SPANISH PROPERTY BUYING GUIDE

Before you arrive in Spain, you should make sure that you have sufficient funds to cover the reservation sum. The minimum required amount is €3.000, but could be greater for properties of a high value. The reservation fee can be paid by either cash or credit card. It is possible to pay this amount by cheque drawn on a foreign (non-Spanish) bank but can take seven to ten days to clear into a Spanish account.

It is highly recommended to have the reservation amount available before viewing properties to avoid a situation where another party beats you to the purchase.

There are virtually no exchange controls in Spain, which means that whether resident or not, you are free to obtain a loan or mortgage against your property in any currency and from any bank in the world. Spanish banks are quite willing to lend to non-residents purchasers of Real Estate. You will need:

1. A photocopy of your income tax returns
2. Three months salary slips
3. A bank reference
4. A breakdown of assets and liabilities
5. Last three months bank statements
6. If self employed, statements of accounts

Once you have found a property that you wish to purchase, the terms and price will need to be negotiated with the seller. You may wish to make your offer subject to mortgage or Lawyer approval, or vary final completion dates, or the method of payment. The salesman who was good at finding the property may not be as good at negotiating the terms of sale with the owner. Ask to speak with the senior sales person or sales manager in the company and discuss with him the formation of a team to negotiate and carry through the terms of your purchase. The sales person may at this stage feel it of benefit to bring into the team a recommended lawyer to assist in the negotiation making sure that any offer meets his legal criteria.

Once there is a verbal accord between parties, the next step will be to formalize those offer terms of purchase in writing. Funds should be lodged in a local bank account or with your Lawyer in order to show the seller that there is a real intention to purchase. It is normal practice in Spain to include with the offer a sum of money to reserve the property until exchange of private contracts.

Upon acceptance of the offer by the owner the next step in the sales process is to exchange private contracts of sale or to sign an option to purchase. This may take place within two weeks following formal acceptance of the offer or sooner. Your Lawyer will have completed his searches and investigations of the property and will have arranged with the owner the procedure for the cancellation of any outstanding debts.
The private contract of sale or option will reflect all the agreed terms of the offer and sale and set out the date for final completion at the Notary. It is customary practice at this stage to pay ten percent of the purchase price which normally is non-refundable should the purchaser not complete.

A sale is formally completed in Spain, when the public title deeds of purchase are signed before a notary, the final payment made, and possession given to the buyer.

Once signed, the notary will fax a note of the title deed to local land registry. Your Lawyer will also pay on your behalf all the relevant transfer taxes associated with the purchase and will handle the formalities of registration of your title deeds.
Final registration of the deed may take up to two months. Similarly, your Lawyer will arrange for the transfer of accounts with the local suppliers of utility services such as water and electricity and organize their payment through a local bank.

There are in principal three fees and two taxes to pay when purchasing property in Spain. As a rule of thumb, you should budget the combined total of these amounts will be around 10% of the purchase price.

The fees are as follows:

1. Legal fees: Minimum of €600 or 1% of the purchase value whichever is the greater, plus value-added tax (I.V.A) currently charged at 16%.
2. Notary fees: the scale is fixed by law and may range from €300 for lower price properties to €841,40 for higher priced properties.
3. Property Registry: as a rule of thumb, 60% of what the notary charges.

The taxes

Transfer tax (ITP) at 7% or (IVA) at 16% plus Stamp Duty at 1%. The IVA rate of 16% is applicable when purchasing parcels of land, commercial premises, or garage spaces.

Plus Valía: normally payable by the vendor but it may be stipulated that the buyer pays. This may range from a few hundred euros to as much as thousands of euros on larger properties with a lot of land. Who pays this will be discussed in the negotiations and in consultation with your Lawyer