Legal & Property purchase procedure - Marbella & Costa del Sol, Spain
Property purchase procedure
Once you have decided to buy the house of your dreams, we will do an offer on your behalf. We will negotiate for you to obtain the lowest possible price under the best conditions. Because we are not emotionally tied to the house it is easier for us to do it for you, the vendor will not be able to see how eager and for how much you want to buy the house.
We represent your interests and will think of all additional aspects and conditions of the sale and put them on paper. We will read any small print if a new construction project and tell them, where necessary, to adapt the agreement to your advantage to seek and obtain the most favorable terms and conditions for you.
The moment you agree with the price and conditions, a reservation contract will be made up and you will have to pay a certain amount. The amount of the payment depends on the amount of the purchase price, which usually will be at least a few thousand euros. After this the property will be taken off the market and remain reserved for you until the deal is completed.
As a real estate agent we will already check the owner and the property by looking into the land registry office (nota simple) and / or by studying all documents and permits the developer has submitted to us.
It is important to prepare the reservation contract as quickly as possible because this is the only way to ensure that the property is reserved for you.
A reservation contract also gives the solicitor the time to do the necessary research and check the contracts and permits, which will be reported in a due-diligence. In Spain, a lawyer performs the work of what a notary in most Northern European countries does, further on he/she will protect your interest and rights. In order to buy property in Spain you must have an NIE number, an identification number for which the lawyer will submit your request to get one. In total his fee will usually be 1% of the purchase price and it is included in the total purchase costs. It is not mandatory, but we always recommend it.
We have spent years searching for a good lawyer, who is purely engaged in the legal profession (many lawyers have indeed interests in real estate, and if so that could work against either of us). Moreover, he is very meticulous, negotiates very well, thinks along with you for legal and fiscal aspects, and he is very focused on a good service.
Once everything is checked and approved by the lawyer of both parties a preliminary contract will be drawn up (contracto privado). Here, price, terms, conditions and day for the signature before Notary are recorded. This is not mandatory and could possibly also immediately proceed to the transfer. It is common that 10% of the purchase price minus the deposit will be paid in advance. For a sale off-plan one should usually pay in advance up to 30%, depending on the construction phase.
The lawyer made sure that everything is all right and the property is free of charges, encumbrances and tenants. A possible existing mortgage on the property can be taken over or cancelled at the notary in the presence of a banker (this gives a saving of mortgage tax). The notary checks the identity, the tittle deed (Escritura) and records it in the register (Registro de la propiedad), you will receive a duplicate (copia simple); the original is delivered to you after registration. From the moment of registration you are considered the legal owner. The notary does not do any research on the documents, this is one of the reasons why you need a lawyer.
On the transfer of real estate Spanish taxes are due. A small distinction is made between new or resale property. It concerns mainly the 10% V.A.T. plus 1,5% tax on new construction, and 8% to 10% transfer tax on resales. This is compounded by the lawyer's fees, notary fees and registration fees, as a rule, about 10%. An exception counts for arable land, here applies 21% VAT and 2% buying costs.
An example: If a NEW property:
Purchase Price: 1,000,000 € VAT 10%: 100,000 € Stamp Duty 1,5%: 15.000 € Registration fee: 900 € Notary fees: 1,500 € Electrical, water and telephone connections: 500 € Lawyer charges including VAT: 12.100 € Total cost including purchase costs: 1,130,000 €
Construction guarantee and bank guarantee
On new construction there is a mandatory guarantee valid for 10 years. On the equipment that is included in the purchase the manufacturer's warranty applies as well. Before the transfer we check with you the completion of everything involved, any defects must be repaired before agreeing on the transfer. After the transfer, you have a one year warranty for hidden defects. When new, your deposits are covered by a bank. There are many different things to keep an eye on and it is the work of your lawyer to check everything.
Obviously there are also annual taxes to meet such as the property or council tax (IBI), and municipal taxes. These are known in advance. Amounts can range from several hundred to several thousand euros per year. The lawyer or an administration office can manage that for you.
In a private urbanization (private residential area) one pays for maintenance of the roads and the infrastructure. Usually this can amount to several hundred euros per year, the advantage is that you can use the infrastructure, such as communal gardens, swimming pools and surveillance, and rest assured that you have a good service and added value to your property in place. The same goes for the community of owners of an apartment complex. These costs are usually between 150 and 350 euros per month. For new communities it will not be known until the association of owners is set up and it will always depend on the services that they offer to the residents.
Resident or non-residents
For residents of the EU there is freedom to live and to work. If you stay longer than 6 months per year in Spain you should in theory apply for a residence card at the municipality, you will be regarded as a Spanish resident.
Here we have sketched a general picture about buying a house in Spain, we always support our customers and help them even after their purchase. We work with the best professionals on legal and tax matters.