Buying Spanish Property - The Buying Process

This Buyers Guide has been prepared for Costa Dream Homes by Mr Rodrigo Blanco , an English speaking Spanish Lawyer based in Marbella and specialising in the purchase of property in Spain .

It appears here with his kind permission.

Rodrigo Blanco can be contacted at:-

Lex-Marbella Abogados S.L.
C/ Notario Luis Oliver 2 - 4
Edificio Banco Jerez
29600 Marbella ( Malaga )

Tel: (+34) 952 901 199
Fax: (+34) 952 901 615
E-Mail: rblanco@lex-marbella.com

Buying Property in Spain

Once you have chosen a Spanish property from the vast range available on Spain 's Costa del Sol , but before committing yourself to buying the property , you should ensure that pre-contract enquiries and searches are carried out to protect your best interests. By taking sensible, appropriate measures you will safeguard your hard-earned life savings , and prevent the buying of your Spanish dream home from turning into a nightmare.

Spanish Solicitor Advice

Our first advice is to employ a Spanish solicitor who specialises in drawing conveyances, and who has extensive experience and knowledge of all the legal and fiscal aspects of Spanish property transactions. Your decision to employ a solicitor will provide you with peace of mind and save you considerable expense in the long run.

Spanish Property Conveyancing

Once you have chosen a Spanish solicitor, the spanish conveyancing process commences with the pre-contract enquiries and searches. These procedures are the same for newly-built and second-hand properties. In broad outline, the enquiries and searches would cover the following subjects:

1. An enquiry at the Land Registry to ensure that the person or company selling you the property is the legitimate vendor and entitled to do so. A land charges search must also be made to reveal adverse entries and ensure the property is free of charges and encumbrances.

2. When purchasing a newly-built property, the solicitor will make enquiries regarding the planning situation of the property to ensure that the property developer obtained proper planning permission and a building permit.

3. Furthermore, enquiries must be made with the appropriate local authority department to check that taxes and rates have been paid. (Such as Residential Property Tax and refuse collection charges).

4. When purchasing a property second-hand from a previous owner, the solicitor shall ensure that the vendor is up to date in payment of condominium charges, electricity, water, telephone bills, etc.

Once these basic preliminary enquiries have been dealt with, the procedure is as follows, depending on each particular case:

Buying Second-hand Spanish Properties

It is usual to sign an option contract, and pay 10% of the purchase price, from which any amount you may have previously paid as a booking deposit must be deducted. The balance is paid, in the majority of cases, within 30 to 60 days. On payment of the balance of the purchase price, the vendor is bound to sign the Deed of Conveyance transferring the property to you, or to the person or company you designate.

It should be remembered that where the vendor is a non-resident you must retain 5% of the purchase price stated in the Deed of Conveyance. This 5% must be lodged with the Spanish Inland Revenue as a payment on account by the vendor in respect of his eventual capital gains liability generated as a result of the sale. Your solicitor is the person best qualified to deal with all these matters.

Before embarking on your property investment, it is worthwhile to consider whether you wish to have the deeds in your own name only, or jointly with your spouse, if you are married. You may also wish to consider the advisability of registering the property in the name of a company, bearing in mind that these options may help you to avoid unnecessary expenses in the future.

Before having your deeds registered at the Land Registry you must first apply for registration as a non-national (Identification Number for Non-nationals). This is a mere formality, for which you only require a certified copy of your passport, and a signed application form. You will require this identification number for non-nationals should you wish to open a bank account in Spain .

It is always advisable to make a will in Spain, solely in respect of your assets and property in this country. Making a will facilitates probate proceedings in the future, and will reduce expenses. Drafting and signing a will is a simple and inexpensive procedure and your solicitor will be able to advise and create your will for you.

Buying Newly-built Spanish Properties

In most cases the Spanish property developer will offer a standard contract of sale, requiring an initial down-payment and a number of interim or staged payments, which are generally linked to progress of construction and completed work stages. In most cases, the final payment is made when the Deed of Conveyance is signed.

Likewise, if the developer has financed the property development through a mortgage loan, the purchaser may assume the mortgage instead of making the final payment. Should you not wish to assume the mortgage, the developer must discharge the mortgage, and will be liable for any expenses or outlay entailed in the discharge of mortgage.

Any interim payments you may make to the property developer while construction is in progress must be guaranteed by a performance bond or insurance policy

As we have already remarked with regard to second-hand homes, before having your deeds registered at the Land Registry you must first apply for registration as a non-national (Identification Number for Non-nationals). This is a mere formality, for which you only require a certified copy of your passport, and a signed application form. You will require this identification number for non-nationals should you wish to open a bank account in Spain.

Nowadays the majority of property developers have no objection to your assigning the rights and obligations under the contract of sale to a third party, thereby recovering any amounts you may have paid to date, including VAT plus any potential profit you are likely to make upon assigning the contract.

Whether the Spanish property that you are buying is new or second-hand, the registration of your deeds at the Land Registry usually takes six or seven weeks from the date on which the deed was signed before the Notary Public.

Proof of registration is unequivocal proof of title, and that title is guaranteed by the Land Registry.

In either case, you must bear in mind that the fees and outlay/disbursements entailed in the property purchase will amount to around 9,5% of the purchase price. Most of this is used to cover taxes or stamp duty, which amount to 7,5% when purchasing a newly-built home and 7% in the case of a previously-owned or second-hand home. The rest covers notary's fees, Land Registry fees and your solicitor's fees.

The only exception where taxes are concerned is in the case of a first-time transfer of development land (a site) by a property developer, in which case you would be required to pay 16% VAT in addition to the Notary's fees, Land Registration fee and lawyer's fees.

Thousands of property transactions take place each year on the Costa del Sol. In the vast majority of cases these transactions prove an excellent investment, bringing many advantages to the investor, provided they are properly handled and supervised by a solicitor. Your solicitor will answer all your queries and ensure that risks are kept to a minimum.