Buying property in Spain
Before buying a resale in Spain and making an offer, it is advisable that buyers understand the the legal process. How this fits with any requirement to raise funds. Also any legal differences between Spain and their country of residency.
Making an offer
The first stage when selecting a property is to request a copy of the Nota Simple. The Nota Simple is a simplified version of the property deeds. It outlines the legal owner and also exactly what is registered at land registry. The Nota Simple defines the Classification of Land, Also square meters registered and how these are distributed. In addition any Spanish Mortgage or embargos registered against the property.
In addition it is a good idea to request the last paid yearly IBI (yearly property tax), and level of community charges where applicable.
It is recommended at this point you appoint an independent legal representative to work on your behalf.
Signing a reservation contract
After the initial checks are undertaken it is normal in Spain for the seller to request you sign a reservation contract, and pay a reservation fee. This is to remove property from active marketing. The reservation fee should be refundable for a specified period in time. To allow for all legal checks to be undertaken. In addition provides the buyer with a cooling off period.
It is highly advisable, if you require a Mortgage in Spain, that you obtain an upfront financial approval. Normally before making an offer. By organizing an underwritten financial approval, only valuation of a specific property is required for a formal offer of lending. By obtaining an upfront approval you can undertake the valuation during the time between reservation and signing of purchase contract. Therefore before you commit to any non refundable deposit monies.
How to pre arrange a Spanish Mortgage approval
An independent broker in Spain can help you obtain a mortgage offer. The offer will outline all your terms and conditions of the Spanish Mortgage. The Maximum loan to value, as well as the maximum capital that can be borrowed. It is not necessary to have a particular property in mind to get an approval in place. At IMS we make no charge for making an application. You can therefore obtain safety and security with no upfront cost or obligation.
Signing the Private Purchase Contract
Once all the legal checks have been undertaken. In addition to finances, where required sorted, it is safe to move to signing a private purchase contract. This is called the ARRAS.
It is normal at this point for a 10% deposit to be passed to the seller. Once the ARRAS is signed the buyer will become legally liable to complete within the stated timescales. Failure to meet the stated completion date may put at risk the deposit paid, or incur late payment penalties.
It is advisable before signing the purchase contract that the following steps have been undertaken.
- A mortgage where required is offered and legally binding
- All legal searches have been undertaken.
- All existing debts or infractions have been cleared. Including all utilities paid and up to date
- That it is clear the full asking price will be recorded at completion. Therefore the buyer is not going to be expected to take participate in tax fraud, by way of paying black money ( cash) at completion.
Completion at Notary
Completion is undertaken in the offices of Notaria Public. All parties connected to the completion are required to attend. Including any bank personnel for redemption of an existing loan. The bank providing a new mortgage. Also the seller or their representative must attend. In addition the buyer or a buyer’s representative, with a full Power of Attorney must be present.
If a Spanish Mortgage is being contracted the legal representative must hold relevant Power of Attorney covering everything related to the Mortgage in Spain. A Mortgage broker in Spain can check the Power of attorney before signing, to make sure all powers the Spanish Bank will need are included. Before the day of signing the buyer or their representative must visit the Notary. This is to allow the Notoria to check that all elements of the mortgage deed are fully understood.
Attending completion
In the event the buyer wishes to sign in person, the Notary will insist they either are fluent in Spanish, or have an attendant with them who is.
Before completion the buyer will need to understand and ensure they have accounted for all costs. Have sufficient provision of funds required for costs and taxes, and all relevant cheques or bankers drafts.
When signing at the Notary patience can be required. It is not unusual for there to be delays. Nor unknown for one of the parties required to attend to not turn up. in this instance the signing cannot take place and must delayed. Never assume it will happen on the day booked. Leave sufficient time in Spain to allow for delays.
Prior to signing The Notary will check all paperwork. It is not unusual for them to raise issues, and or require clarification on certain points. This may cause the signing to be suspended.
The buyer or their power of attorney will be required to have a certified passport or original passport and original NIE certificates available. The Notary will also require to see evidence of the full monies required for completion, and be able to verify their source.
Post signing
After signing a copy of the deeds are given to the buyer or their representative by the Notary. The originals are sent to land registry to be registered . The registration process can take up to three months. After registration the original deeds and all invoices relating to the transaction become available.
If a non resident Spanish Mortgage is taken then the Bank takes responsibility for ensuring the deeds are registered. If no mortgage is involved the buyers Lawyer needs to check that registration has taken place. Either way the new owner should obtain the originals of all documents and invoices, once registration has taken place.
For any future sale the originals will be required. In addition evidence of all costs related to the purchase need to be kept safe. This is to avoid paying unnecessary capital gains tax in the event of selling the property. Due to lack of evidence of these co