally in the area to whom we have successfully introduced many satisfied clients over the years.
Guidelines to ensure a successful purchase…
1. Be prepared
Unlike in most domestic property market situations, there will only very rarely be a chain of buyers involved in your overseas purchase. You must, therefore, ensure you are in a position to act quickly once you have found the right property, to secure it from the market and avoid the disappointment of losing out to another buyer.
2. Purchase reservation
Once you have found the right property, it would be normal to reserve it by signing a purchase reservation confirming the basic terms of your offer for the vendor or developer to formally accept. At this time, you should expect to pay a reservation deposit of 3000 euros, or 6000 euros for higher priced properties. This deposit would be refundable subject to your lawyer’s searches and approval to proceed.
3. Instructing a lawyer
Having reserved the property on agreed terms acceptable to both sides, the next stage would normally be for you to instruct a lawyer to conduct the searches and to supervise the purchase on your behalf.
4. Exchange of contracts (private or option contract)
Once the legal searches have been concluded, your lawyer will require the funds – normally 10% (to include the original purchase reservation deposit) of the agreed purchase price to pay over on signature of the private contract. To allow time for searches and money transfer, this would normally be 10-15 days after the purchase reservation.
It is usual, subject to your approval of the terms and authorisation, that your lawyer would sign this contract on your behalf, therefore avoiding any necessity for you personally to return to Spain.
If you are buying a new property, then there is likely to be a series of stage payments during the period of construction, of which you will be advised at the time you make your original purchase reservation.
The private contract will stipulate all the agreed terms of the purchase, the stage payments if applicable, and the final completion date.
5. Final completion
This will take place in Spain at the office of a local Notary (a public official appointed by the State legal system) where the sale deed (compraventa) is signed by both buyer and seller, or their duly authorised representatives, acting with a formal Spanish power of attorney.
The Notary´s office will have verified the legality of the sale terms and of the legal capacity of each of the parties to conclude the sale deed, which will also be signed by the Notary in confirmation.
At this stage the final payment will be paid over to the seller in the manner previously agreed between the parties, and the keys will be handed over. If there is a mortgage involved, then this will be formally dealt with at this same time by the signature of the mortgage deed (hipoteca)
6. Registration of new ownership
Following the completion your lawyer will arrange on your behalf for payment of the appropriate transfer taxes, notary and land registry fees required to formally register your new title.
7. Budgeting for the buying expenses
Generally as a guide you should allow 10%-11% of the purchase price ( 12%-13% if obtaining a Spanish mortgage) to cover the following expenses
Purchase taxes
Resale Properties:
7% ITP (Property Transfer Tax) up to a 400.000 euros or
8% ITP prices over 400.000 euros
New Properties:
8% IVA (VAT) plus 1% AJDO (Stamp Duty)
Land Plots:
18% IVA (VAT)
