Marbella & Costa del Sol Property

Buying Property in Spain

How to avoid the pitfalls

Negotiating the purchase

Once a suitable property has been chosen, the first step is to make a verbal offer.  The purchase terms and price may need to be negotiated with the seller and Des Res will proceed on your behalf until a price is agreed.

Reservation deposit – Formalising the offer

Once there is a verbal agreement between parties, the next step will be to formalise the terms of the offer in writing.

It is normal practice in Spain to include with the offer a reservation deposit until the exchange of private contracts.  Paying the reservation deposit guarantees that the property is taken off the market and is reserved for you at the agreed, fixed price.

Appointing an independent lawyer

There are many excellent local lawyers in Spain who are fluent in your language.

A lawyer will provide the legal guarantees for the purchase of the property ensuring that Spanish legal requirements are met and that the property is bought free of encumbrances, charges, liens or debt and is up to date in all its payments of local contributions and community charges etc.

Lawyers will tell you in advance what their fee will be – usually one percent of the purchase price.  Des Res can recommend  a proven independent lawyer should you wish.

Exchange of private contracts

Upon acceptance of the offer by the owner the next step in the process is to exchange private contracts of sale or to sign an option to purchase. This normally takes place within two weeks following formal acceptance of the offer.

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.  At this stage it is usual for the buyer to pay a ten percent deposit of the purchase price which is non refundable.

Completion at the notary

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.  On the assigned day, the buyer and the seller (or their authorised representatives) will attend the notary’s office to sign the title deed ’Escritura de Compraventa’.  At this point the payment of the remaining balance is made and possession passes to the buyer with the handing over of the keys.

Registration

Once signed, the notary will fax a note of the title deeds to the local land registry.  Your lawyer will also arrange payment of 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 local suppliers of utility services, such as water and electricity, and organise their payment through a local bank.

Costs involved in purchasing a property

There are, in principal, three fees and two taxes to pay when purchasing a property in Spain.  As a rule of thumb, you should estimate that the combined total of these amounts to be around 10% of the purchase price.  If you are taking out a mortgage also count with 1% opening fee of the mortgage amount and 1.8% of taxes and notary fees for the mortgage deed.  These costs and taxes are not reflected on the price advertised for the property and have to be added on top.

The Taxes

VAT or IVA as it is called in Spain applies to new properties only, however there is a transfer tax (ITP) that applies to the purchase of resale properties, both taxes are currently 8% in most areas of Spain. Stamp duty of 1% is also payable when buying a brand new property.
Plus Valia 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. This tax is payable by the vendor unless otherwise agreed. The main rate of IVA in Spain is now 18% and is payable on most professional fees.

Page updated 06/03/2012