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Process of Buying a Property in Spain |
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The purchase of a Spanish property is a regulated process and a little different to that of
the UK, but as long as the correct procedures are followed it should not cause any problems.
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NIE Number |
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You will need to obtain a fiscal identity number to buy a property in Spain. Obtaining your
NIE (Nmero de Identidad de Extranjero, or foreigners identity number) is this first thing
you should do if you plan to buy a property (whether resident or non-resident).
An NIE number will be required when you:
- Buy or sell a property in Spain
- Open a residents bank account
- Apply for a driving license in Spain and to validate your current EU driving license
in Spain
- Apply for a business permit
- Apply for a mortgage or other type of loan.
- Pay your taxes
- Telephone, electric, water contracts
- To make purchases above 3,000 euros
You must apply for your NIE in person at the Oficina de Extranjeros (Foreigners Department)
at the nearest Polic� Nacional (National Police Headquarters). The task may seem daunting,
but it really is quite a straightforward process.
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Spanish Bank Account |
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If you are planning to own a property in Spain, a Spanish bank account is essential to make
mortgage payments and pay bills by direct debit. You will also be issued a debit card which
you can use when shopping accompanied by a form of photographic idea, usually your passport
or driving license if you are not resident. You can also use your UK debit and credit cards,
but you will be subject to exchange rate costs. Opening a bank account is a simple procedure:
dont worry if you dont speak Spanish, most banks employ English speaking staff, especially
along the Costas. A current European passport is the only documentation required to open a
bank account.
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Choosing a Lawyer (Abogado) |
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Spanish property law can be complicated so it is essential to employ a local English-speaking
lawyer or solicitor to protect your own interests. Lawyers will usually charge you 1% of the
sale price of the property. The lawyer will ensure that the Spanish property you wish to buy
is free of debts and restrictive clauses. For anyone buying a property in Spain, the single
most important piece of advice is to find a good solicitor who will thoroughly research the
Spanish property you intend to buy. Make sure your solicitor checks the Spanish property
registry, which will show immediately if the vendor owns the property and whether there is an
outstanding mortgage (mortgages can be sold on with the property in Spain). The lawyer can
also be instructed to check items such as:
- The boundaries and the legal description of the property
- The name of the person or companies listed as the owner of the property
- That there are no existing debts or mortgage charges against the property
- Building regulations have been observed and land has been properly designated for
development
- Pending assessments for public works, e.g. storm drains
- Assessed valuation of the property so it agrees with the price paid
- Ensure that both water and electricity supplies are available
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Reservation Deposit |
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After finding the Spanish property of your dreams and there is a verbal agreement between
parties, the next step will be to formalize the terms of the offer in writing. It is normal
practice in Spain to include with the offer a reservation or holding deposit until the
exchange of private contracts, usually 3,000 paid in cash (or by credit card or bank
transfer in the case of new property). Payment of the reservation deposit guarantees that
the property is taken off the market and is reserved for you at the agreed fixed price.
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Legal Process for the Purchase of Spanish Property |
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The legal side for buying a Spanish property falls into two parts, the preliminary contract
(Contrato Privado de Compraventa) and the completion contract (Escritura de Compraventa).
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Preliminary Contract (Contrato Privado de Compraventa) |
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As soon as possible after taking the property in Spain off the market, both parties are best
advised to sign a preliminary private sales contract, a Contrato Privado de Compraventa.
This usually happens within two weeks from the offer being accepted and during this time your
lawyer will conduct the property conveyancy and make sure that there are no outstanding debts
attached to the property. The lawyer applies for a copy of the Nota Simple from the Registro
de la Propiedad to confirm if a property has any outstanding debts on it.
Then, unless you are paying in full and in cash immediately, a private preliminary sales
contract (Contrato Privado de Compraventa) is drawn up containing all the details such as a
description of the property, purchase price, and date of completion. At this stage you will
be expected to pay a deposit of usually 10% of the purchase price, and the estate agent will
hold these funds in a bonded client account. If you intend to raise finance for the purchase,
this private preliminary sales agreement should have an arras agreement and a date specified
for completion.
The preliminary sales contract should contain:
- Details and identities of the vendor and yourself (the purchaser)
- A full description of the property
- The surface area of the property and land
- The purchase price, the breakdown of fees and who will pay each fee
- Details of the sales agent
- Details of any fixtures and fittings included in the sale
- Details of your mortgage, the date of when you should have your mortgage offer and
the date of completion
- Details of the penalties that will be incurred by you or the vendor if completion
doesn't take place
Once this contract is signed and the deposit paid the buyer is committed to paying the balance
of the agred price and the vendor is committed to transferring the ownership of the property
to the purchaser. Should the vendor decide to withdraw you are entitled to twice the deposit
as compensation.
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Final Contract (Escritura de Compraventa) |
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On the completion date the balance of the purchase price (sales price minus deposit) and all
fees and taxes must be payed by the purchaser. The vendor and purchaser then sign the
Escritura de Compraventa contract, which is equivalent to the deeds of the property.
The purchaser is then issued with the public deed of conveyance (Escritura) witnessed by a
Notary Public, and a copy will then be passed to the tax office and on to the property
registry. The Notary Public in Spain is a public official who will be required to witness the
deed of the sale of properties in Spain. Once the Escritura has been signed and witnessed you
will be requested to pay all the taxes, land registry and notariys fees. A few months later
you will receive a certificate informing you that the title has been registered. The original
title deed is returned to the Notary and you can collect the deeds and the Notary is able to
make authorised copies. The final authorised deed is known as the Escritura Pblica and is
usually received within a couple of months of signing the Escritura de Compraventa.
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Making A Will |
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It is strongly advised that all owners of property in Spain arrange a Spanish Will as this
will accelerate and simplify the inheritance process in the event of your death.
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Making the right investment is key and if you pick the right investment,
you could be in for a handsome return.
Where should I buy? Schools in Spain? Healthcare? Legal fees? Please browse through this section for helpful
hints and answers to all your questions on buying property in Spain.