General Overview of the Process The following is a simplified “To Do” list that will apply during the purchase process. Some step may occur in a slightly different order depending on your personal requirements or something specifically related to the property itself. In the majority of cases, we have found that the suggested sequence works most effectively for a smooth transaction.
- Property viewing
- Open a Spanish bank account
- Get Nota Simple from Land Registry office
- Get report from the "Catastro"
- Provide your lawyers' contact details
- Forward all documentation to your lawyer
- Prepare offer and present to existing owners verbally
- Upon acceptance of offer, prepare sales-purchase contract with all applicable purchase conditions as agreed with existing owners
- Review details of property and purchase contract with lawyer
- Sign contract with existing owner and pay part or full deposit
- Apply for NIE number
- Apply for Spanish mortgage if required
- Provide al personal documentation required by Notary
- Prepare final payment
- Go to the Public Notary for completion (Signing of Escritura)
- Pay all applicable taxes
- Submit to Land Registry office for change of ownership
- Change ownership on all property utility services
- Change ownership at the Catastro
- Once registered under your name, ensure you have all your original documents: “Escritura” for the purchase of property, your copy of all the taxes that have been paid on your behalf, all invoices directly related to the purchase, the change of ownership request made at the Catastro, your NIE numbers, your copy of your mortgage escritura and evaluation report if applicable.
[Back to Top] Availability of Properties
Unless otherwise stated during viewing of each specific property, all our resale properties are normally available for completion within 90 days. As for availability of properties advertised on our web site or other portal, it is highly recommended that an appointment be confirmed for viewing to ensure the property is still available. Once you have visited a property, should you be interested in acquiring it, it is advisable to act quickly given that most properties are listed with more than one agent and might no longer be available the next day. Also, keep in mind that most property owners will not reserve their property until they have received at least a small deposit towards its purchase and sign a private sales-purchase contract.
[Back to Top] About Prices
All advertised prices are reflective of the selling price we have personally negotiated with the owners and inclusive of all sales commissions. We are often being asked if the price of a property is negotiable. Irrelevant of the conversations we have had in the past with the owners of the property, we have the professional obligation to communicate all offers to them. Therefore, although we might have received instructions from them not to communicate offers below a certain price, we remain obligated to do so in case they have changed their decision. Our recommendation is for you to carefully consider how much you are prepared to spend towards the purchase of that particular property and present a full offer which also includes purchase conditions, deposit amount and completion date. Worst case scenario the offer will not be accepted, best case scenario, you are on your way to ownership of a property you like for price and conditions that are acceptable to you!
[Back to Top] Deposit and Amount
Once you have elected your favourite property, you will be required to make a small deposit towards its purchase to reserve it. This will be done simultaneously with the signing of a private Sales-Purchase contract which will further define all the terms and conditions towards the purchase of the property. Although a full deposit of 10% of the total purchase price is normally expected within the next 10 days following signing of the private contract, the contract itself will address the exact amount to be paid by when and how. Because the properties themselves are usually ready, final completion at the notary office can occur as quickly as you wish within the following 90 days. We will provide you and / or Solicitors all relevant information to ensure a smooth transmission.
As explained above, a small deposit to reserve the property followed by a full deposit of around 10% is normally required. The minimum amount normally required to reserve the property is 3.000 Euros.
The 10% full deposit however is something that is highly negotiable and will depend on the owners' specific requirements in consideration of other conditions of purchased proposed such as date of completion, financing etc. Having said this, before considering offering less than 10% deposit you should seriously consider some of the risk associated with this. The sales-purchase contract normally includes some conditions of the Spanish Civil Code under which both parties agree that should the buying party was to default to its obligation they would lose all the quantities already paid. It also states that should it be the selling party defaulting on its obligation, they would have to reimburse twice the amount paid. This leads to the conclusion that the smaller the deposit, the easier you make it for the owner to default on his obligations with you and potentially sell the property at a slightly higher price to someone else – although there is a signed contract.
[Back to Top] Additional Cost of Purchase
In addition to the price of the property the following cost of purchase will apply:
- Transmission Tax (called ITP) which is currently set at 7%. In the case of a new property purchase directly from the builder the transmission tax (ITP) is replaced by VAT (called IVA in Spanish) which is also set at 7%
- Notary fees
- Registration Fees
- Administration Fees
- Plus Valía which is a small municipal tax that is calculated based on the increase of value of the plot since the last transmission. It is normally paid by the seller however you should know that some will ask that the buyer pays it and that if not paid, this would eventually appear as a debt against the property itself.
