Buying Property in Spain

Once satisfied that the property/building plot is free from all legal and planning encumbrances, in the case of a resale property it is structurally sound and is being sold at a reasonable price, then it is usual for a private sale/purchase contract to be drawn up.

To secure the property in Spain it is normal practice for the buyer to provide a non-refundable deposit (Non refundable except in the event the seller fails to meet his obligations). This deposit is usually fixed at 10% of the sale price. However, often the buyer does not have sufficient funds on hand at the time and so an interim private contract will be prepared and a deposit of about 3,000€ provided to hold the property and take it off the market for up to three weeks to allow time for the purchaser to arrange for the balance of the 10% deposit to be transferred and for preliminary checks to be made.

The contract will state the date by which the sale must be completed. It is very important that the purchaser be fully aware of the implications of his failing to meet this completion date. Invariably the result of such failure will be the total loss of the 10% deposit. If, on the other hand, the seller fails to meet his obligations under the contract by the given date then the deposit will be refunded.

Next, a convenient date for the completion of the sale is arranged with the local public Notary.

(You can learn more about the role of the Notary at: http://www.notariado.org/english/intro.htm or on our links page.)

The Notary's office prepares the Escritura de Compraventa, a legal public document describing precisely the property being bought/sold, details of the persons involved together with the declared purchase price. It is this value that determines the level of tax to be paid. (Invariably the declared value is less than the true purchase price.) Twenty- four hours prior to the date of signing the Notary will obtain a report from the land registry ensuring that there have been no charges made against the property during the period between the signing of the private contract and the current date. The Notary has a duty to ensure that the transactions are made in accordance with the law and that all parties involved understand the implications of the document they will sign. Often an independent interpreter will be required to translate as the Notary reads the escritura to both the seller and the purchaser, explaining all that has been written. All parties involved, including the Notary will sign the escritura and at this point the balance of the purchase price will be handed over to the seller. This final payment is usually made by way of a banker's cheque, or cash.
You are now the owner of the property and at this point you will be required to pay the Notary fees, Land Registry fees and Purchase tax.