The Complete Spanish Property Buying Process – All you need to know.
STEP 1 - What to do after you find your ideal “RESALE” property.
Making an Offer
When you have found your ideal home through a reputable estate agent in Spain, you will no doubt want to make an offer below the asking price. Once the offer has been accepted by the owner, in writing to your estate agent, you will need to instruct a Spanish lawyer to request the following documents in order to check the property is legal and up to date with utilities and local rates etc:-
The sellers own title deed, known as the Escritura Publica and a report from the property register called the Nota Simple
IBI - paid up receipt for annual property tax.
Catastral certificate giving land measurements and boundaries in exact measurements. (sometimes out of date)
Receipts paid up for the annual fees of the community of property owners and last minutes of AGM if buying on Urbanization with shared facilities.
Receipts paid up for all utility bills.
A reputable estate agent will have copies of these documents for every property they have listed on their books. If the agent doesn’t have an office facility, either local to the property, or in Spain, then most likely they will not be listing the property directly with the owner and will probably be working with another agent. Be sure to ask your agent if they have the property directly from the owners.
Find a Lawyer who speaks your language
Most house hunters visiting Spain on an independent viewing trip will probably have already sourced a legal representative; either via the internet, or through friends and family living in the area. If you do not have a lawyer in mind, you can look around the local area for English speaking lawyers, or you could use a recommendation from the estate agent, they should be able to offer you several choices of local law firms. The first consultation with a lawyer Lawyershould be free, if you don’t feel the first one, or two lawyers you visit are right for you, then don’t engage them and keep looking. It’s very important you chose someone you feel comfortable dealing with. Having found a suitable lawyer whose estimated fees seem reasonable, you can now give them the contact details of the estate agent representing the vendors and start the buying process.
Your lawyer should be able to advise you on the legal and financial status of your chosen property within 24 hours or so. If you have already returned to your home country the process can still be carried out relatively easily but perhaps a little slower.
Paying a “Reserve” or “Deposit”
We strongly advise buyers not to part with any money until your legal advisor has cleared the property and fully satisfied you that all is in order to proceed with the purchase, even including your offer of mortgage if you require one. If you have returned to your home country then the next thing you will receive is a draft copy of a “Contracto de Compra-Venta”. This contract will identify both parties, the buyers and the vendors as well as the details of the property concerned, the 10% deposit amount, the balance on the completion and a sell-by date up until which you can complete the sale at the Notary. If you are delayed and cannot complete within the time on the contract, don’t worry, there are ways in which the process can be extended beyond the sell-by date.
If you are still in Spain and concerned you might lose the house to other buyers, you should be offered the right to reserve the property, thereby removing it from the market for up to 4 weeks. The “Reserva” document is a simple agreement between you and the estate agent and will require you to transfer €3000 as a holding fee, giving you enough time to go back to your home country and sign a full “Contract de Compra-Venta and transfer the balance of the deposit up to 10% through your lawyer.
What are the costs associated with buying a property in Spain
In the region of Murcia & Costa Calida, there is a purchase tax on resale property of 8%. This must be paid within 30 days of the completion and its submission is usually carried out by your lawyer. It is the buyer’s responsibility to pay this tax along with the Notary fees and land registry costs. As a fairly good guide we suggest 10% of the purchase price is often accurate. So for example a €100,000 property will cost approximately an extra €10,000 in additional costs. New build taxes can vary between 4 and 8% due to government inducements and incentives. These taxes can also vary from region to region.
If you are taking out a mortgage to part fund the property purchase, we suggest you add another 3 - 4% to the estimated purchase costs to account for mortgage set-up fees and extra legal work.
Your lawyer’s fees are variable depending on the amount of work and searching they will be required to carry out, but in most cases a 1% fee or minimum amount of €1,200 is a reasonable guide and therefore accounted for in the 10% purchase costs figure. For the previously agreed fees, your lawyer will:-
The town Hall for debts
Check for any partial plan which could affect the property now or in the future and report on it
Arrange for Power of Attorney ( POA) if necessary
Make sure the property is up to date legally, if not can arrange for an architect to do the necessary to make sure it is at point of sale
Give legal and tax advice when necessary
Make the changes to the utility contracts so they are in the correct name
Arrange with the bank with regards to what funds are needed for what and also liaise with the bank if a mortgage is required
We can arrange for a survey should you require one to make sure the property has no defects
The list could be endless, he will do whatever is necessary to make sure your property is up to date and you know exactly what you are buying
Obtain a Certificate of Habitation
This is simply a certificate to show that the property is fit for habitation. It has a lifetime of 15 years, then it needs to be renewed, however it will probably only be required if and when you come to sell that you may need it. It is obligatory to have this certificate in date if you rent a house and contract gas Electric and water services. The seller has to request it.
For an example the owner of a house which has no mains water or electricity would need to obtain this certificate first from the town hall in order to be put onto mains services, but only if this was an option for that actual property.
STEP 2 – The Completion Process.
As soon as an amicable date has been agreed for the completion at the Notary office, usually the lawyer and estate agent liaise with buyers and vendors, then both parties can make their travel and accommodation arrangements. Quite often both buyers and sellers live abroad and so it is important to consider all parties when identifying a convenient completion date.
On the day of completion, the buyer’s lawyer will meet the buyers and vendors, separately, to discuss the detailed funds and settlements on all sides. Usually, for the buyer, this will be a breakdown of the total purchase costs as well as retentions for the payment of the Notary and Land registry bills which often are not received by the lawyer until severalTitle Deeds weeks after completion. Usually the utility bills are divided proportionately depending where the billing cycle is at the date of completion. Utility meter readings are taken on the morning of the completion day.
Both parties then attend the Notary, often with the estate agent and will all assemble in a private room where the reading of the title deed takes place with the buyer’s lawyer translating events. Next the Notary will appear and convene the actual sale, ensuring all parties are satisfied and fully understand what is being said. Then the “Copia Simple”, literally meaning a simple copy of the title deed will be signed and witnessed by the buyers, vendors and the Notary before payment is handed over to the vendors in the form of several cheques. At this point the estate agent submits their invoice to the vendors and the lawyer will have previously arranged a cheque for this too, it is usual to record this in the Copia Simple and main title deed. Both buyers and vendors will be given a copy of this simple deed to take away from the completion.
The Background Work Post Sale
After leaving the Notary’s office, the new owners will have the keys to the property; these are usually passed over by the estate agent after the title deed is signed. The new owners are now able to access and move into their new home. It is usual for the agents or lawyers to invite the buyers and vendors for a coffee or even a spot of lunch to celebrate. Although a nice touch it may not be possible as we all lead busy lives and therefore simple thanks, but no thanks will excuse you without any disappointment to the other parties.
Keys Handover Between the lawyer and estate agent, all the back-up paperwork, such as submission of taxes, utility contract changes, land registry updates etc. will happen without the buyers and vendors being involved.
Finally, when your lawyer has received back from the land registry the fully incorporated title deed with their official stamps, bound in the Notary’s cover, the buyers will be invited back to the lawyer’s office to formally be handed all the documentation such as the new original title deed, tax submission receipts and utility contracts along with any refunds of monies left over from the 10% purchase costs.
The vendors will also see a residual refund of their retentions held back at the time of completion to cover outstanding utility costs etc.
Should the buyer or vendor have any problems during or after the sale, both the estate agent and lawyers shouldMurcia Coast Country Guide always be on hand to resolve these queries to satisfactory conclusions.