Buying a property in Spain
Buying a property abroad can be a daunting process so it’s worth familiarising yourself with the legal process and costs associated before you take commit to buying. It’s highly advisable to find a reputable local property lawyer who can assist you in all aspects of the sale.
Once a suitable property has been found and an offer accepted, the process of buying a Spanish property begins.
Firstly, you will be asked by the vendor to sign a reservation agreement which ensures that the property is taken off the market for an initial period of about 30 days. The second stage is the preparation of the main purchase contract. Your lawyer will perform searches on the property to ensure that the vendor fully owns the property being sold, that there are no mortgages or other charges outstanding and that all planning consents are valid and up to date. Once these searches are complete, the main contract (Contrato deArras) can be signed. Once the contract is signed, the buyer will need to pay a deposit of between 10% and 20% of the purchase price. Buyers and sellers must bear in mind that once the contract is signed, it is legally binding. If the buyer decides not to complete the sale, they will lose their deposit and if the seller withdraws for any reason, they will be required to pay the buyer double the deposit initially agreed when the contract was signed.
The final stage of the buying process is the signing of the title deeds (Escatura de Compraventa). This needs to be performed in front of the local public notary (Notario), usually at their offices. The final balance of the purchase price, including any taxes needs to be paid at this stage and then the Notario registers the Escatura with the Land Registry and the ownership of the property is passed to the new owner.
In terms of taxes and costs, as a general rule, buyers should budget between 10 and 15% of the agreed price to cover the costs of buying a Spanish property. This figure allows for transfer tax (up to 10% of the value), the Public Notary fee (typically 0.5%), the Land Registry fees (approximately 0.4%) and finally the legal fees which are generally around 1%. Buyers must also be aware that any fees due to the estate agent selling the property are borne by the vendor and not the buyer.
It’s also worth mentioning currency costs. If your local currency is not the Euro, the timing of your currency exchange can be crucial in ensuring you obtain the most beneficial rate of exchange. Many buyers opt to use specialist currency firms instead of traditional banks and can make significant savings as a result. In short, shop around!