Buying property in Spain
With this short brochure we intend to introduce readers in the Spanish real estate market, so they become able to take the opportunities that are awaiting them in Spain.
If you are to buy a real estate property in Spain and you lack the Spanish citizenship, you must first of all acquire a Foreigner Identification Number (NIE in Spain).
When buying a real state asset, the first thing to do is to find a property suitable to your needs and preferences. From this very moment, the assistance of a real estate agent will be very helpful. These professionals licensed by the state will assist you on finding what you want in relation to your preferences and will aid you along the buying process. Even though you can contract real estate agents directly, it is recommended that you seek the assistance of a lawyer to help you in hiring them. This is because, since the Spanish real estate market boom took place, there has been an exponential increase in the number of agents, many of which lack the knowledge or experience to terminate your purchase smoothly. Your lawyer will help you in finding an experienced and efficient real estate agent, thereby making it easier for you to find what you are looking for.
Financing
The Spanish financial system has not been alien to the continuous growth in the real estate market of the last 16 years, and has therefore developed financing instruments to match the growing market necessities. In spite of current international financial turbulences, the Spanish financial system is, if not the best, at least one of the strongest, safest and most reliable that can be found nowadays.
Once you have found the property you want to purchase, and before you sign any Deposit contract, you might need to obtain some financial support. To do this, you will have to take into account the purchasing price of the property plus the costs of the acquisition which will normally be around a 9-11% of the total cost of the property. Spanish Banks may offer financing up to an 80% of the property value, without including the costs associated and taking a mortgage as a warranty. In any case, they will finance 80% of the price valued by an official expert homologated by the Spanish Central Bank. This means that the official value might be above or below the price which you are going to pay for it, which is why it is important to work with an official real estate agent. From now on, the Bank will help you with the acquisition process given that it is in its interest that you do not have any problem with the property that you are going to purchase.
It usually takes two steps to complete a real estate transaction. Firstly you will have to sign a deposit contract which is a private document between the buyer and the seller. The second step will be to sign a public deed by which the property transfer will usually take over.
Deposit Contract
If you already have the money to pay the price there is no need to sign this contract, you may look forward for the next step. Otherwise, once you have obtained a mortgage loan you will have to sign the Deposit Contract. It must contain a full description of the property which is going to be purchased, the deadline to sign the public deed, the final price, liabilities for not paying on time and the amount of the deposit. Generally, the deposit will be stipulated between 3000€ and 6000€ for assets with prices around 240 000€. Real estate agents will mostly offer you a standard form of contract to sign, but before signing anything you should let your lawyer read it in order to protect your risks and position. Additionally, before signing, it is highly recommended to verify the current title deeds state as well as the required licences. This will be done by your lawyer. Spain has a highly reliable real estate registration system which allows certifying the existence of any possible defects or title exceptions such as mortgages or other burdens. This system allows buyers to safely purchase properties with the confidence that any problems concerning the property rights will be highly unlikely to arise in the future.
Public Deed
Given the safety of the Spanish public notary system and public property registry it is highly recommended to formally complete the purchase before a public notary and to proceed with the inscription of your purchase in the Real Estate Registry.
Once you have chosen a property and have the money to pay the price, it is important you register the acquisition in the Spanish property registry in order to avoid problems in the future. For this, you will have to send all the following documentation to a notary office: seller’s title deeds, tax paid receipt, letter from the neighbour’s community president confirming that the seller is up to date with community payments, DNI, NIE or passport numbers of all parties. The Registration fees are 7% of the property’s value in the case of housing and 16% if it is for business.
Once the notary has all the documents needed, he will ask the Real Estate Registry again for the title deeds state and current charges. Both parties will then meet at the notary office where the new title deeds will be signed. These must reflect the way in which the deposit payment was done and how the rest is going to be carried out. You will be given the keys at that moment and through this symbolic act you will take possession of the property unless something different is stipulated in the public deed. Once signed, the notary will send a formal notification to the Real Estate Registry informing of the acquisition. Two or three days after the signature, the notary will provide you with the title deeds so you can liquidate taxes in the tax office and immediately take it to the Real Estate Registry for formal registration. Normally all the costs are paid for by the buyer, except the taxes which are entitled to the seller by law (municipality capital gain tax).
Once your new property is inscribed the process is ended.
As we have seen, all along the purchasing process you will be assisted by your lawyer and, in different stages, by the Real Estate Agent and the Bank in order to make it easier and faster, so you can enjoy your acquisition as soon as possible.
We hope that this short guide has been a useful help in understanding the steps that must be followed to buy real estate properties in Spain
Marina Bugallal
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