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Real Estate Spain - Buying Property in Spain

Finding the right property for you.
Advising you about the expenses that are likely to be payable.
Check money payable.
Obtaining information from the vendors.
Check all the planning matters, permissions & projects.
Searches & Statutory Undertakings.
The Conveyancing Process - Contract to Completion.
Obtaining a Mortgage.
Spanish notary (notario)
Payment and completion.
Taxes, registration and payment of fees.
Now the property is yours to own!
Checks and payment of rates and taxes.
Payment of bills.
Making a spanish Will.

Contents

Buying a property in Spain can be someone's dream, as it can be both a good investment and a way of feeling at home whenever you go to Spain. But one must be aware that the Spanish legal system is very different indeed from that of the UK, and to avoid misunderstanding, disappointments and possible fraud, it is essential to seek expert advice from the very beginning. Below, we have set out the main stages involved in the purchase of a property in Spain. This is only a guideline to help you understand the conveyancing procedure, and it will vary in detail according to the particular circumstances of each transaction.

Finding the right property for you.

We can help you decide which area of Spain and what type of property will be more suitable for your needs. We are not estate agents, and hence, we are totally independent and only seek to provide our clients with the best information, so that you will always be happy with your purchase in Spain.

We can also advise you whether a ready built house would be more suitable for you than to build your own, and whether a place in the mountains, by the beach, or in town is really what you would like.

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Advising you about the expenses that are likely to be payable,

both during the conveyancing procedure, and after, for the ordinary maintenance and running of the property. Buying certain types of property can seem very attractive, but you should be aware of their running costs, and whether they suit your needs.

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Check money payable.

Before you are bound to the purchase, check that you have the deposit money and other monies payable at different stages of the conveyancing, and we will inform you about different financial entities that may be able to partly finance your purchase with a mortgage.

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Obtaining information from the vendors.

Once you have the necessary funds, and have decided which property to buy, obtain from the vendors all the legal relevant information and check that they have a good legal title on the property.

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Check all the planning matters, permissions & projects,

that are likely to affect the value of the property in the future.

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Searches and Statutory Undertakings.

The property to be purchased should be searched against and investigated by your Spanish Lawyer before any contract to purchase is signed in order to ascertain the following:

  1. To check the legal description of the property and its boundaries see that it agrees with what you think you are purchasing.
  2. The names of the person or company listed as the owner of the property. As we have already pointed out all land in Spain must be registered in the name of the owner at the Local Land Registry. Purchasers will not be full owners of the land until their names appear on this document and its registration via the Notary. The only people who are capable of legally transferring full ownership are those that are registered. An investigation of the Local Land Register will show who the legal owners are and it is their names which must appear in the contract to purchase: unless the vendors are properly appointed agents for the legal owners. It is not uncommon for purchasers to sign contracts to purchase where the vendors are property selling agents who do not hold valid authority or power of attorney. Monies are mistakenly paid to these agents who cannot transfer the property to the purchaser. This can end up with the purchaser losing his money.
  3. A record of existing debts or mortgages against the property. If there are any mortgages affecting the property then the proper steps will need to be taken to see that these are fully paid off before legal ownership of the property is transferred to the purchaser. There are instances where UK purchasers have lost their Spanish property because prior mortgage charges against the property have not been cleared off the register.
  4. Building restrictions, if any, are complied with such as planning consents, building permits, road construction or extension projects properly approved and any fines charged by the Local Authority for breach of planning control properly paid. If there is no planning permission granted for the development then it will be an illegal development in the eyes of the authorities, and at the very worst could be required to be pulled down.
  5. That the land has been properly designated/zoned for development.
  6. Pending assessments for public works like storm drains etc.
  7. The assessed valuation of the property, so that this will agree with the price actually paid and inserted in the contract document and in turn the Escritura.

We at Baily Gibson can arrange for all the above investigations to be carried out on your behalf.

An Abogado will make certain that on the signing of the contract both electricity and water have been connected to the property, that there is not inherent road service charge, and also that provisions for disposal of sewage are satisfactory. It can cost as much as 500.00 for a water supply to be connected to a property so it must be ascertained that the Contract price includes the cost of connection and the supply of water. The supply of electricity is equally important, as the water supply to the property is invariable circulated by means of an electric pump.

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The conveyancing process - Contract to Completion.

El Contrato Privido (The Private Contract) is an important document standing on its own and not as part of the Escritura, and contains its own conditions. Therefore, it is important to know and understand what these conditions are before you proceed with the purchase! It is the first stage in property ownership. It is usually short in form merely containing details of the vendor and the purchaser, legal description of the property, purchase price, form of payment, date of completion, date of possession etc. With a new property under construction, there may also be a secondary supplementalo contract (called the "Contrato de Infrastuctura" later confirmed by the Notario by a second Escritura called the Escritura de Obra Nueva) relating to the payment for and construction of the service media for the property - this secondary contract may not be with the owner of the land but with the contractor/developer for the development/estate (urbanization).

