Legal Process

The legalities of buying a property in Spain takes far less time to process here than in the UK. You may be told that you do not have to hire a lawyer for purchasing or for selling a property but we recommend that you do. There are gestorias or fiscal representatives that can do the job as well, and many estate agencies and construction companies have qualified in-house teams to handle this aspect of the property purchase for you, but we believe this is a conflict of interest and again we recommend that you use your own lawyer.

An outline of the conveyancing procedure is as follows when you have found a property you will be required to:

• Sign a holding contract and pay 3000 Euros (£2000) (optional ) This secures the property until you are ready to pay the 10%.
• Appoint an Abogado (Lawyer)
• Arrange bank accounts if you have not already done so (we can assist you with this)
• To buy a property in Spain you will have to have a NIE number (your Abogado (Lawyer) can arrange this for you).
• Vendor and Purchaser sign a Private Purchase Contract and pay 10% of the purchase price. This Contract also will write that completion should be conveyed on or before a certain date (please plan carefully and make sure you will be ready by that date). This date can be changed by mutual agreement.
• Meantime, if you need a mortgage a valuation of the property will be necessary by the lender, and we recommend that this is done before the 10% is paid. The bank will usually lend up to 70% of declared value of the purchase price (see below). This valuation usually takes only a few days.
• Your Abogado will do a search on the property to check there are no embargos, debts or *mortgages which will not be passed on when the property changes hands.
• He will also make sure that if the current owner has a mortgage on the property that this will be redeemed before you purchase it.
• He will check with The Land Registry and require a copy of the existing Escritura (Title Deed) and will prepare a new Escritura for the **declared value of the property for you the new owner.
• He will need a copy of the last IBI invoice (Rates) and also he will be required to carry out SUMA check The Municipal Tax Collectors Office to make sure there are no outstanding tax debts for Rates and Rubbish arrears.
• The existing Escritura is checked and a copy is sent to the Notary's Office (there is no legal equivalent in the U.K) where the new Escritura will be signed.
• The new escritura should give details of the new owner, together with the Declared Value of the property. At the same time an appointment is made to complete and sign at the Notary. If you need a mortgage with a Spanish bank, then the bank manager will also have to attend the Notary Office to sign the Mortgage deed, so they must be consulted when making the appointment.
• Before going to the Notary you will need to order a bank draft for the declared value and cash for the remainder of the sale. This applies only if you are declaring a value different from the purchase price. At this point there is an extra cost of between 9% and 11% of the purchase price for notary fees taxes lawyers etc all to be settled on signing.
• Your lawyer (abogado) should the day before or on the morning recheck that there are no outstanding debts on the property.
• If you cannot attend the notary on the day of signing you can appoint a Poder (Power of Attorney) to sign on your behalf. Otherwise you must have your passports with you to show the Notary. All parties concerned with the sale/purchase should be present. The Notary will inform you of the document's legalities and if you are satisfied you are then required to sign in front of him. After signing it is a legally binding document and transfers the title of ownership on the new Escritura to yourselves.

*A mortgage on a property belongs with the property and not as in the U.K with the owners, therefore it is possible to transfer this mortgage to you. It can be cheaper to do this as the mortgage may have been running for some time. Also there is normally a set up fee for a new mortgage and this can be avoided or reduced if you take on the old mortgage. It is also possible in some cases to increase this mortgage for a new amount.

** When buying a resale and on some new properties it is a usual practice in Spain for the 'Declared Value' that appears on the Escritura (Title Deed) to be less than the actual purchase price of the property. It is also recommended and accepted that the Declared Value should not be less than 70% of the purchase price.

In Spain you pay Tax on buying and selling a property so the Declared Value means that on purchasing a property, less tax will need to be paid if a lower purchase amount has been declared. However, when selling the property, it must be borne in mind that non-residents will have to pay Capital Gains Tax on any profit made. . The fees for the Notary and property registry for a conveyancing transaction are set by the Government on a fixed scale, and normally amount to approximately 1% of the declared value. The fees for the Notary will be due on the day of signing the escritura.