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Buying Process
This is the process for buying a property in Spain:
1. Reservation Deposit
Once you have found your ideal property, you reserve the property with a reservation deposit. This is usually between 3000€ - 6000€. You can either pay this by credit card, bank transfer, internet transfer or cash. Once you have paid the reservation deposit this guarantees that the property that you have chosen is taken off the market and is reserved for you at the agreed fixed price. At this stage you need to appoint a Lawyer who is fluent in Spanish, who can also speak your native language. Your Lawyer will explain the procedures involved with purchasing a property in Spain, as well as negotiating purchase terms with the vendor's Lawyer.
It is normal at this stage to give power of attorney to your appointed Lawyer to act on your behalf.
This will involve a visit to a public notary to sign over consent. At no time should power of attorney be given to the other party.
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2.1. Exchange of the Private Purchase Contract - Off Plan
This takes place 30 days after the reservation fee has been paid, during this time your assigned Lawyer will prepare all the necessary legal documentation. On exchange of the private purchase contract 30% of the property value is paid, the property is bank guaranteed through a developer’s insurance policy or directly underwritten by the lending bank. These checks are made by the Lawyer prior to the private purchase contract being signed. This will insure the safety of your funds at all times. This is based on the 30%-70% payment plan, which is the most common but again in certain cases, payment plans may vary.
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2.2. Exchange of the Private Purchase Contract - Re-Sale
After the initial reservation deposit has been paid, you have up to thirty days to exchange private purchase contract. This basically means that you will pay the remainder of the deposit required; this is usually a sum between 10% and 30% of the purchase price. This can be undertaken by your Lawyer, who can exchange contracts on your behalf, if you are unable to attend.
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3. Completion
On the assigned day of completion, the buyer and vendor (or their authorized representatives) will be present at the office of the notary to sign the Escritura de Compraventa (the title deed). The notary does not check any terms, but certifies that both parties have agreed to the terms stated, (the notary is in place to only witness both parties' signatures). At this stage the property becomes your possession, and your Lawyer is now required to fax details of the title deed to the local land registry confirming you as the new owner. Your Lawyer will also arrange payment of taxes and fees. It is advisable to make sure your property and contents are fully insured at this stage. Your Lawyer can undertake this for you.
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4. Costs Incurred
There are three fees that are required to be paid; the Lawyer's fee, the notary fee and the property registry fees. You will always have to calculate approx. 10% on the top of the sales price to cover all your costs. Please note that this is only a brief guide on the steps taken when buying a Property in Spain. Of course, we understand you might have many more questions, so please do not hesitate to contact us.
When buying property in Spain, first and foremost, it is essential to secure professional legal and financial advice before you invest in a property in Spain. Spanish property law is complicated and there have been some cases of unwary investors being misled by unscrupulous sellers. No matter how tempting the offer might be, never sign anything without the express agreement of a qualified, Spanish-speaking Lawyer.
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