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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:
- A
photocopy of your income tax returns
- Three
months salary slip, ( UK P-60)
- A
bank reference
- A
breakdown of asset and liabilities
- Last
three months bank statements
- 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 sales person may at this stage feel
it of benefit to bring in 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. If you
are buying with a mortgage you will need to add another 2 to 3% to the
costs.
The
fees are as follows:
1) 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 18%.
2) Notary fees: the scale is fixed by law and may range from € 300 for
lower price properties to € 841,40 for higher priced properties.
3) 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 18% plus Stamp Duty at 1%. The IVA rate of
18% is applicable when purchasing parcels of land, commercial premises, or
garage spaces.
Plus Valia: normally payable by the vendor but it may be stipulated that
the buyers pays. This may range from a few thousand euros to as much as
tens of thousands on larger properties with a lot of land. Who pays this
will be discussed in the negotiations and in consultation with your Lawyer.
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