Buying real estate property in Spain is not dissimilar from buying in other European countries. In this article we will explain the basic steps in the process of purchasing a property.
First of all, a buyer will need to obtain a fiscal ID number or NIE (“numero de identificacion de extranjeros”). In addition, it would be advisable that the buyer obtains the services of a local lawyer who has a good level of English.
• In the case of an off-plan purchase, a buyer will be asked to sign a reservation contract and pay a small amount of money, at which point the property will be taken off the market for a limited period (usually around 30 days).
This allows time for the necessary legal checks to be carried out and for a contract of sale to be drawn up. The buyer can then begin the first in a series of payments (known as stage payments, because they are made at agreed stages of construction). This first payment is normally 10% or more of the purchase price, and it is non-refundable.
• In case of re-sale, once your offer has been accepted, you pay a small deposit. Your lawyer then carries out the necessary legal investigations (ownership, liens and encumbrances of the property, previous mortgages, etc).
When these are complete, you sign a contract of sale, which states: the price and a description of the property, the deposit (usually 10%), payment method and the date of completion; for this stage you will need a notary service. Should you breach the contract, you forfeit your deposit. Should the seller breach it, they must twice the amount of the deposit to you.
The buyer must remember that if the seller insists on taking cash ‘under the table’, the buyer should walk away from the deal. This is illegal; in order to avoid this it is always better to put money in an escrow account, so that no one will have the access to the money until all the processes are done.
Costs involved. Those who have already decided to buy a property in Spain should allow between 10 and 14 % on top of the agreed purchase price for the various fees that must be paid. A buyer should be ready to pay:
• Legal fees (usually around 1-2% of the purchase price)
• IVA (Spain’s equivalent of VAT) 10% of the purchase price, if the property is a new residential property (first purchase), 8% if the property is not residential.
• ITP/AJD (stamp duty) of 10 %, though this will depend on local regulations
• Notary and property registration fees of about 1%
If the property is located within a complex, there will be maintenance charges. These will usually cover such costs as swimming pool, garden upkeep, etc.
This is a series of articles focusing on real estate deals in Spain. The legal team at Pinera del Olmo SLP is ready to provide assistance in all the procedures mentioned above. Our lawyers have a high level of experience and deal with these matters on a daily basis.