Overview of the real estate buying process in Spain
Denise Watson, Tuesday, 12 November 2013
This article is part of a series of 8 articles about buying property in Spain. The other articles in the series cover the following topics:
When buying a property in Spain, the first thing to cover on that ‘purchase flow chart’ will be to know how much capital you have available, either in your bank account or by way of a mortgage or loan. If you’re applying for credit in Spain, be aware that the process can be very slow and you don’t want to miss out on your dream home because the cogs of the mortgage lender weren’t turning quickly enough.
Legal Representation
At this stage, you now need a legal representative to support you during the buying process, so find a Spanish lawyer or a gestor (a qualified professional who helps the general public with all paperwork needs) as well as an interpreter who can help you. Thanks to the internet, a lot of spade work can be done in anticipation of arriving in Spain. Paying a lawyer or gestor and an interpreter to act on your behalf could save you being caught up in any pitfalls which you might otherwise fall into.
Nota Simple (a simplified view of the house deeds)
A form known as a nota simple, which must have a date within the last few weeks, gives you brief details of the house deeds and will tell you what land is registered with the property, as well as whether there are any restraints on the property e.g. unpaid debts such as utility bills or even an unpaid mortgage. This is a very important document since, in Spain, any unpaid debts would pass on to the new owner, if they had not been cleared beforehand. You must see this document before you sign a reservation-cum-deposit fee and it is the law in Spain that, when selling a house, either the estate agent or the seller must provide an up-to-date nota simple.
Checking for any Outstanding Debts
As well as the check that the nota simple has covered, make sure you check that there is no outstanding community tax payments or outstanding utility bills. It is advisable to get a copy of the last three or four community (IBI) tax receipts and an equal number of refuse (basura y alcantarillado) tax receipts, to confirm that these payments are up-to-date, as well as proof that utility bills are paid. For subsequent connection to the utilities, you will need the licence of first habitation of the property from the local town hall, which will allow for a smooth and up-to-date connection commencement date.
A Certificate for Energy Efficiency
From 1st. June, 2013, it is now obligatory that all homes for sale or for rental must provide an energy efficiency certificate and the seller should produce this as a condition of sale. Make sure that you do collect this information, as it is still a relatively new requirement in Spain. A Property Survey
While it is not obligatory for a survey to be carried out on a potential property, it is advisable that you do so, as points which might not relate to you in your own country might be of great significance when buying a property in Spain. If you are applying for a mortgage for your property, the survey check will be the bank’s responsibility, though it will not necessarily be as in-depth as you would like for yourself.
Contracts Relating to Purchasing a Property
If you want a property to be removed from the open market while you check it is the right place for you, this can be done by paying a deposit, which acts as a reservation fee. This will have been set somewhere between 5% and 15% of the purchase price by the seller and the estate agent before the property went up for sale. In some cases, this deposit, minus the estate agent’s fee of between 3% and 5% which will be retained by the estate agent, might be held by the seller. Your lawyer or gestor will be involved in this transaction and will arrange a sufficient amount of time for you to complete legal searches and financial arrangements. This period usually stretches ninety days, though completion can go through at the stage all information has been collected and all searches have been done.
Signing the Purchase Contract
Before signing the contract, there are certain points that you must make sure are in place. These include:
The signature for purchase takes place in front of the notary (notario/a), a qualified lawyer who works for the government, who is responsible for checking the correctness of all legal transactions. In the case of purchasing a property, the notary will check that the transaction is legal and meets Spanish and international laws, the nota simple confirms there are no restraints on the property, the right taxes have been calculated and that there is no money laundering involved. Once the purchase has been signed for, the new owners will be supplied with a copy of the deeds (copia simple) to the property. The actual deeds (escritura de compraventa) will be received once the property has been registered with the Spanish Land registry, which could take up to three months to complete. Land registry will check what yearly community taxes are due on the property and then you will be up and running.
Yearly Taxes
There are two taxes payable, namely, the local community tax (impuestos sobre bienes immuebles (IBI)) and the local refuse and drainage tax (basura y alcantarillado). The IBI, like a community tax, is payable once a year to the local town hall and a direct payment (domiciliación) can be set up at your Spanish bank to make this payment on your behalf. These taxes vary from region to region and are set between 0.4% and 3% at the moment.
The refuse tax is payable twice or maybe four times a year and could be up to two hundred and fifty euros a year. However, in the more rural areas, where water may come from the hills and drainage may be in the form of septic tanks, the total yearly fee could be as little as fifty euros. Again, these payments can be made via a direct payment from your bank.
Overall
Any process which is different to how you know it to be in your own country can appear frightening, so it is always sensible to make use of a legal representative and an interpreter when buying abroad. Without these professional services, any mistakes you make could have catastrophic results on your new future.
This article is part of a series of 8 articles about buying property in Spain. The other articles in the series cover the following topics:
When buying a property in Spain, the first thing to cover on that ‘purchase flow chart’ will be to know how much capital you have available, either in your bank account or by way of a mortgage or loan. If you’re applying for credit in Spain, be aware that the process can be very slow and you don’t want to miss out on your dream home because the cogs of the mortgage lender weren’t turning quickly enough.