Once the Contrato Privado has been signed by both parties and the deposit paid (usually 10% for the main contract) it is binding. This means that purchasers are committed to paying the balance of the purchase price and the vendor is committed to transferring the ownership of the land of the purchaser. Thus, if a developer goes bankrupt or his company into liquidation before the Escritura has been signed, the purchaser would be able to make an application to the court so that his particular unit would be specifically excluded from the developer's assets by lodging the Contrato Privado with the court as proof of the purchaser's ownership of the unit.

The time between the signing of the Contrato Privado and the Escritura (completion of the purchase varies). If the villa or the apartment is physically constructed and both parties are ready with all the documents and purchase money then completion can take place within a matter of days of Exchange of Contracts. However if a new building is being purchased which has not yet been constructed, completion will take place on the signing of the Escritura before the Notario and the handing over of the keys by the developer/estate agent which may be many months away.

Where possession of the property can be given immediately the purchaser can physically can take possession on the strength of the Contrato Privado even though the Escritura has not been signed, although this can lead to problems: some properties have been sold more than once, the crooked agent collecting the monies, and no Escritura and it is far better even though the property is ready for possession, not to physically take actual delivery of the document from the Notario after registration at the Property Registry (Registro de la Propiedad) can take a considerable time, but it is the signing of the Escritura that is the vital element of ownership because the Escritura can then be registered in the Property Register and the transfer of ownership is certain at that stage.

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Obtaining a Mortgage.

We can deal with any legal matters related to a mortgage that you wish to obtain to part finance the purchase. Click here to visit EuropeanMortgages.com to arrange your mortgage in Spain

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Spanish notary (notario).

He is the public official in front of whom the Escritura (Transfer of Ownership Deed) will be signed. The Transferring of legal ownership of the property on completion of the purchase must, in Spain, take place in a notaries office in the area where the property is being purchased. The notario is responsible for ensuring that the contract (the Agreement between the parties) is turned into a public Contract by preparation of the Escritura and its registration in the Property Register in Spain. He is a lawyer who has taken special examinations to qualify for this position. Before preparing the Escritura the Notario will be needed to see that the purchaser receives the right property and that the purchase price has been paid to the vendor.

Only the Notario will witness the signing of the Escritura and he then arranges for it to be registered in the Local Deed Register in the name of the new owner. He collects his own fees both from the vendor and the purchaser, and also all taxes that are due. The Notary charges his fees in accordance with the Schedule of Notary's fees set by the Government, which is fixed on many documents such as Powers of Attorney, Wills etc. and on other document such as Company formation, Inheritances, purchases etc. on a scale in accordance with the purchase price or value. Some documents are subject to reduction of fees such as loans and subrogation of Mortgages.

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Payment and completion.

Get the purchase price ready and make the last searches before completion (ie. the signing of the Escritura Publica de Compravena before the Notary). The purchase money will have to be paid before or on the signing of the Escritura.

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Taxes, registration and payment of fees.

The Escritura should be taken to the Registro de la Propiedad as soon as practicable, to avoid fraud. On doing this, and before it can be registered, a number of taxes will have to be paid, as well as the Land Registry fees, Notary's and Lawyer's fees will also have to be paid.

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Now the property is yours to own!

Once the Escritura is back from the Registry bearing the stamps, the property is yours and the Registry protects your ownership against anyone.

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Checks and payment of rates and taxes.

As happens in England, the local authorities will be levying taxes on the property. Also, other central government taxes will have to be paid annually. Although usually they are not very high, it is most important that you know of them and do not forget to pay them on time. The authorities will not send you reminders, and if you have not paid, your property could be confiscated and auctioned to raise the money for the taxes. For further details about taxes, please see sections on Taxes later in this document.

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Payment of bills.

The bills for the supply of water, electricity, etc. will have to be paid regularly, and if you have bought an apartment or a house in a private development, you will also probably have to pay maintenance charges and community fees.

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Making a Spanish Will.

Finally, you should be aware of the Spanish Inheritance Rules, the taxes payable on the transfer of the property on death and how to mitigate them. For further information about this, please ask for our brochure on "Making a Spanish Will".

 

Protect Your Interest
Buying Property in Spain
Tax Incentives
Main Taxes on Purchase
Main Annual Tax
Community Fees
Spanish Identification No
Spanish Law
Useful terms

 

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