Prior to viewing
Prior to arriving in Spain, you should make sure that you have at your
disposal sufficient funds to cover the reservation sum. The absolute minimum
required is normally € 3.000,- to € 6.000,-, but may be greater
for high priced properties. The reservation sum may be paid with a credit
card or cash. A cheque if drawn on a foreign bank may take up to ten days
to clear by a Spanish bank.
If you do not have the means to lodge a reservation sum immediately, you may risk losing the property to another party who does have the reservation sum to lay down. There are virtually no exchange controls in Spain, which means that whether resident or not, you are free to obtain a loan or mortgage against your property in any currency and from any bank in the world. Spanish banks are quite willing to lend to non-residents purchasers of Real Estate.
You will need:
1. A photocopy of your income tax returns
2. Three months salary slips
3. A bank reference
4. A breakdown of asset and liabilities
5. Last three months bank statements
6. If self employed, statements of accounts
Negotiating the purchase
Once a suitable property has been chosen, the purchase terms and price
will need to be negotiated with the seller. You may wish to make your
offer subject to mortgage or Lawyer approval, or vary final completion
dates, or the method of payment. The salesman who was good at finding
the property may not be as good at negotiating the terms of sale with
the owner. Ask to speak with the senior sales person or sales manager
in the company and discuss with him the formation of a team to negotiate
and carry through the terms of your purchase. The sales person may at
this stage feel it of benefit to bring into the team a recommended lawyer
to assist in the negotiation making sure that any offer meets his legal
criteria.
Choosing a Lawyer
There are many excellent local Lawyers in Spain who may be fluent in your
language. A Lawyer will provide the legal guarantees for the purchase
of the property ensuring that Spanish legal requirements are met and that
the property is bought free of encumbrances, charges, liens or debt and
up to date in all its payments of local contributions and community charges
etc. The lawyer may also assist the sales team in difficult and complex
negotiations with the owner. Using a Lawyer from your home country will
increase substantially your legal costs and most certainly will delay
the sales process.
Formalizing the offer
Once there is a verbal accord between parties, the next step will be to
formalize those offer terms of purchase in writing. Funds should be lodged
in a local bank account or with your Lawyer in order to show the seller
that there is a real intention to purchase. It is normal practice in Spain
to include with the offer a sum of money to reserve the property until
exchange of private contracts.
Exchange of private contracts
Upon acceptance of the offer by the owner the next step in the sales process
is to exchange private contracts of sale or to sign an option to purchase.
This may take place within two weeks following formal acceptance of the
offer or sooner. Your Lawyer will have completed his searches and investigations
of the property and will have arranged with the owner the procedure for
the cancellation of any outstanding debts. The private contract of sale
or option will reflect all the agreed terms of the offer and sale and
set out the date for final completion at the Notary. It is customary practice
at this stage to pay ten percent of the purchase price which normally
is non-refundable should the purchaser not complete.
Final completion at the notary
A sale is formally completed in Spain, when the public title deeds of
purchase are signed before a notary, the final payment made, and possession
given to the buyer.
Registration
Once signed, the notary will fax a note of the title deed to local land
registry. Your Lawyer will also pay on your behalf all the relevant transfer
taxes associated with the purchase and will handle the formalities of
registration of your title deeds. Final registration of the deed may take
up to two months. Similarly, your Lawyer will arrange for the transfer
of accounts with the local suppliers of utility services such as water
and electricity and organize their payment through a local bank.
Costs involved in purchasing a property
There are in principal three fees and two taxes to pay when purchasing
property in Spain. As a rule of thumb, you should budget the combined
total of these amounts will be around 10% of the purchase price.
The fees are as follows:
Legal fees: Minimum of € 600,- or 1% of the purchase value whichever
is the greater, plus value-added tax (I.V.A) currently charged at 16%.
Notary fees: the scale is fixed by law and may range from € 300,-
for lower price properties to € 841,40 for higher priced properties.
Property Registry: as a rule of thumb, 60% of what the notary charges.
The taxes
Transfer tax (ITP) at 6% or, when buying from a promoter, developer or
habitual trades, IVA at 7% or 16% plus Stamp Duty at 1%. The IVA rate
of 16% is applicable when purchasing parcels of land, commercial premises,
or garage spaces.
Plus Valía: normally payable by the vendor but it may be stipulated that the buyers pays. This may range from a few thousands pesetas to as much as several million pesetas on larger properties with a lot of land. Who pays this will be discussed in the negotiations and in consultation with your Lawyer.
