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Buying a property in Spain
 Information kindly provided by Gomez Villarez & Alvarez Abogados Official designated solicitors
For more information and to contact them directly Please click here
| Once
you have decided to buy a property in Spain you should follow the two Golden
Rules: |
1.
2. |
Choose
an Estate Agent.
Find a Lawyer to Advise and Assist you. |
Once
you have chosen the right Estate Agent with experience and knowledge of
the
property market, he will help you to find a suitable property. The agent
will show the finest
selection of properties advising as to the best areas to invest in, comparing
prices and qualities. |
You
should ask for details of the outgoings payable every year to maintain the
property,
namely the Annual Real Estate Tax (1131), the community fees, the charges
for rubbish collection,
the water rates, the electricity charges and the Property Income and Wealth
Tax in respect of the
property you wish to buy. |
When
you have made a decision as to the property you want to buy you will be
asked to
make immediate payment of a Reservation Deposit, thereby ensuring
that the property is not sold
to another purchaser. You will then have a period of between 10 and 15 days
to exchange contracts
but before doing so, you should seek proper legal advice. |
| LEGAL
ADVICE AND ASSISTANCE |
Prevention
is always better than cure. From now on until and after completion of the
purchase, the lawyer will take care and assist you in all the different
steps involved in the
transaction. There are many excellent English-speaking Spanish lawyers in
Spain. Choosing the
right lawyer is your guarantee that Spanish Legal requirements are met,
that the property is
registered in the vendor's name and that it is free of any mortgages, charges,
encumbrances, debts
or other liabilities. Your lawyer will negotiate and discuss the purchase
terms with the seller's
lawyer. The terms should not be limited solely to price but should cover
in detail all your
requirements like the completion date, the form of payment, etc... |
Once
you have appointed your chosen law firm they will explain the procedure
involved in
buying in Spain and the associated costs. |
The
next step after paying the reservation deposit is to evidence the terms
of purchase in
writing. At this stage the lawyers will draw up the private contract. It
is customary to pay a
deposit of ten per cent of the price on exchange of contracts, which is
not normally refundable if
the purchaser defaults. Conversely, if the vendor fails to perform his obligations,
you will be
entitled to the resolution of the contract and claim damages or either demand
the obligatory
fulfilment of the contract. Before your lawyer exchanges contracts he will
have completed his
searches and investigations in the Land Registry in respect of the property. |
Finally
on the day fixed for completion your lawyer will go to the Notary Public
to sign the
Title Deed, making the final payment to the vendor who will simultaneously
pass over possession
of the property to you, handing you the keys. At this stage the sale is
completed. Immediately after
completion, the notary will fax details of the title deed to the local Land
Register to inform them of
the identity of the new owner so as to prevent the property being sold twice.
In this way the Notary
and the Land Register act together to protect and guarantee your interests.
You will then have to
pay the relevant taxes and have the original title deed submitted to the
Land Register for
registration of your title. Your Lawyer can also arrange for the transfer
to your name of utilities and
services such as water and electricity and organise their payment through
a local bank. |
| The
purchase of the property will involve the following expenses. |
| Ø |
Notary,
who charges according to a fixed scale, his charges may range from 80.000
Pts for a
property price of 20.000.000 Pts to 150.000 Pts for property price of 100.000.000
Pts. |
| Ø |
Land
Registry, as a rule of thumb, 40% of what the Notary charges. |
| Ø |
If
you are buying a re-sale property you are obliged to pay Transfer Tax (ITP)
at 6%. |
| Ø |
If
you are buying a new property or a property in the course of construction
from a promoter,
developer or habitual trader, then you should pay VAT (IVA) at 7% plus Stamp
Duty at 0,5%. |
| Ø |
The
VAT (IVA) rate increases to 16% if you are purchasing plots of land, commercial
premises
or garage spaces. |
| Ø |
Plusvalia
is a tax levied by the local Town Hall based on the particular area where
the property
is located, on the surface area of the land, on the catastral value and
on the date of the previous
title deed. This tax may range from a few thousand pesetas to as much as
several million
pesetas on larger properties with a lot of land. By law the vendor is obliged
to pay this tax but it
is common practise for the parties to negotiate on who is to assume this
liability. |
Finally
bear in mind that your lawyer will charge fees for his professional services,
that normally
will range from 1 % to 2 % of the price plus VAT (currently at 16%). |
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