FAQs

Spanserv.com Guide to buying a country property in Spain.

How do I find a country property in Spain?

Research the local areas to find out where you want to live.

You can start by looking on the internet on property portals and web sites such as www.kyero.com or www.thinkspain.com or www.spanserv.com
There are numerous real estate Exhibitions such as place in the sun.
Visit Local Real estate agents in the towns that you are researching.
Auctions- A possibility if you have cash and a good knowledge of the area.
Scan Local Papers such as the Sur in English and Euro weekly.
I like the look of a property. How do I view a property?

Contact the local agent and arrange a viewing. The agent is required by law to have all the property paperwork available to you in line with Decreto 218. (All Legal Information on the property must be made available to prospective purchasers) When asking to view the property ask the agent for this information.

At the viewing be prepared with all your questions at hand. (See our top tips to buying a country property in Spain) Walk the perimeters of the land, check the views for unsightly obstructions. Look out for cracks or damp patches in the main building.

Documents the agent may have available or can provide at a later date for your lawyer to check:

Copy of the escritura publica: The title deed to the property to check title ownership and a description of the property.

Copy of the Nota Simple Informativa: You can find out from this document if the property is free of debt, if it belongs to the seller, and if the description of the property matches what you have been told. (Dimensions of the build and size of the plot)

For an up to date document you can get this document from the property registry (Registro de la Propiedad)  at the local town hall. It is available to anybody for a cost of a few euros. You will need the tomo, finca, libro numbers taken from the title deed of the said property. You just fill out a little form with the numbers you have and pay and collect.

Basura receipts: copies of receipts for rubbish collection

The municipal tax is known as the Impuesto sobre Bienes Inmuebles, or IBI for short. Request a municipal tax certificate to demonstrate that there are no unpaid municipal taxes associated with the property which would become a problem for the buyer.

For resale property a check can also be made on the local capital gains tax (Plusvalía) that will become due when the property changes hands. In theory this tax is paid by the seller, however sometimes it is assumed by the buyer. It is important to know how much it is and who will pay it before committing.

Utility receipts: Electric and water bills to check that the bills are in the name of the seller. When buying resale property it may be prudent to ask the seller to demonstrate that all utility bills are up to date.

Community by-laws and fees
When buying property that is part of a community of owners (Comunidad de Propietarios) it is important to know what the by-laws governing the workings of the community are, and what the financial obligations are per period. A copy of the community by-laws can be obtained from the land registry. It may also be necessary, in the case of resale, to obtain confirmation from the president or secretary of the community that the previous owner is up to date with community bills.

Occupation Licence: To check the property is registered as habitable with services connected.

We may need a mortgage how do we apply for one?
Sometimes the property may have an existing mortgage that you can take over. This could save you time and money. But this needs to be investigated to check the rate and small print. All major banks in Spain are offering mortgages to residents and non-residents. It is normally possible to obtain 70-80% of the valuation. Subject to your financial status. Check out our guide to obtaining a mortgage in Spain.
We like the house how do we make an offer?

Once the terms of the purchase-sale have been discussed, it is submitted to the real estate agent who in turn will inform the other party of the details of the offer. If it is accepted, a binding agreement is created. It is normal practice in Spain to include with the purchase offer a sum of money to reserve the property prior to the exchange of private purchase contracts in order to show the seller that there is a genuine intention to purchase.

The amount given to the purchaser’s lawyer to be held in an escrow account at this time to take the property off the market, usually ranges between 3.000 euros and 6.000 euros. Several consumers’ protection acts are applicable in respect of what you have signed and will very much determine the legal position of the parties, regardless of whether you have waived the mandatory protection granted by Law. According to the Supreme Court of Spain, a reservation deposit document, deposit slip, offer and deposit receipt, must be construed as being either being a true purchase-sale agreement or a pledge to buy or sell. Typically this means that the pre-contract agreement (called contrato de arras) provides that if the buyer backs out of the contract, he loses the deposit; if the seller backs out, he has to pay double. Of course, the buyer and seller may choose to alter this by agreement.

The pre-contract agreement means both parties agree that, upon the completion of certain conditions either will be entitled to compel the other to sign a proper purchase or sale contract. Basically, it is an interim document to set out the lines on which the purchase sale contract will be eventually drawn. For example, in the case where the developer has not obtained the building license or is pending authorisation by regional authorities. Likewise, the buyer might be in the process of raising funds or realising funds. Once these events take place, the parties are bound to instruct their respective lawyers to prepare the necessary contract for signature.

