How to Buy

Spanish Property Buying Process

To help explain, we have drawn up a simple guideline to outline the main points of the typical buying process in Spain.

This comprehensive guide outlines all major points, the finer details of which can be explained by a lawyer, if required.

Please note the process varies slightly, depending on what type of property purchase is chosen.

Resale Purchase

The three main stages of buying an existing residential property are as follows:

1. Reservation

Once the perfect property has been found and a sales price agreed, a reservation contract is drawn up and signed by both the buyer and the seller.

This reservation contract states the buyer’s intention to buy and the seller’s intention to sell. The contract carries information such as:

·      The personal details of both parties.
·      Address of the property.
·      The agreed selling price.
·      A determined date to sign the ‘Private Purchase Contract’.
·      Any special conditions of sale (such as whether furniture is included).
·      The deposit amount required to secure the contract and have the property withdrawn from the market.

The buyer’s lawyer can then produce a due diligence report on the property to check that the seller is the legal vendor, that the property has been registered correctly with the local authorities and that there are no debts or unpaid taxes attached to the property.

Once it has been determined there are no legal impediments on the property, the sale continues.

2. Private Purchase Contract

Once the sale is agreed, a Private Purchase Contract (Contrato Privado) can be arranged. Detailed in this contract will be an intended sale completion date to sign the title deed (escritura) and collect the keys.

Once checked and approved by the appointed lawyers, both buyer and seller will then sign the contract. If a buyer or seller cannot be present for the signing of the contract then their lawyer can arrange to sign on their behalf through Power of Attorney.

A 10% non-refundable deposit (less the initial reservation fee) is then transferred into the seller’s bank account. The purchase is now legally binding and penalties will be incurred for withdrawal from the deal by either side, as specified in the contract.

3. Completion

The lawyers can agree a completion date and an appointment to finalise the purchase at a Notary’s office in Spain can be set. The completion date is usually between 30 to 60 days from the date of signing the Private Purchase Contract.

On the completion date at the Notary’s office, the balance of the sale price will be settled in full, along with the relevant buying costs and taxes (see below for details of additional purchase costs). The buyer and the seller (or their representative holding Power of Attorney) sign the title deed and the keys are exchanged.

It is at this point that all utilities to be transferred into the name of the new owner and details of the new ownership of the property registered with the local authorities.

Off-Plan/New Build Properties

Although very similar to the purchase process of resale properties, there are some differences regarding payment structure when buying a new build property off-plan.

New build property purchases allow the buyer to pay in stages, generally spaced throughout the construction period, with the final amount due upon completion of the property.

This extended timeframe can be of great benefit to buyers wanting to invest in a Spanish property at an agreed set price, with a view to being ready to pay and use it in full later. The timescale for buying off-plan from deposit to completion varies, although it is typically a maximum of two years.

Initially, as with resale property buying, the reservation contract is signed and a holding deposit/reservation fee, usually of around 6,000 euros, is paid to secure the purchase.

The first stage payment is due around one month later, although this can vary depending on the property. The first instalment can be between 10% and 40% of the agreed purchase price, again depending on the property.

If further stage payments throughout the construction period are required, set payment dates will be detailed in the contract. It is important that these deadlines are met according to the contract.

As with a resale property, the final balance should be paid along with the relevant taxes on the completion date detailed in the Private Purchase Contract. The title deed will be signed in front of a Notary, from which time the buyer will receive keys and full legal title over the property.

Buying Costs

Total buying costs associated with Spanish property can vary from 10% – 15% of the purchase price, depending on what is being bought and where the investment is being made. Such costs are an important factor when budgeting to buy, as they must be added to the agreed sale price. Buyers investing in Andalucia should consider the main typical additions as being:
– Between 8,0% and 10,0% IVA (Spanish equivalent of the UK’s VAT) for resales and off-plan property.
– 1,0% Notary fee.
– 1,0% Legal fees.
– 1,5% Stamp Duty Tax.
– An additional 1,0% to 1,5% mortgage set-up fee is usually charged by the bank/lender, if a mortgage is required.

Legal Introductions

APEX Marbella Property will be pleased to recommend trusted and reputable independent lawyers to advise you further. Additionally, we can introduce you to multilingual tax advisors to help you correctly navigate the most current tax laws and assist you with all. We are also able to make bank introductions and remain available throughout the buying process and beyond.

Please let us know HERE if you would like further information.