Tips to Buying a Property in Spain
Buying property in a foreign country with a different legal system and a foreign language to deal with makes it that much more complicated. Here are a few tips to help you navigate the process with ease in Spain.
Buying Properties in Spain | LuxuryForSale.Properties, Luxury Real Estate For Sale & Rent.
Make sure you know exactly how much you can spend. This will help you focus on properties you can buy, which can help you save time and money. Consider the costs when buying a property.
Determine your payment method:
This will also affect your total budget and there are various ways to pay for your new home:
o One-off payment – Paying the total price of the property in one lump sum to the seller.
o Mortgage – Getting a mortgage, either from a Spanish bank or from your bank back home, using the property as a guarantee is the most common way of paying for the purchase of a property.
o Mortgage subrogation – Changing the name of the debtor on an existing mortgage on the property to your name is another option.
Choose a Property:
Once you’ve decided where to buy and how much to spend, your search will be so much more focused. This will make it easier for you to determine which type of seller you should be going for – a private seller for a resale, a developer for a brand new property, a bank for repossessions. Always with the help of a good, experienced Real Estate agent that will help guide you with local knowledge.
I always suggest making a list of what is important to you first. Then prioritize the items on that list. Once you have your priorities laid out, it is easier to determine where to look and what to get, in line with your allocated budget.
Pay attention when viewing a property:
Remember to keep a critical eye on things. Pay attention to detail. How old is the wiring? Are there any humidity issues? Security at night? Has a good orientation? What about the neighbourhood? Is it a children-friendly environment? A pet-friendly environment? etc.
Choose a good lawyer:
it is important to select the best attorney possible. Retain an Honest, experienced Lawyer. LuxuryForSale.Properties work with an established network of lawyers and Notaries throughout Spain for dealing with our clients’ Spanish Real Estate. We also have facilities in place with Consular offices and Notaries in many other countries, so that whenever possible, our clients can sign documentation without having to be in Spain in person. So, wherever you are situated, we can accept instructions from you in respect of your Spanish assets, wherever your Spanish assets are situated. Providing a variety of legal services, carried out by qualified and certified lawyers, that includes:
• Free preliminary legal consultations.
• Company registration.
• Preparation of the documentation necessary for the purchase or sale of a property in Spain.
• Verification the ownership of the property.
• Checking for encumbrances.
• Tax advice.
• Drawing up agreements and preparing notary deeds.
• Checking all documents related to the deal including those drawn up by third persons (for example the documents for presenting the deal before a notary public), so that we are sure your interests are protected
• Representation for purchase or sale of a property if and when necessary.
• many other legal services upon request.
LuxuryForSale.Properties only work with the best, more trusted lawyers in Marbella.
– N.I.E. Number
The N.I.E number (Número de Identificación de Extranjero) is the Identification Number for Foreigners. It is imperative that all foreigners who purchase a property in Spain have one as this is needed in all fiscal and legal matters. You can obtain a N.I.E. number from the Police Station or if you prefer you can obtain a legalised photocopy of your passport and sign a Power of Attorney so that your solicitor can act on your behalf and obtain one for you. You will need to have your N.I.E. number before completing the purchase of your property. In fact the N.I.E. number is also required for buying a vehicle, employment, inheritance of assets in Spain, insuring property, paying taxes and even for signing onto the national social security health scheme.
– Opening a Bank Account in Spain
Owners of properties in Spain need a bank account in a Spanish Bank in their name for the purpose of meeting ongoing costs, utilities (such as electricity and water), mortgages, local taxes and duties. The Bank or Savings Bank will draw up a contract to open the account and ancillary documentation, and will require from the client the necessary information to complete that documentation (passport). On the “Costa del Sol”, most of the Bank offices have at their customers’ disposal English versions of the above mentioned documentation, as well as employees fluent in various languages.
Loan mortgages are most useful for financing the purchase of your Spanish property. For a non-resident buyer, a mortgage is usually limited to around 70% of the valuation of the property. Our advice is to go for a variable- rate mortgage, The lender’s rate will be a margin over Euribor, generally Euribor +1.25 %, but certain lenders may fluctuate on this. Fixed rate mortgages are available at slightly higher interest rates. Note that re-mortgages are not common practice in Spain.
Make an offer:
- The lawyer should visit the Property Registry to find out all the details of the property and adjust your offer accordingly. Especially, should check if there are any debts or encumbrances attached to the property. Remember in Spain, if these aren’t eliminated before doing the transfer of ownership, you risk ending up with the seller’s outstanding debts.
- Make sure you’ve got your mortgage in place and ready to go.
- Make a second Visit to the property, before making an offer.
Make a deposit and sign a Reservation Agreement – Contrato de Arras:
This is the first contract that is normally signed when you make a deposit for the house – common practice is 10% of the sales price. It confirms the amount you have paid as a deposit, along with pre-agreed terms and conditions. It also means the seller takes the property off the market and cannot sell it for a timeframe stipulated in the reservation agreement – Usually, 4 to 6 weeks.
Private Purchase Contract.
According to Spanish law, the Private Purchase Contract is used to reflect the agreement reached between two parties in the transaction of the sale of a property, for both new build and resale property. In order for the Private Purchase contract to be valid and of use to both parties it must include a series of compulsory requirements. Apart from these requirements, both parties can freely agree all the terms they consider should be reflected in the private purchase contract. However there are three different types of Private Contract: These are known as the Purchase Deposit Contract, the Option Contract, and the actual Private Purchase Contract. All three have the same requirements mentioned above, but each binds the parties legally in a different way to the agreement reached.
Sign the title deed:
The registered title deeds of the property are always signed at a Spanish Notary. This is the official document that certifies that the property has been sold and it includes the details of the buyer and the seller, description of the property that has been sold and its price. Once the title deeds are signed they must be registered at the Property Registry.
Tips: Before signing the property title deeds the Lawyer will make sure that the seller has no debts with the Town Hall with unpaid IBI (Property tax) and garbage fees as well as no debt with the neighbours’ community, mortgages and that the property has a valid habitation permit.
Transaction fees and taxes:
There are transaction fees and taxes which must be paid when buying and selling a property in Spain – ITP property Transfer and VAT tax, capital gains tax, notary fees, registration fees at the property register and mortgage fees (if applicable).
Transfer amenities to your name:
The energy companies and any other service provider should be notified that you are the new owner and will be paying the bills from now on. This requires a transfer of the name from the seller to you for all amenities related to the property.
– The Property Registry.
The Property Registry/ Registro de la Propiedad, is the authority where all properties and their title deeds are registered. This is an extremely important office for the purchaser of a property in Spain, because this is where you will be able to find all the information about the property with a true description of it detailing area and owner and more importantly if there are any charges, liens or mortgages against the property. You can check all of this with the nota simple who will supply a report provided by the Property Registry.