Buying a Property in Spain

1. CHOOSING A PROPERTY AND AGENT

Serious thought is required to identify the type of property you wish to purchase and in which area. Once this has been made we would recommend the use of an agent who will have the necessary experience to help you through the process of acquiring your property in Spain. Remember a 'bonafide' agent such as Dreamtime Properties will not charge the purchaser for his services as the agents fees are paid by the seller as a percentage of your purchase.

2. MAKING AN OFFER

When you have decided on the property the first step is to make a verbal offer through your agent. This may be 5% or more below the asking price. Negotiations will then proceed until a price is agreed when you should appoint a solicitor to formalise the agreement.

3. APPOINT A SOLICITOR

The solicitor should be fluent in your language. We have a Solicitor that we deal with who we have no hesitation in recommending. The solicitor will then carry out the necessary checks on the property and complete the legal requirements of the sale. The first check is normally to obtain the 'Nota Simple' which will identify the registered owner and provide details of mortgages or embargos on the property.
The agent should obtain from the seller receipts for payment of IBI (Impuestos sobre bienes Inmuebles), the annual real estate tax. These will show the 'Valor Catastral' the assessed value of the property on which your property income tax will be based.
If you are buying a new property ask to see the 'Declaracion de Obra Nueva' and the 'Declaracion de Alteracion de Bienes Naturaleza Urbana'.
If the property is part of a community, ask for receipts of community charges and obtain minutes of meetings from the president to identify any problems within the community.

4. HOLDING DEPOSIT

After the price is agreed and all the necessary checks have been carried out, you will be asked to pay a small holding deposit to take the property off the market. This deposit is refundable if the purchase is not completed.

5. RESERVATION CONTRACT (10% DEPOSIT)

The signing of the option to buy (Reservation Contract) would normally take place up to 10 days after the formal offer of acceptance has been made and all checks have been completed. This contract would set out all agreed terms and conditions of the purchase, and state the completion date at the Notary. At this stage you will be required to pay a 10% deposit which is NON REFUNDABLE if you do not complete by the agreed date.This has the advantage of stopping the iniquitous UK-style gazumping - you lose your deposit if you pull out of the deal but the owner has to pay you double your deposit if he or she reneges on the deal.

6. COMPLETION AT THE NOTARY

On the assigned day, buyer and seller (or their authorised representatives) will attend the office of the notary to sign the 'Escitura de Compraventa' (the title deed), which should state that the property is sold free of charges, mortgages and tenants. The notary does not check the terms, but solely certifies that the parties have agreed them. At this point the balance of the payment is made and possession passes to the buyer.
Your solicitor will arrange payment of taxes and fees, and register your title deed at the property registry. This should be done as soon as possible.

7. THE COSTS

SOLICITOR FEES: usually 1% of the purchase price plus IVA

NOTARY FEES: fixed by law and range from €300 to €900

REGISTRY FEES: approximately 40% of the notary fees

TRANSFER TAX: 7% of the purchase price, but when buying from a developer an extra 0.5% is charged

PLUS VALIA: This is the local municipal tax and is based on the officially assessed increase in the value of land since the last time the property changed hands.

8. WHO PAYS WHAT?

It is normal practice for the buyer to pay the above fees and taxes with the exception of the 'Plus Valia', but everything is negotiable and should be stipulated in the contracts.
The vendor will pay his own capital gains tax and the estate agents fees.