Once clients have decided on the property they wish to purchase a reserve deposit of between 3000€ and 6000€ is required immediately, to fix the price and have the property taken off the market. If the buyer changes their mind and pulls out, this deposit is often non-refundable. Once terms and conditions have been agreed with the vendor and the lawyer has completed his searches, checked for debts and charges etc. (usually within 30 days) the private purchase contract is drafted. This includes all terms and conditions of the sale and sets out the completion date for the transfer. A deposit of 10 - 20% of the purchase price may be required at this stage to secure the property and as official confirmation of intent to purchase. This is usually known as 'going to contract'. The purchase is formally concluded when the title deeds are signed before the Notary Public and the balance of the agreed purchase price is paid to the vendor. At this point the buyer will receive the keys to the property. If the vendor changes their mind before completion they have to return all monies paid, together with compensation (usually an additional 100%).
If clients are purchasing a new construction, know as 'off plan', the constructor or developer will ask for stage payments to be made on the property. These can vary dependent on the developer, but are usually 30% deposit and then the remaining 70% on signing of the title deeds. The appointed lawyer will carry out all necessary searches on the property; to ensure that it is owned by the vendor and there is planning permission.
When purchasing a property in Spain, you will normally need to allow around 10% of the purchase price to cover costs such as; land registry fees, notary fees, legal fees and taxes. When purchasing a property with a mortgage however, it is advisable to allow between 11-13% as there are fees associated with the mortgage as well as the purchase. As a general guide you should consider the following:-
For the purchase;
If buying with a mortgage you will also have;
Plus Valia (land / capital gains tax)
This is generally paid by theowner when they sell the property. Transfer tax is calculated on the increase in value of the land from when it was last sold.
It is essential to have an NIE number for any financial dealings clients may have in Spain. This is a simple, but sometimes lengthy process which involves completing an application form. You will need 2 photocopies of the passport along with 2 photos. You will also need to take your original passport. The rules are sometimes relaxed and photos are not required. It is best to check before applying. The NIE can be obtained from a local police station. It can take anything from 1 to 5 weeks to be processed. The NIE number can be obtained by a lawyer on your behalf. This is done via Power of Attorney and the lawyer will charge a fee.
Whilst it is not a necessity to have a lawyer to purchase a property in Spain, it is highly recommended. They will be able to check out any outstanding debts which exist on the property as well as help with contracts and NIE numbers. Clients are free to appoint a lawyer of their own or we can recommend one.
Below is a list of terms you will come across on a day to day basis.
Abogado - Solicitor / Lawyer
Agencia de Inmobiliaria - Estate Agent
Disposición de fondos - Provisión of Funds
Escritura de Compraventa - Property Purchase Deed
Escritura de Hipoteca - Mortgage Deed
Euribor - The European Inter Bank Offered Rate
Gastos - Costs
IVA - VAT
Impuestos - Taxes
Loan to Value (LTV)% - This is the percentage of the loan compared with the value of the property.
NIE number - A registration document to enable a person to purchase anything in Spain i.e. a house, car, obtain finance
Notario - Notary
Nota Simple - Land Registry report
Offerta Vinculante - Binding Offer
Registro de la Propiedad - Land Registry
Tasacion - Valuation