Legal Representation
At this stage, you now need a legal representative to support you during the buying process, so find a Spanish lawyer or a gestor (a qualified professional who helps the general public with all paperwork needs) as well as an interpreter who can help you. Thanks to the internet, a lot of spade work can be done in anticipation of arriving in Spain. Paying a lawyer or gestor and an interpreter to act on your behalf could save you being caught up in any pitfalls which you might otherwise fall into.
Nota Simple (a simplified view of the house deeds)
A form known as a nota simple, which must have a date within the last few weeks, gives you brief details of the house deeds and will tell you what land is registered with the property, as well as whether there are any restraints on the property e.g. unpaid debts such as utility bills or even an unpaid mortgage. This is a very important document since, in Spain, any unpaid debts would pass on to the new owner, if they had not been cleared beforehand. You must see this document before you sign a reservation-cum-deposit fee and it is the law in Spain that, when selling a house, either the estate agent or the seller must provide an up-to-date nota simple.
Checking for any Outstanding Debts
As well as the check that the nota simple has covered, make sure you check that there is no outstanding community tax payments or outstanding utility bills. It is advisable to get a copy of the last three or four community (IBI) tax receipts and an equal number of refuse (basura y alcantarillado) tax receipts, to confirm that these payments are up-to-date, as well as proof that utility bills are paid. For subsequent connection to the utilities, you will need the licence of first habitation of the property from the local town hall, which will allow for a smooth and up-to-date connection commencement date.
A Certificate for Energy Efficiency
From 1st. June, 2013, it is now obligatory that all homes for sale or for rental must provide an energy efficiency certificate and the seller should produce this as a condition of sale. Make sure that you do collect this information, as it is still a relatively new requirement in Spain. A Property Survey
While it is not obligatory for a survey to be carried out on a potential property, it is advisable that you do so, as points which might not relate to you in your own country might be of great significance when buying a property in Spain. If you are applying for a mortgage for your property, the survey check will be the bank’s responsibility, though it will not necessarily be as in-depth as you would like for yourself.
Contracts Relating to Purchasing a Property
If you want a property to be removed from the open market while you check it is the right place for you, this can be done by paying a deposit, which acts as a reservation fee. This will have been set somewhere between 5% and 15% of the purchase price by the seller and the estate agent before the property went up for sale. In some cases, this deposit, minus the estate agent’s fee of between 3% and 5% which will be retained by the estate agent, might be held by the seller. Your lawyer or gestor will be involved in this transaction and will arrange a sufficient amount of time for you to complete legal searches and financial arrangements. This period usually stretches ninety days, though completion can go through at the stage all information has been collected and all searches have been done.
Signing the Purchase Contract
Before signing the contract, there are certain points that you must make sure are in place. These include:
- Does the contract contain all of the names of the purchasers? If it doesn’t, trying to rectify this later will not be easy and will incur costs.
- Have all legal searches been carried out as to outstanding debts?
- Do not get involved in a black money transaction, where part of the outstanding money is passed to the seller outside the actual transaction. If this happens, it lessens the tax the seller has to pay on the profit earned from selling the property but will affect you upon selling, as the lower price paid will indeed make your profit at the next sales stage appear higher.
The signature for purchase takes place in front of the notary (notario/a), a qualified lawyer who works for the government, who is responsible for checking the correctness of all legal transactions. In the case of purchasing a property, the notary will check that the transaction is legal and meets Spanish and international laws, the nota simple confirms there are no restraints on the property, the right taxes have been calculated and that there is no money laundering involved. Once the purchase has been signed for, the new owners will be supplied with a copy of the deeds (copia simple) to the property. The actual deeds (escritura de compraventa) will be received once the property has been registered with the Spanish Land registry, which could take up to three months to complete. Land registry will check what yearly community taxes are due on the property and then you will be up and running.
Yearly Taxes
There are two taxes payable, namely, the local community tax (impuestos sobre bienes immuebles (IBI)) and the local refuse and drainage tax (basura y alcantarillado). The IBI, like a community tax, is payable once a year to the local town hall and a direct payment (domiciliación) can be set up at your Spanish bank to make this payment on your behalf. These taxes vary from region to region and are set between 0.4% and 3% at the moment.
The refuse tax is payable twice or maybe four times a year and could be up to two hundred and fifty euros a year. However, in the more rural areas, where water may come from the hills and drainage may be in the form of septic tanks, the total yearly fee could be as little as fifty euros. Again, these payments can be made via a direct payment from your bank.
Overall
Any process which is different to how you know it to be in your own country can appear frightening, so it is always sensible to make use of a legal representative and an interpreter when buying abroad. Without these professional services, any mistakes you make could have catastrophic results on your new future.
Spanish property for sale. Appartements, villas and houses for sale on the Costa del Sol, Costa Brava and Costa Blanca. For sale by owner and by agent.
Imagine you have found your dream house in Spain and you need finance to realise your dream. For sure questions, may arise about taking out a mortgage
in Spain, probably because you do not manage the language this could seem a complicated task.