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Property Buying Guide
The following is a general buying guide to purchasing new and resale property in Spain and
as such does not attempt to cover all the legal sales aspects and financial points
encountered and we therefore recommend that you employ the services of a lawyer.
If you are looking to buy a property in Nerja, please contact us for information.
Private Buying Contract
On finding a suitable property and you wish to proceed with its purchase then a
private contract will be drawn by your lawyer as an agreement between seller
and purchaser.
This contract will contain all details relevant to the property including:-
Description, purchase price and deposit, form of payment, penalty clauses, inventory
(if applicable), and an “on or before” completion date. When both parties are agreed
then the contract is signed and the deposit will become payable, usually 10% of the
purchase price.
At this stage you must be sure that the property is the one for you as usually there
is a clause in the contract stating that if the buyer rescinds then they lose their
deposit, or if the seller rescinds then they must return double the deposit to the
purchaser.
Searches
Prior to signing the Title deeds (escritura) the lawyer will conduct searches
and obtain a “Nota simple” to ensure the vendor is the registered owner, all taxes
have been paid, if any charges or debts exist on the property and that clear title
can be obtained.
The deeds are signed at the public notaries office in person by vendors and
purchasers or by their representative if a notarised Power of Attorney is
available. It is therefore important to inform your agent as soon as possible if you
are unable to attend at the notaries to enable Power of Attorney to be arranged.
Usually the Deeds are signed, (completion), within 30 days of the private contract
but this can be extended to any period if mutually agreed. Prior to signing all
bills relating to the property must be proven to be paid up to date,
(electricity, water, rates, etc,) the lawyer or ourselves will make these available
for inspection by the notary.
Making Payments
The full balance of the payment is required before the title can be transferred to
the purchaser, therefore it is essential that arrangements are made for funds to be
available prior to completion.
If a Mortgage is required we can arrange one for you but would need to be
informed as soon as possible.
A Bank Account is also necessary here in Spain and we can guide you as
to the best type for your needs.
A fiscal number or “NIE”must also be obtained by the purchaser in order to
register the property, we will of course help you obtain this.
Payment can be made in various ways, but usually by bank transfer or bankers cheque
or draft, and can be in Euros, the local currency, or a foreign “currency”, if again
mutually agreed.
Expenses
Total expenses incurred by the purchaser do not normally exceed 10% of the purchase
price and are made up of the following:-
Stamp Duty For Transfer Tax is charged at 7% of the declared price for resale
properties, this tax is not applicable for new properties which instead are subject
to I.V.A. (V.A.T) of 7%.
(A commercial property is 16%).
Notary And Registration fees total approximately 2% of the declared value.
Lawyers usually charge up to 1% of the purchase price.Plus Valía Tax is applied by
the local authority and calculated on the increase in value of the land occupied by
the property since the last purchase, the value or the size of the building does not
affect this tax.
Although officially the responsibility of the vendor to pay this tax often as is
more the custom of late the onus is on the purchaser to pay. This is sometimes a
“bone of contention” in purchases and has to be established who is liable at an
early stage and must be stated in the private contract.
Retention & Capital Gains Tax - Vendors
A non-resident Vendor is liable to a tax of 3% of the purchase price
withheld or retained in lieu of capital gains tax, it is however the responsibility
of the purchaser to enforce this retention, (the Lawyer normally arranges this for
you), deducted from the final payment. Capital gains by resident owners is calculated on the
difference between the declared price when purchased and the sale price and is
currently 18%. Click here for detailed
explanation.
Taking Possession
Takes place once the title deeds have been signed and full payment made, it is then
that you will need to arrange the following.
Transfer of Services
Electricity, water, rates, telephone and if applicable community fees are usually
paid by “direct debit” or standing order through your bank in Spain and we can
arrange for these to transferred to your name on completion. Insurance of the
property becomes your responsibility on completion and we can recommend and arrange
quotes as required.
Wills
We strongly advise the making of a Spanish will to cover your Spanish estate.
Whilst a foreign will is recognised this may lead to delays and prove more costly in
the long run. Usually a lawyer draws up the will which would need to notarised.
Congratulations on your New Home!
Although it appears daunting the Spanish conveyancing system is straightforward and
used properly gives both the purchaser and the seller complete safety.
Sales Properties
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