BUYER'S GUIDE
PURCHASING PROCEDURE
This document is a simple guideline to purchasing property in Spain. This
guideline in no way attempt to cover all the legal and financial points,
we recommend the potential buyer to seek legal advise, if you do not know
of a lawyer we would advise you to ask your agent to recommend one.
- Choose the property you wish to purchase.
- Once the property is chosen, the verbal negotiation starts. Your
Agent will pass your offer to the Vendor, and you will need to sit
back and wait.
- Once the negotiation is over and a purchase price has been agreed
upon between the Vendor and the Buyer, a Private Contract is drawn
up between the Vendor and Buyer where a Reservation Deposit is put
down, usually a 10% of the agreed purchase price, to take the property
off the market ensuring this property will not be sold to another
purchaser. The Private Contract (Contrato de Arras) contains details
of the agreed purchase price, the deposit that has been put down,
the balance that still is outstanding, and the date the final contract
(Escritura Publica - Title Deed) will be signed on, usually a maximum
of 30 days is given for finalisation of this, and other important
details are also included. This is a binding agreement between the
Vendor and the Buyer where either can rescind the contract, however
the Buyer then loosing his deposit and in case of the Vendor rescinding,
having to return double the reservation put down to the Buyer.
- Your Agent or Lawyer will obtain a Nota Simple (which identifies
the registered owner's details or any embargos and outstanding mortgages
on the property as well as any necessary documentation.
- Your Lawyer meanwhile is tying up all the documentation and any
loose ends, checking that the Vendor's documentation is in order and
ensures that the property is sold free of tenants, charges and mortgages
(Annual Real Estate Tax (IBI), the community fee, charges for rubbish,
water and electricity charges).
- The next step would be the meeting of the Buyer and the Vendor
at the office of the local notary where the signing of the Escritura
de Compraventa (Title Deed) will take place. At this stage everything
has already been checked and will not be re-checked by the notary,
the notary will only ensure compliance with Spanish law, the signing
by both parties to confirm that they agree on the contents will then
take place. The balance of payments will take place and ownership
and the keys of the property are passed to the Buyer.
FEES & TAXES
No matter where in the world you are buying property there are fees involved,
the total expenses incurred in the purchasing should not be over the 10%
of the purchase price.
- Legal fees: are normally around 1% of the purchase price, plus
16% IVA (VAT).
- Notary fees: these are fixed by law and vary depending on the declared
value of the property; they range from 50,000pts to 150,000pts on
average
- Registry fees: are around 45% of the notary fees.
- Transfer tax: when buying a re-sale property the transfer tax is
6% of the purchasing price, however when buying from a promoter or
developer then the price to pay would be of 7% of the purchasing price,
plus Stamped Duty at 0,5%.
- Plusvalia (Capital Gains Tax); is taxed paid to the local municipal
(town hall) and is based on the official assessment of the increase
in value of the land from the last time it changed ownership. This
figure can vary drastically and can be confirmed at the town hall.
All the above mentioned taxes and fees, with the exception
of the Plusvalia taxes (Capital Gains Tax), are paid by the buyer, however
are subject to agreement, stipulated in the contracts.
The vendor is responsible for any Plusvalia Tax (Capital Gain tax) and
for the payment of the agent's fee.
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