Buying Property In Spain

The Purchase:

Once you have decided to buy a property in Spain, you should follow the two Golden Rules:

  1. Choose a qualified estate agent. ( We are members of the API official college of Spanish real estate agents with number 893)
  2. Find a lawyer to advise and assist you.

 

The Estate Agent

Once you have chosen the right estate agent with experience and knowledge of the property market, he will help you to find a suitable property. The agent will show the finest selection of properties available and advising as to the best areas in which to invest, comparing prices and qualities.
You should ask for details of the outgoing costs payable every year to maintain the property, mainly:   The Annual Real Estate Tax (IBI), any community fees, and the charges for rubbish collection.
When you have made a decision as to the property you want to buy, you will be asked to make immediate payment of a reservation deposit, thereby ensuring that the property is not sold to another purchaser. You will then have a period of between 10 and 15 days to exchange contracts
Javea Homes has a complimentary service which it provides for its sellers and purchasers:

  1. Introduction to local bank for opening of bank account
  2. Request a search at the Land registry, for the property history, such as any debts encumbrances or charges. Known as the “ Nota simple”
  3. Preparation of the purchase / sale contracts in Spanish and the native language of the buyer / seller  we provide Spanish/English, Spanish/French, Spanish/German.
  4. Assistance with the request for and collection of N.I.E.  ( Fiscal Identification Number for foreigners) for the buyer
  5. Preparation of documentation needed for the completion of the purchase / sale deed  and appointment at the Notary Public office for completion.
  6. Transfer of all the amenities such as, water, electricity, gas, rates and rubbish collection tax from the seller to the buyers account and request for payment of the local plus-valia tax for the seller.

 

Legal Advice and Assistance

There are many excellent English-speaking Spanish lawyers in Spain. Choosing the right lawyer is your guarantee that Spanish legal requirements are also met, from now on until and after completion of the purchase; the lawyer will take care and assist you in all the different steps involved in the transaction.  That the property is registered in the vendor’s name and that it is free of any mortgages, charges, encumbrances, debts or other liabilities. Your lawyer will negotiate and discuss the purchase terms with the seller’s lawyer. The terms should not be limited solely to price, but should cover in detail all your requirements, such as the completion date, the form of payment...etc.
Once you have appointed your chosen law firm they will explain the procedure involved in buying in Spain and the associated costs.
At this stage the lawyer will draw up the private contract and the next step after paying the reservation deposit is to examine and witness the terms of the purchase / sale agreement in writing.
It is customary to pay a deposit of ten per cent of the price on exchange of contracts, which is not normally refundable if the purchaser defaults. Conversely, if the vendor fails to perform his obligations, you will be entitled to rescind the contract and claim damages.
Before your lawyer exchanges contracts, he will have completed his searches and investigations in respect of the property.
Finally, on the day fixed for completion your lawyer will go with you to the Notary Public to sign the title deed, making the final payment to the vendor who will simultaneously pass over possession of the property to you, and handing you the keys.
At this stage the sale is completed. Immediately after completion, the notary will fax details of the title deed to the local land registry to inform them of the identity of the new owner, to prevent the property being sold twice. In this way the notary and the Land Registry act together to protect and guarantee your interests. You will then have to pay the relevant taxes and have the original title deed submitted to the Land Registry for registration of your title. Your lawyer can also arrange for the transfer to your name of utilities and services such as water and electricity and organize their payment through a local bank.
The purchase of the property will involve the following expenses.

The Fees

  • Notary, who charges according to a fixed scale. His charges may range from € 340 for a property price of  € 120.202 to € 601 for a property price of  € 601.012.
  • Land Registry, as a rule of thumb, is 40% of what the notary charges.

 

The Taxes

  • If you are buying a re-sale property you are obliged to pay Transfer Tax (ITP) at 7%.
  • If you are buying a new property or a property in the course of construction from a promoter, developer or builder , then you should pay VAT (IVA) at 4% plus Stamp Duty at 1%.
  • The VAT (IVA) rate increases to 18% if you are purchasing plots of land, commercial premises or garage spaces.
  • Plus-valía is a tax levied by the local Town Hall based on the particular area where the property is located, on the surface area of the land, on the catastral value and on the date of the previous title deed. This tax may range from a few hundred Euros to as much as several thousand Euros on larger properties with a lot of land. By law the vendor is obliged to pay this tax but it is common practice for the parties to negotiate on who is to assume this liability.
  • Finally, bear in mind that your lawyer will charge fees for his professional services normally between 1% and 2% of the price plus VAT (currently at 18%).