Buying a property in Spain

Choosing the Property

Serious thought may be required to first identify clearly in your own mind  the type of property you need and the area where you would like to buy. Once armed with this information you would well be advised to contact several agents in the area of your choice to establish what is available and the price you are likely to pay.  You should also check property magazines  and newspapers to complete your overall picture of the market.

Using an Agent

An agent can be very helpful to a buyer. He will provide a wide selection of properties, and local information. He may also help you to seek out the perfect property even though he does not have it listed already. Care should be taken in selecting an agent who will provide the experience to answer all your questions and guide you through the negotiations and sometimes complex procedures to the completion of your purchase.

Agents do not normally make a charge to buyers  and therefore it makes sense for a buyer to use the very helpful services of an agent. Agents fees are usually paid by the seller as a percentage of the selling price.

Buying a property in Spain

Make an Offer

When you have decided on the property the first  step  is to make a verbal offer either directly to the owner or though  your agent.  Negotiations will then proceed until a price is agreed  when you should appoint a lawyer to formalize the agreement.

Appoint a Lawyer

The lawyer , who should be fluent in your language, will carry out the necessary checks on the property and complete the legal requirements of the sale. The first check is normally to obtain from the Property Registry a “Nota Simple” which will identify the registered owner and provide details of  mortgages or embargos on the property.

You 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”.

Where there is a community involved ask for  receipts for community charges and obtain minutes of meetings from the president to identify any problems. A chat with the neighbours would also be a good idea.

Buying a property in Spain

Holding Deposit

After the price is agreed and the “Nota Simple” has been checked you may wish to pay a small holding deposit to take the property off the market and reserve it until you can make completion. Your lawyer will prepare a formal offer and agreement for this purpose.

Exchange Private Contracts

The exchange of private contracts or the signing of an option to buy would normally take place about two weeks after the formal acceptance of an offer, when the lawyer would have completed his searches. The contract would set out all the agreed terms and state a date for completion. It is usual for the buyer to pay a 10% deposit at this stage which is non-refundable.

Complete at the Notary

On the assigned day buyer and seller (or their authorised representatives) will attend the office of the notary to sign the “Escritura 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 payment is made and possession passes to the buyer.

Your lawyer will arrange payment of taxes and fees, and register your title deed at the Property Registry. This should be done promptly. Don’t forget to have the property insured.

The Costs

There are three fees to be paid Lawyers fees, Notary fees, and Property Registry fees.   Also there are two taxes, Transfer Tax (ITP) and “Plus Valia”

  • Lawyers fees: usually about 1% of the purchase price plus 16% IVA.
  • Notary fees: fixed by law and normally in the range of 300€ – 900€.
  • Registry fees: approximately 40% of the Notary fees.
  • Transfer tax: 7% of the purchase price; but when buying from a developer this is replaced by 7% IVA plus 0.5% stamp duty.
  • Plus Valia: this is a local municipal tax and is based on the officially assessed increase in the value of the land since the last time the property changed hands. It can vary considerably and you should find out the exact amount from the town hall.

Who Pay´s What?

It is  normal practice for the buyer to pay the above fees and taxes with the possible 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.