01. Finding the right property for you.
02. Advising you about the expenses that are likely to be payable.
03. Check on the monies.
04. Obtaining information from the vendors.
05. Check all the planning matters, permissions & projects.
06. Searches and Statutory Undertakings.
07. The Conveyancing Process - Contract to Completion.
08. Mortgage.
09. Spanish notary (notario)
10. Payment and completion.
11. Taxes, registration and payment of fees.
12. The property is now yours!
13. Checks and payment of rates and taxes.
14. Payment of bills.
Contents
Buying a property in Spain can be someone's dream, as it can be both
a good investment and a way of feeling at home whenever you go to Spain. But one must be
aware that the Spanish legal system is very different indeed from that of the UK, and to
avoid misunderstanding, disappointments and possible fraud, it is essential to seek expert
advice from the very beginning. Below, we have set out the main stages involved in the
purchase of a property in Spain. This is only a guideline to help you understand the
conveyancing procedure, and it will vary in detail according to the particular
circumstances of each transaction.
01. Finding the right property for you.
We can help you decide which area of Spain and what type of property
will be more suitable for your needs. We are not estate agents, and hence, we are totally
independent and only seek to provide our clients with the best information, so that you
will always be happy with your purchase in Spain.
We can also advise you whether a ready built house would be more
suitable for you than to build your own, and whether a place in the mountains, by the
beach, or in town is really what you would like.
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02. Advising you about the expenses that are likely to be
payable,
both during the conveyancing procedure, and after, for the ordinary
maintenance and running of the property. Buying certain types of property can seem very
attractive, but you should be aware of their running costs, and whether they suit your
needs.
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03. Check on the monies.
Before you are bound to the purchase, check that you have the deposit
money and other monies payable at different stages of the conveyancing, and we will inform
you about different financial entities that may be able to partly finance your purchase
with a mortgage.
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04. Obtaining information from the vendors.
Once you have the necessary funds, and have decided which property to
buy, obtain from the vendors all the legal relevant information and check that they have a
good legal title on the property.
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05. Check all the planning matters, permissions, projects,
that are likely to affect the value of the property in the future.
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06. Searches and Statutory Undertakings.
(a) The property to be purchased should be searched against and
investigated by your Spanish Lawyer before any contract to purchase is signed in order to
ascertain the following:
(1) To check the legal description of the property and its
boundaries see that it agrees with what you think you are purchasing.
(2) The names of the person or company listed as the owner of the
property. As we have already pointed out all land in Spain must be registered in the name
of the owner at the Local Land Registry. Purchasers will not be full owners of the land
until their names appear on this document and its registration via the Notary. The only
people who are capable of legally transferring full ownership are those that are
registered. An investigation of the Local Land Register will show who the legal owners are
and it is their names which must appear in the contract to purchase: unless the vendors
are properly appointed agents for the legal owners. It is not uncommon for purchasers to
sign contracts to purchase where the vendors are property selling agents who do not hold
valid authority or power of attorney. Monies are mistakenly paid to these agents who
cannot transfer the property to the purchaser. This can end up with the purchaser losing
his money.
(3) A record of existing debts or mortgages against the property. If
there are any mortgages affecting the property then the proper steps will need to be taken
to see that these are fully paid off before legal ownership of the property is transferred
to the purchaser. There are instances where UK purchasers have lost their Spanish property
because prior mortgage charges against the property have not been cleared off the
register.
(4) Building restrictions, if any, are complied with such as
planning consents, building permits, road construction or extension projects properly
approved and any fines charged by the Local Authority for breach of planning control
properly paid. If there is no planning permission granted for the development then it will
be an illegal development in the eyes of the authorities, and at the very worst could be
required to be pulled down.
(5) That the land has been properly designated/zoned for
development.
(6) Pending assessments for public works like storm drains etc.
(7) The assessed valuation of the property, so that this will agree
with the price actually paid and inserted in the contract document and in turn the
Escritura.
(b) We at Baily Gibson can arrange for all the above investigations
to be carried out on your behalf.
(c) An Abogado will make certain that on the signing of the contract
both electricity and water have been connected to the property, that there is not inherent
road service charge, and also that provisions for disposal of sewage are satisfactory. It
can cost as much as £500.00 for a water supply to be connected to a property so it must
be ascertained that the Contract price includes the cost of connection and the supply of
water. The supply of electricity is equally important, as the water supply to the property
is invariable circulated by means of an electric pump.
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07. The conveyancing process - Contract to Completion.
El Contrato Privido (The Private Contract) is an important document
standing on its own and not as part of the Escritura, and contains its own conditions.
