PURCHASING PROCEDURE AND LEGAL ADVICE

The purchase of property in Spain can be a very easy and safe process provided some precautionary steps are taken and compared to the UK system, much fairer and faster!

The Spanish legal system offers a lot of ways to check that your investment is protected. The safest and easiest way is to instruct a lawyer to liaise with all parties and check that the paperwork is in order. Your lawyer will advise you of any problems that arise, attempt to solve them, obviously working in your best interests.

The lawyers we recommend are an independent, well-established Spanish family firm who specialise in this work and are English speaking. However, we are happy to liaise with any other lawyer of your choice and it is not compulsory for you to have a lawyer at all. In fact, if you are taking a mortgage, then the Spanish banks will make the same checks to ensure that your purchase is in order and their investment safe.

In all property transactions, the most common and advisable practice is to sign a simple 'Purchase Contract' or 'Option to Purchase Contract'. This establishes the rights and obligations of all parties concerned.

Once you have found a property you wish to purchase, you will be asked to sign a purchase contract and these vary depending on whether the property is new or a resale. For a new construction, the contract will include the builder's terms of payment. For a resale property the terms are agreed between the vendor and purchaser. Initially you will be asked pay a 'holding deposit'. Normally 3,000 euros is acceptable.

It is therefore important to ensure that you have access to this money, either in cash (usually drawn from a credit or debit card) or in a Spanish bank account. Written into the purchase contract is a clause stating that your 3,000 euros holding deposit will be refunded in full, should you subsequently be unable to proceed with the purchase, due to any problem with the title deeds.

If you do not already have a Spanish bank account, then you will need to open one. We will assist you with this. You will need to show your passport and a photocopy will be taken and held by the bank. This procedure is very straightforward.

You will also need to apply for a fiscal number (N.I.E.) before you can purchase a property (or even a car!). This is obtained from the police station and the easiest and quickest method is to go there with our lawyer. Her charge is around 50 euros and in our opinion is well worth paying as she will fast track you through the queues and speak on your behalf.

The balance of 10% deposit is due for payment 15 days later. This allows time for your lawyer or bank to check that the title deed is in order and there are no debts on the property.

A mutually convenient date for completion will be set (this can be anything from a few days to 3 months later), when all parties meet with the Notary who witnesses the signing of the Title Deed and transfer of title. If you are unable to attend personally, you can arrange for your lawyer to have Power of Attorney and sign on your behalf. The Notary we use and recommend speaks English and will translate the Title Deed for you prior to you signing. At this time the purchase is complete and the keys to your new property are handed over to you.

When calculating costs and taxes due on your purchase, you should allow 10% of the purchase price. It is possible that your costs will amount to less than 10%, as the bulk of these costs is a transfer tax payable by the purchaser of 7% of the declared value of the property and the vendors normally request a lesser price to be declared in the Deeds, thus reducing their capital gains tax due, as well as your transfer tax. Although this is normal practice in Spain, purchasers should be aware that declaring too low a price in the Deeds could be detrimental to them at a later date, if and when they wish to sell.

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