The basics about buying in Spain

The purchase process

Reservation:  Once you have chosen a property and negotiated a price, if you are leaving the country immediately, it is wise to get the property off the market by paying a small initial holding deposit (known as a “señal”).  This can be whatever you can get hold of, from as little as 100 Euros to 1000 Euros, etc.  Never just hand over the money, get the owner or agent to prepare a short initial reservation agreement.  This should usually simply say that you are reserving the property by paying the “señal” and that until the Private Contract is signed, this deposit is returnable in full.  It might be wise for the agent (or lawyer, if you have one in place at this stage) to keep hold of this money for a few days until the Private Contract can be signed and the paperwork checked out.  However, use your judgement, as many vendors won’t see the value of taking their property off the market if they don’t have the money actually in their hands.

Open a Spanish bank account – this is vital, as you will need that account to prove that the funds have come from your country into a Spanish account for the purpose of purchasing a property.

Get an NIE number – this is your official ID number in Spain.  You can get this at the local police station, but seek advice and assistance from your estate agent or lawyer, or a friend who has already done it, as otherwise what is a very simple task can become quite a nightmare.  My advice is don’t let your lawyer or estate agent charge you for helping you get it, as it is a task that should be included for free.  You need this number for the purchase, or at least you need to prove that you have applied for it.

Private Contract
Usually, around 7 to 10 days is the maximum time between initial reservation and signing a Private Contract with the vendor, at which point it is standard (but not obligatory) to pay 10% of the agreed sales price.  This gives you time to appoint a lawyer, (not obligatory but often wise), check out paperwork and any questions you might have that require answers (such as access rights over someone else’s land, building or renovation estimates, planning issues, etc), and to prepare the money.  When you sign the Private Contract, it should stipulate the total sales price agreed, all payments paid and to be paid, the deadline for the purchase to take place, and any clauses that are deemed appropriate.

It is normally the case that the Private Contract is relatively binding for both parties by including a clause that stipulates that if the vendor pulls out, he or she pays back any monies paid to date, plus the same amount again, and if the purchaser pulls out, he or she loses the monies paid to the vendor to date.

Please note that all contracts in Spain are only legal if they are in Spanish.  They can be in several languages, but need to also be in Spanish!

Completion
Completion takes place on the day both parties meet at a suitable Notary office to sign the new title deeds (Escritura).  At this point the balance of the money is paid over, usually in the form of a bankers draft drawn from the purchaser’s Spanish bank account and handed to the vendor in front of the Notary.  The deeds will be translated verbally to you on the day, as the administrative staff at the office prepare them, so you need a Spanish speaker if you don’t speak Spanish, who also has to sign the deeds as your official translator.  Once you have signed, then the property is yours!

Please note that if you are based in Spain already and find your ideal property, and wish to go straight to completion, there is no obligation to sign a private contract.  As long as the paperwork has been checked and everything is clear, you can go from Reservation straight to Completion at the Notary office.

Purchase Costs
Allow around 10% of the total agreed sales price, on top, to cover these costs.  These consist of:

7-8% purchase tax (percentage of the amount declared on the deeds on the day of completion)

Notary office fee (varies depending on each individual case, but normally, allow up to 500 Euros)

Registration fee (again, varies hugely depending on the work involved and property purchased – again, on average, allow 500 Euros)

Lawyer’s fee (often 1% or 1.5% of the total purchase price agreed)

What is a Nota Simple?
If the property you are buying is registered on the Property Registry (Registro de la Propiedad), you can go to the local registry office and request a Nota Simple for that property.  You will need, if possible, to know the Finca number (estate number) .  It may take 24 hours so you may have to go back the next day and it usually costs a few Euros to order one.  The Nota Simple is a short document that will summarise the present status of the property: who owns it, who are the immediate neighbours, the size of the property and what it consists of, and if there are any mortgages or loans taken out against it.  It will also tell you how long it has been registered, and this is important if you are looking to take out a mortgage against it.  A property needs to be registered for a minimum of 2 years before most Spanish banks will lend you money against it.

What if a property doesn’t have any deeds?

Lots of older Spanish properties don’t have deeds, as in the past, few folk bothered to create them (it costs money, you see!)  This is not necessarily an end-of-the-line situation.  If the property has been around for a long time (currently the law states a minimum of 5 years) and this can be proved, you can get new deeds created.  Recently the law was changed, making this process a little more complicated, but it is still possible, as long as it is not a recent property that was built illegally and is not recognised by the local town hall’s planning department.

The same applies is the property is not on the property registry – it doesn’t mean it can’t be added on!

If you have any general questions about buying a property in Spain, please email us.  However, we are not legal advisors:  FOR ALL LEGAL ADVICE, OR IF YOU ARE IN DOUBT, ALWAYS SEEK THAT OF A LOCAL LAWYER.