Therefore, it is important to know and understand what these conditions are before you
proceed with the purchase! It is the first stage in property ownership. It is usually
short in form merely containing details of the vendor and the purchaser, legal description
of the property, purchase price, form of payment, date of completion, date of possession
etc. With a new property under construction, there may also be a secondary supplementalo
contract (called the "Contrato de Infrastuctura" later confirmed by the Notario
by a second Escritura called the Escritura de Obra Nueva) relating to the payment for and
construction of the service media for the property - this secondary contract may not be
with the owner of the land but with the contractor/developer for the development/estate
(urbanization).
Once the Contrato Privado has been signed by both parties and the
deposit paid (usually 10% for the main contract) it is binding. This means that purchasers
are committed to paying the balance of the purchase price and the vendor is committed to
transferring the ownership of the land of the purchaser. Thus, if a developer goes
bankrupt or his company into liquidation before the Escritura has been signed, the
purchaser would be able to make an application to the court so that his particular unit
would be specifically excluded from the developer's assets by lodging the Contrato Privado
with the court as proof of the purchaser's ownership of the unit.
The time between the signing of the Contrato Privado and the
Escritura (completion of the purchase varies). If the villa or the apartment is physically
constructed and both parties are ready with all the documents and purchase money then
completion can take place within a matter of days of Exchange of Contracts. However if a
new building is being purchased which has not yet been constructed, completion will take
place on the signing of the Escritura before the Notario and the handing over of the keys
by the developer/estate agent which may be many months away.
Where possession of the property can be given immediately the
purchaser can physically can take possession on the strength of the Contrato Privado even
though the Escritura has not been signed, although this can lead to problems: some
properties have been sold more than once, the crooked agent collecting the monies, and no
Escritura and it is far better even though the property is ready for possession, not to
physically take actual delivery of the document from the Notario after registration at the
Property Registry (Registro de la Propiedad) can take a considerable time, but it is the
signing of the Escritura that is the vital element of ownership because the Escritura can
then be registered in the Property Register and the transfer of ownership is certain at
that stage.
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08. Mortgage.
We can deal with any legal matters related to a mortgage that you
wish to obtain to part finance the purchase.
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09. Spanish notary (notario).
He is the public official in front of whom the Escritura (Transfer of
Ownership Deed) will be signed. The Transferring of legal ownership of the property on
completion of the purchase must, in Spain, take place in a notaries office in the area
where the property is being purchased. The notario is responsible for ensuring that the
contract (the Agreement between the parties) is turned into a public Contract by
preparation of the Escritura and its registration in the Property Register in Spain. He is
a lawyer who has taken special examinations to qualify for this position. Before preparing
the Escritura the Notario will be needed to see that the purchaser receives the right
property and that the purchase price has been paid to the vendor.
Only the Notario will witness the signing of the Escritura and he
then arranges for it to be registered in the Local Deed Register in the name of the new
owner. He collects his own fees both from the vendor and the purchaser, and also all taxes
that are due. The Notary charges his fees in accordance with the Schedule of Notary's fees
set by the Government, which is fixed on many documents such as Powers of Attorney, Wills
etc. and on other document such as Company formation, Inheritances, purchases etc. on a
scale in accordance with the purchase price or value. Some documents are subject to
reduction of fees such as loans and subrogation of Mortgages.
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10. Payment and completion.
Get the purchase price ready and make the last searches before
completion (ie. the signing of the Escritura Publica de Compravena before the Notary). The
purchase money will have to be paid before or on the signing of the Escritura.
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11. Taxes, registration and payment of fees.
The Escritura should be taken to the Registro de la Propiedad as soon
as practicable, to avoid fraud. On doing this, and before it can be registered, a number
of taxes will have to be paid, as well as the Land Registry fees, Notary's and Lawyer's
fees will also have to be paid.
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12. The property is now yours!
Once the Escritura is back from the Registry bearing the stamps, the
property is yours and the Registry protects your ownership against anyone.
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13. Checks and payment of rates and taxes.
As happens in England, the local authorities will be levying taxes on
the property. Also, other central government taxes will have to be paid annually. Although
usually they are not very high, it is most important that you know of them and do not
forget to pay them on time. The authorities will not send you reminders, and if you have
not paid, your property could be confiscated and auctioned to raise the money for the
taxes. For further details about taxes, please see sections on Taxes later in this
document.
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14. Payment of bills.
The bills for the supply of water, electricity, etc. will have to be
paid regularly, and if you have bought an apartment or a house in a private development,
you will also probably have to pay maintenance charges and community fees.
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