LEGAL STEPS FOR PURCHASING A PROPERTY IN SPAIN
Buying or selling a home can be a complicated and lengthy process. With different steps, stages and people involved, it is always good to know how the Conveyancing process works.
To help you, we have prepared a step-by-step guide of the Conveyancing process for a typical property sale and purchase transaction.
1 CHOOSE A SOLICITOR SPECIALISED IN CONVEYANCING
Once you have found a property you like, we recommend your first step should be to instruct an expert conveyancing solicitor. It is always recommended that the solicitor you choose confirms the instructions in writing and provides an estimate of costs.
Care should be taken when choosing a solicitor. Simply picking the cheapest conveyancing quote is a recipe for disaster. It is important that you instruct a solicitor who specialises in property. For most people their house is the biggest asset they will ever own, so it is vital to have a specialist solicitor dealing with this for you.
You will need to provide proper identification and, if purchasing, evidence of where the funds to purchase are coming from. Money Laundering Regulations have to be complied with.
If you are applying for a mortgage, the mortgage offer should now be forwarded to your solicitor.
2 DEPOSIT CONTRACT / PURCHASE CONTRACT OR “ARRAS”
Your solicitor will check the deposit contract (called “contrato de arras” in Spanish) before transferring the deposit.
3 NIE CERTIFICATE
It is mandatory to obtain a NIE (foreign citizens identity number) when purchasing a property, or any other transaction in Spain, such as: selling a property, starting a business, applying for a mortgage, opening a bank account, etc.
NIE is a fiscal number for non residents. It will be your Spanish tax identification number. The foreign citizens identity number (NIE) is assigned by the Ministry of the Interior.
We will assist you in obtaining your NIE certificates by being present with you to make the application at the Police Station or our solicitor can do it on your behalf if you give us Power of Attorney, which we highly recommend.
4 POWER OF ATTORNEY (POA)
Many clients are not able to be present on the day of signing/completion, so the best option is to grant us a Power of Attorney so that we can act on your behalf.
The POA can be made either in Spain or in your own country.
5 LAND REGISTRY SEARCH
We will verify that the vendors are the legal owners of the property and if the property description on the Land Registry Report matches the current status of the property.
The Land Registry certifies whether or not there are charges, mortgages, debts or attachments against the property.
6 SPANISH BANK ACCOUNT
You will need to open a Spanish bank account from where you will pay utility bills, taxes, etc by direct debit.
7 COUNCIL TAX, UTILITIES AND FEES
IBI Tax (Council Tax): IBI is a local Council tax which is paid annually. We will check that this tax is paid and that there are no outstanding debts before the signing. The Town Hall will have to be informed of the new ownership once completion takes place and we will set up direct debits from your Spanish bank account so that you do not have to worry about paying the tax.
Utilities (electricity, water, gas, etc): We will obtain up-to-date statements from the owners/sellers and we will check that all bills are paid before completion. We will change all utility contracts after completion so they are put into your name, and we will also arrange direct debits from your Spanish bank account so they are paid monthly. You should be aware that debts can be registered against the property in Spain, so it is important that all debts are cleared prior to completion at the Notary.
Community fees: Most of the properties belong to a community which is funded by all property owners (i.e. gardens, lifts, maintenance, swimming pool, etc). We will check that community fees are paid up-to-date before completion and we will inform the community administrator that you are the new owner so once the purchase takes place. Direct debits will also be set up from your Spanish bank account so that the community fees are paid (monthly, quarterly or annually).
8 ENERGY EFFICIENCY CERTIFICATE
The Energy Efficiency Certificate (EEC) is a certificate which shows the energy performance of a property. Since 2013, it is mandatory for the property to have a valid and updated EEC issued by a qualified professional who is formally registered with the Ministry of Industry. The vendor will have to provide this document before completion.
9 HABITATION CERTIFICATE (LICENCIA DE 1ª OCUPACIÓN)
We will ensure that the Habitation Certificate Document has been granted by the Town Hall and the Authorities.
10 COSTS OF BUYING A PROPERTY IN SPAIN
Before completion, we will inform you of the total cost of the process by sending you a Completion Statement which will itemise all associated costs of the process.
11 NOTARY SIGNING, PAYMENT OF TAXES AND REGISTRATION OF THE PROPERTY
Once everything is prepared for signing, we will make an appointment at the Notary for signing the title deeds of your new property.
After the signing at the Notary, we will pay the Taxes (ITP) and the purchase deeds will be sent to the Land Registry for legal registration.
We will receive the formal title deeds from the Land Registry 5 or 6 weeks after the signing.
12 MORTGAGE IN SPAIN
If you need to finance the purchase of your property, we will assist you with this process.
Depending on your borrowing capacity and your needs, you will be able to choose between fixed and variable interest mortgages; mortgages with interest-only conditions, in which you only pay interest for a certain period of time, without repaying the capital; flexible and fixed-rate mortgages.
In order for the lending institution to approve your mortgage, you must provide documentary evidence that you are able to pay the monthly instalments. The amount of the loan will ultimately depend on the valuation of your property which the bank itself will carry out. Although at some moments of the real estate boom the banks were lending 100% of the appraised value, this practice is now a thing of the past and banks nowadays do not usually lend more than than 70% to non-residents in Spain. The repayment term will almost exclusively depend on the age of the applicant, although some banks and financial institutions have limits in this respect. The terms normally range from 10 to 25 years for non-residents.
13 REGISTRATION OF THE PROPERTY AS HOLIDAY ACCOMODATION WITH THE REGIONAL GOVERNMENT OF ANDALUSÍA
If you wish to register your property for use as holiday accommodation with the Regional Government (the ”Junta”), we can organise registration if the legal requirements for registering the property are met.
14 MAKING A SPANISH WILL
We recommend you make a formal will once you buy a property in Spain. The Spanish Will will cover all your assets in Spain. It is written in line with Spanish formalities, but follows European Inheritance Laws.
Normally, the Will will be drafted in two columns, Spanish and English, and signed before a Spanish Notary. Once the document is legalised by the Notary, we will register it in the General Register of Wills in Madrid.
15 PAYMENTS RELATED TO YOUR PROPERTY
Finally, you should not forget that once you own a property in Spain you will have to deal with payments related to the property. Some of these are: community fees, local taxes (IBI and Rubbish Tax), Non-Resident Tax, utility bills, etc.