Buying Spanish Property the Law.
In the following we will explain you the being procedure step by step. What happens when after touring with our agents and you find that perfect dream house here? What to do and who can guide and help you through the next steps till you finally go to completion? We can recommend lawyers and financial advisers or you can chose your own lawyer on the coast. As long as you feel you are in secure hands.
1) Reservation Contract
Once you find your property, the first thing you have to do is sign a RESERVATION CONTRACT.
This is to secure that the property is taken off the market and that no one else can put an offer on the property. To make the Reservation Contract you will have to pay between 3000-6000 Euros in reservation fee. The Reservation Contract is legal for a specified period that gives the lawyer time to do the “Due Diligence”.
The Reservation Contract will include:
- Full name of the buyer, you, and the vendor.
- The full address of the property
- The agreed price
- The completion date or date of signing a Private Purchase Contract
- Special conditions, ex. are you buying the property with or without furniture? Is the reservation subject to mortgage?
- The amount of the reservation fee
- A copy of your passport
The reservation fee should be transferred within days to your lawyers account or payed by credit card at the lawyers office. This amount will be deducted from the agreed price at completion.
2) Lawyer, Due diligence
Now that the Reservation Contract is signed by both parts and the reservation fee is secured, the lawyers will do their work.
Your lawyer and the vendors lawyer can now exchange the papers of the property.
Your lawyer will conduct the due diligence to secure there are no legal issues regarding the property. At this time you also have the time to arrange a mortgage if you would need it. The lawyer can also help you open a bank account, and for a small extra fee get you your Spanish Fiscal (tax) number. It is to be recommended the lawyer do this and by Spanish law you need the number to own a property here.
A lot of our clients are foreigners and are not able to be here during the whole buying process. Therefore it is recommended to make a Power of Attorney and let your lawyer sign your papers here in Spain. Many clients prefer this procedure and will come down for the completion and handing over the keys at the Notary.
3) Private purchase contract or completion
The moment your lawyer has stated that all papers are up to date and there are legal matters regarding you new property you can proceed to either a Private Purchase Contract or go directly to completion. When signing a Private Purchase Contract you pay the first 10% of the agreed final price of the property.
A Private Purchase Contract will include:
- Government registration of the property, called Referencia Castral.
- A declaration that the vendor legally is the owner and entitled to sell the property.
- The completion date at the Notary
- Any other agreements and special conditions agreed between buyer and vendor.
If both parties agree you can also go directly to completion for a quick handover of the property.
4) Buying costs in Spain
On top of the agreed price you will have to put the buying costs here in Spain. The buying costs vary from 10 % to 13,5 %.
You will have to pay:
- 8-10% Property Tax, depending on the price and if its a resale or a new build property.
- 1% to the Lawyer for conducting the Due Diligence
- 1% Notary Fee
- 1 1/2 % Stamp Duty Tax, secure all documents are legally effective
Podium Real Estate Team will of course be be at your disposal during the whole process of buying the property and in constant contact with your lawyer.
If you have ANY questions regarding buying a property in Spain, do not hesitate to contact us