After the reservation deposit has been lodged with the real estate agent or the purchaser’s lawyer and prior to the signing of the private purchase contract, the appointed lawyer will have completed the legal searches and investigations of the property.

Any debt or charge attached to the property will be stated in the private purchase contract. (in Spain mortgages, tax obligations, and other charges are ascribed to property rather than individuals). These will have to be settled by the vendor, prior to completion. If not, the buyer will be entitled to either withdraw from the proposed deal and claim damages or deduct the amount of the debt together with all redemption costs, if any.

The purchaser’s lawyer will have checked all of the documents previously mentioned and will of course have checked the property registry. The proof of ownership of the property, where the property can be tracked back to the first owner.

It may be prudent at this time to confirm with your lawyer and the vendor exactly what is included in the property sale.

Ask your lawyer to check the urban classification of the land. An official plan of the property is contained in the zoning plans (plan urbanistico) which can be obtained from the planning department (Departamento de Urbanismo) of the town hall.
The plan urbanistico also shows the development plans for the land around a property. When buying out of town property that is not part of a planned residential estate (urbanizacion) it is important to know what will be built around you in the coming years.

If you are buying off-plan your lawyer needs to investigate the legality of your urbanisation and you need assurance of a building permit and bank guarantee for the monies paid.

Developers that sell property under construction are legally required to have a bank guarantee or insurance policy that protects any payments you make to the developer before the property is completed. This ensures that you get your money back if for whatever reason the developer fails before completion. If there are any doubts about the developer it may be necessary to see proof that the appropriate insurance is in place. Note that developers are also required by law to hold an insurance policy which guarantees for 10 years eventual damages occurring due to defects affecting ground work, supports, beams, reinforcement bars, retaining walls, or other structural elements. Depending upon the circumstances some or all of the checks may be required, along with further checks in special cases. Your lawyer will advise you as to what is appropriate in your case.

Property Survey- There is always the option of having the property evaluated by a chartered surveyor if there are any doubts as to the condition of the property.

We have our funds available what happens now?

If the legal representation of both parties deem necessary, the exchange of private purchase contracts is supported by a payment of normally a 10% of the purchase price, to include any money already paid.
The contract sets out the agreed terms and conditions of the transaction and the date for final completion before the Notary Public.
Everything has been checked and we are ready to complete.

On the appointed day buyer and purchaser, and/or their legal representatives, meet at the appointed notary’s office to sign the official transfer of title deed (“escritura”).
The witnessing of the documentation by the notary is your legal safeguard in that the change of ownership will be recorded in the official registry and it completes the process, leaving you safe in the knowledge that your property purchase is official and free of encumbrances.
The property transfer must be certified by a notary and the deed of purchase will be given to the buyer after the notary reads it and the parties present agree to its contents. The following needs to be shown: proof of identity (or power of attorney) of both parties, the seller’s title of property (a form reporting the change to the Central Register), and the buyer’s payment.
The buyer and seller sign the contract; which is followed by the notary signing using his firma protocolizada. The deeds are now ready for taxation.

To be sure that your rights to the property are fully protected, your title must be registered with the local office.Your Lawyer will prepare the documentation required for the transfer of ownership. You will be charged a standard fee (about .4% of the first 6010 euros, going down to .02% for over 6,010,121 euros).

What taxes need to be paid?

Taxes to be paid by the buyer are transfer tax (impuesto de transmisiones patrimoniales) and stamp tax (impuesto de actos jurídicos documentados) If the seller is an individual, the buyer pays a tax of 6% (7% in some regions) of the price specified in the deed.
If the seller is a real estate developer and the building or land to be built on represents a first-time transfer then the buyer pays VAT tax instead, meaning 7% for housing, 16% otherwise. If for housing, you have to add a stamp tax, in this case reduced to 0.5% depending on the region.
For the seller: a local tax called the plusvalia With a copy of the deed in hand, the seller must go to the City Hall (or wherever local taxes are paid). After filling out the form, the seller will receive in the mail a notice of how much they have to pay. This amount is calculated based on the number of years the property was held, and on the property’s valor catastral. Be aware that each town has a different procedure regarding payment of this plusvalia. It’s best to ask at the notary’s office about this payment.
This document is only a guideline. Please seek legal advice before making a property purchase.