Buying A Home In Spain Top Advice From La Heredia Estates Recommended Lawyer
Buying a Property in Spain
STEPS IN THE CONVEYANCING PROCESS WHEN BUYING A PROPERTY (RESALE)
Your solicitor will guide you through the process. His initial step would be to contact the vendor’s solicitor in order to organize and clarify all the aspects and conditions of the purchase. At the same time your solicitor will contact your mortgage lender if you decide to take and the estate agent for the same purpose.
STARTING THE LEGAL PROCESS:
Once your lawyer has contacted all parties he/she will be able to start the legal process which is to prepare and sign a RESERVATION CONTRACT in order to reserve the property and take it off the market.
Once signed the property is taken off the market and is reserved in your names.
Frequent query: Could the vendor pull out? Yes, but he will have to pay the purchaser back the total amount paid plus another equal amount as indemnity.
For this reason many purchaser’s prefer to sign immediately after the PRIVATE PURCHASE CONTRACT (Contrato Privado de Compraventa) as a formal private contract could obligate vendor and purchaser to complete, not allowing any party to pull out.
Upon signing of the private purchase contract a 10% of the purchase price is paid.
A formal contract should include the following: - Full description of the two parties. - Full description of the property. Inscription number in the land registry. - Price of the property and stage payment details.
Your solicitor in Spain will check that all the details are correct within the contract.
An important issue would be to do the SEARCH ON THE PROPERTY. The search will consist in several actions:
1.- To ask for a Certificate from the Land Registry. The Land Registry will advise of the current ownership and of any kind of debts and charges affecting the porperty.
2.- To check in the Town Hall that the property has the correspondent building licence and first occupancy licence.
3.- To check that the vendor has paid the Council tax, electricity & water, and community of owners Your solicitor in Spain will then send a report to you detailing the results of the searches.
OTHER ISSUES BEFORE COMPLETION:
Once the private contract has been signed your lawyer will have to organize all the paperwork and documentation in order to sign the title deeds.
1.- POWER OF ATTORNEY. It will be needed If the purchaser can not come to sign title deeds at completion or can not come to apply for the NIE number. (see text bellow) Power of attorney will enable your lawyer to complete on your behalf without your being present.
2.- NIE NUMBER. It is a Fiscal Identification Number for non residents and it will be required before you can make any transaction in Spain, such as purchasing a property, a car, pay taxes etc.
NIE can be applied personally at the police station or your lawyer can apply for it using the power of attorney.
3.- SPANISH BANK ACCOUNT: You will need one in Spain as your lawyer will order direct debit for water, electricity, Community of owners and IBI tax (council tax).
4.- Finally, immediately before completion your lawyer will check that there are no outstanding debts affecting the property you are buying. I refer to the Council tax, electricity & water and community of owners. Vendor will have to provide copy of the latest receipts duly paid at completion.
TITLE DEEDS- This is the magical date you have been waiting for.
Please note that completion must take place on a working day (Monday to Friday), principally because money transfer cannot take place at the weekend.
On completion the balance of the price, ownership and keys of the property are exchanged. This takes place in the Public Notary’s office.
A new Certificate from the Land Registry is requested that day to secure that no charges have appeared since the initial search was done.
INSCRIPTION OF OWNERSHIP IN THE LAND REGISTRY.- After signing the title deeds your lawyer will pay the Notary fee and the transfer tax and finally register it at the local Land Registry.
The Land Registry maintains all the details of the property and records financial charges and other matters that may affect the title.
Registering the deed provides the highest public level of protection.
TAXES
As explained before, after the Notary fee is paid, your lawyer will take the said deed to the local tax authorities in order to pay the TRANSFER TAX.
As a resume:
If you are buying a resale, the Transfer tax would be a 7% of the declared purchase price.
If you are buying an off plan (from a developer) you will pay 7% VAT at completion and1% Stamp Duty after completion to the local tax authorities.
Final steps after completion.
In order to complete the file, you lawyer will order direct debit of water, electricity, community of owners and Council tax / rubbish collection into your account in Spain.
OTHER ANNUAL TAXES
COUNCIL TAX and RUBBISH COLLECTION. This tax is annually paid to the Town Hall.
You should receive a letter in your post confirming the amount and timescale to pay it. We suggest to order direct debit as the Town Hall charges interests if you delay paying it.
INCOME TAX:
It is a tax charged by the Spanish Tax Office for all owners of properties in Spain.
Your solicitor will advise you yearly of the exact amount to pay.
The information herein was kindly supplied by our recommended Lawyer
YOLANDA REQUE – LAWYERS
Tel: 0034 669447532 / Fax: 0034 951968845Avenida Ricardo Soriano nº 5. Edificio Esplendido 3º-Izq. 29600 - Marbella.e-mail: yolanda@reque-lawyers.com
