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.