- Finally and only in the case of new properties directly from the builder, Stamp Duty (called AJD)of 1% also applies. Sometimes the builder will pay it, some other times, the builder will ask you to pay it.
Further to the above and depending on your personal situation the following costs might also apply:
- Mortgage fees (Stamp Duty, Bank Opening Commission, Notary and Registration fees and any other fees applicable to contracting a mortgage payable to your financial institution, the tax office or other applicable entities necessary in the process of contracting for a mortgage.)
- Property appraisal fees
- Property insurances
- Lawyers / Solicitors fees
- Moving fees
- Furniture purchase
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Additional Information
Nota Simple – From the Land Registry Office
The Nota Simply is one of the key documents needed before you agree to sign a sales-purchase contract. We cannot stress enough the importance of this document, and it needs to be dated as close as possible to the date of signing the contract. The document is essentially a “summarized” version of the content of the escritura with few more notes. It contains:
- The issuing office where the property is registered and date it was issued.
- The reference number that uniquely identifies that property within the land registry office itself so you can ask for it by stating the Property number, Section, Tome, Book and Folio.
- A full description of the property including square metres of the plot, square metres of the buildings on it, description of the boundaries to the property, assigned participating quota in case of pertaining to a community, and sometimes a full description of the internal distribution (older properties may not provide this information).
- The list of legal owners of this property. Please note that each owner listed under this section needs to be present physically or legally represented at the notary for completion, otherwise you will not be able to complete the transaction.
- The list and description of any pending debt against the property. This will include mortgages but also any leans that might have been registered on the property by other entities (ie. Car financing companies, credit card offices, etc…). Should there be anything else than a mortgage in that section, your lawyer will need to investigate each one in-dept and negotiate arrangements with each one to get paid and consequently cancel the lean and corresponding registry entry against the property before completion.
- Finally some miscellaneous notes about possible revision in the future of the last transaction by the state, note to the confidentiality of personal information, and / or notes about recent re-organization of the territory within that area.
The importance of an up to date copy of this document resides in the fact that it is the only piece of actual documentation that will confirm the following:
- The legal owners of the property . This information is critical for the sales-purchase contract to be valid. Only the legally registered owner of a property can sell you this property.
- The description of the property will confirm the registered size of the built area and plot . If you think you are buying a 150 square metre house on a 1.000 square metre plot, and the Nota simple describes the property with substantially less square metre than what you saw, then, deeper investigation is required. You need to find out why these square metres have not been registered and if it is possible to register them before or at the same time than your completion date at the Notary office.
- Finally, the list of debt against the property will allow you to ensure they are being cancelled before completion. Although the Nota Simple you would get before signing the private sales-purchase contract will accurately reflect the current debt on the property, this is not to say that between that time and actual completion, other debt may not appear. This is why a statement from the existing owners in the private contract is normally put to state that they are selling the property to you free of any debt. Meanwhile, the day of completion, the Notary will have received directly from the Land Registry office, the same day, a similar report indicating all debt registered on the property as of their records on that day along with any other ones that might be pending registration.
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Sales-Purchase Contract
The sales-purchase contract is, outside of the Escritura the most important document you will sign before completion. Because it outlines both parties agreement as to theirs obligations and detailed conditions of purchase, it is critical that you fully understand it before signing. The document is redacted in Spanish so the need of an independent translator or English speaking solicitor is strongly recommended. For the contract to be valid it needs to state at minimum the following:
- Full name and personal details of the buying party
- Full name and personal details of the selling party
- Full name and personal details of any other party involved in signing the contract and in which capacity
- Full description of the property including reference at the land registry office and reference at the catastro office
- Total purchase price
- Payments term for the purchase
- Completion date
- Public Notary office where it will be signed
- Key delivery
- Any other conditions that were negotiated between buyers and sellers
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The "Escritura"
The content of the “Escritura” is very similar to the content of the private sales-purchase contract. However, additional diligence is paid to some of the details, applicable laws, tax paying, identification of the parties and other information aimed at informing the parties of their rights and obligations. Although the Public Notary is not responsible for protecting neither parties' interest, it is responsible for ensuring that all parties involved truly understand the content of the document and are therefore signing in proof of their agreement. Once signed, the original of the “Escritura” is being presented along with proof of payment of the taxes to the Land Registry office for registering under your name as the new owners.
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