Your Lawyer

Your Lawyer needs to check your intended property thoroughly. The process is not dissimilar from that in the UK and a check of legal title will be made through a search in the local Land Registry Office. This will indicate if there are any mortgages or charges against the property. If you are buying a plot of land, the lawyer will also check that you can obtain permission to build on the land and what size and type of property you can build; there are zoning controls on this island and an old documents presented pertaining to be planning permission may well have changed in the interim period.

The Purchase Contract

Once you have been assured by your Lawyer that all is in order, you will need to sign a Contract of Purchase raised by a Lawyer, and pay a deposit which is usually 10% of the intended purchase price. The deposit is held by the Lawyer to arrange the signing of the Title Deed. The contract will state the terms and conditions of the sale and will state a specific time for completion of the transaction which is when you must produce the balance of the price. If for any reason you decide, up to this completion time that you cannot proceed with the purchase, you will forfeit the deposit paid, but, if the seller changes their mind, they must return the deposit to you in full, plus a compensation payment for damages. Obviously, if a Lawyer is holding these funds, these issues can be handled more easily.

Notary

The next step is to complete the transaction by making the outstanding balance of payment and sign the Title Deed, which is known in Spain as the Escritura; this must be done in the Notary’s Office. The Notary’s task is to ensure that all of the legal documentation is correct, they will also carry out a search in the Land Registry Office on the day of signing to check the current status of the property or land. They will require the last annual rates receipt from the council in which the property is situated. It is essential to ensure that your Lawyer has current receipts for all other payments such as water, electric and community charges, since debts such as these are levied against the property and not the owner. When in the Notary’s Office, you will be asked to produce your passport as evidence of identification.

Paying

If you are not a resident in Spain and are buying property or land it is advisable to transfer your money from abroad to complete the purchase. It is simple to open a non-resident account in a local Bank. You can then transfer your funds from the UK, to this new account. On the signing of the new Title Deed your payment will be shown to the Notary and included as part of the documentation of the deed. They must be inscripted with details of the property of land to be purchased, or have an investment certificate from the issuing bank attached. The Notary will also require you to sign a Spanish Ministry form, declaring that the investment has been made.

The Estate Agents fees are normally paid by the vendor and the details of the specific percentage to be paid will normally be noted in the Purchase Contract. Beware! Some unscrupulous agents have been known to charge the purchaser as well as the vendor for their fees. You may well also find that the price in your title deed is not exactly the same as the cost of the purchase, as some sellers prefer to treat the furnishings and fittings, if they are included, as a separate item.

Registering the Purchase

Signing the Escritura in the Notary office does not yet mean that you officially own the property. For the transaction to be complete you must register the Deeds in the Registro de la Propiedad (Property Registry). When the Deeds are taken to the Registro, the purchase tax of 6.5% of the value of the property must be paid. Later the Registro will write to whoever presented the documents and ask for a second payment to cover their charges. In addition, a tax to the Local Authority, based on the increase of values of land in their area since the property last changed hands (known as ‘Plus Valia’) is payable. This is subject to negotiation between the vendor and purchaser. Your Lawyer can provide an estimate in advance of the purchase, so that you have the funds ready. At the same time, a form should be entered to the local authority, advising them of the change of ownership. You should remind whoever is doing your paperwork about this, as it is often forgotten.

Additional costs

Other bills which will have to be paid include the Transmission Tax, the Plus Valia, the Notary’s bill, the fees from the Registro and the bill from your Lawyer, will probably come to about 10-11% of the purchase price. It cannot be stressed enough, though, that you should deal in these matters with a professional person who is well established.

The Community Association

Spain has firm laws on how a Community Association is to be run, and the Instituto de Propietarios Extranjeros publishes a very good booklet explaining this law. Information about your Association has to be freely available to you, as do the accounts which have to be published to the members every year. Belonging to a Community Association brings many advantages to the owner who does not intend to live in the property year round since you can be sure that someone will be keeping an eye on things when you are away. Should you be buying a property on an ‘Urbanisation’, you will find that there is a Community Association, of which you must become a member. Each property owner on the site owns a percentage of the communal areas, and is responsible for making a payment to the Association for their upkeep. You should check before you buy that your Community Association is functioning well, how much the monthly payment is, and whether the payments for your intended property are up to date. If these payments are not made the Association can eventually seize your property, so be careful.

Outstanding Bills

When you buy a property you become liable for any outstanding bills for water, electricity, local rates and community fees. Both the Electricity Board (UNELCO) and the Water Company (CAAF) have forms which you and the seller must sign, to transfer the bills into your name. When you go to do this you should check that all payments are up-to-date. Local rates are payable at the Town Hall. You or your representative needs to visit the ‘Oficina de Recaudacion ‘ at the Town Hall to give them the form changing the rates into your name, and again, checking that all payments are up to date. As bills are not sent out for the rates, property owners often forget to pay them, and they can soon mount up.