Go-to-Spain ::: Article: Legal Guidance on purchasing a property in Spain

This is a guide to purchasing property in Spain, but does not cover all the legal aspects in detail. We recommend that you take legal advice from an English-speaking lawyer in Spain, and seek help from the Notary.

When you purchase a property through Go-to-Spain, our colleagues and partners in Spain will guide you through everything listed below including accompanying you to get your NIE number (download application form here) - and introducing you to the trusted lawyers and notaries we have been dealing with for years. Just ask for anything you need, but you will be looked after all the way through.

Land Registry: As in the UK, all property in Spain is registered at the Land Registry (further details below), and all deeds of sale (Escritura de compraventa - often just called the Escritura), are witnessed by the Notary. An exception to this is a private agreement, which is definitely not recommended. It is important for you to have your Escritura dealt with by the Notary, otherwise your ownership may be at risk. The Notary is a public official, but you pay him a fee for the work he does, which is a fixed amount based on the value and type of property you are buying. It is quite usual, and sensible, for the same Notary to act on behalf of the vendor and the purchaser. He is unbiased, and his role is rather like that of a referee to ensure fair play all round.

Open a Bank account and get an NIE number: It is best to have a bank account in the area in which you are intending to purchase the property. A form for the NIE number is available from the National Police Station. You will need to take your passport and a photocopy of your passport. Keep the copy of the form, because you will need this and your passport to collect the number when it is ready. Please note that accountants will charge to obtain a number for you. You need this number in order to purchase a property in Spain. (NIE stands for Numero de Identificacion de Extranjeros - foreigner's tax identification number).

Check out the property! When you find a property you wish to buy, all the appropriate checks must be carried out. In Spain, a debt is lodged against a property rather than against the owner, and you must ensure that your property carries no debts. You also need to check that the 'owner' really does own the property, and that it is his name which is lodged at the Land Registry. (This can be found in a 'nota simple' (see below) from the Land Registry). As it is the Notary who has to register you as the new owner, he is the person who will check this out for you. If it transpires that there is some hitch with title to the property - don't panic! In country areas, elderly people sometimes do not remember to get a deceased spouse's name removed and children's names added. This can be sorted out by the Notary, but may delay your completion date for a few weeks.

Reservation deposit: This is paid when a verbal agreement, an 'Offer to Buy' is made between the vendor and the purchaser, which takes the property off the market. It is not advisable to make a written 'Offer to Buy', since this is legally binding. The amount of the reservation deposit is usuallybetween 1000 and 3000 euros and can be paid in some areas by credit card, but more usually in cash. It is usually paid into your own bank account as an expression of good faith to the vendor, or into the solicitor's clients' account. A cheque or banker's draft takes too long to clear, and you will be in danger of losing the property to someone else who can pay a cash deposit.

An alternative is to take out a written Reservation Contract. which is similar to an Option Contract in the UK inasmuch as the vendor agrees to take the property off the market for a specified time, but neither you nor he is legally bound. If, however, you withdraw, you will lose your deposit unless you have made certain 'subject to' stipulations in the contract. An example of this would be if you agreed to purchase the property subject to its receiving planning permission for a particular project. If such permission was not granted, you would not forfeit your reservation deposit. You can exercise your right to buy at any time up to the agreed date, but if the vendor then withdraws the property, you can claim compensation.

Full preliminary contract (Contrato Privado de Compraventa - usually just called the Compraventa): Use a lawyer! Most Spanish people do not bother with a lawyer, but we strongly recommend that you do so. He will be able to advise you about Inheritance Tax, Spanish Wills, tax implications, etc. It is best to use an English-speaking Spanish lawyer who lives in and knows the area in which you are intending to purchase. He is likely to have experience with the type of property you are wishing to buy, and will probably have acted for many more clients in the area in the past. Although it is tempting to use a lawyer based in the UK, you may end up paying twice the fees for the same result as the UK lawyer will have to contact a Spanish lawyer to obtain the details of the proposed sale.

The contract (Compraventa) is a private contract between you and the vendor, drawn up by the estate agent or developer, or sometimes by the Notary. This contains all the details of the sale, e.g. purchase price, amount of deposit required, final balance required, date for completion, etc. When you and the Vendor sign this in front of the Notary, you also hand over the full deposit. This is then a legally binding agreement. If you break the contract you forfeit your deposit. If the vendor breaks the contract he must refund to you double the amount of the deposit paid. It is very, very important that your lawyer checks the document carefully to ensure that it is not weighted in favour of the vendor.

Full deposit: Usually 10% (less the reservation deposit) of the declared value (due within 10 days of returning to the UK). In the case of newbuild property, the deposit is usually 30% which has to be paid within one month. It is best to avoid purchasing a new-build which requires a 50% deposit.

Power of Attorney (Poderes): It is usual, and advisable to grant Power of Attorney to the Notary (or the Agent). This is best done in Spain under Spanish Law. Even if you intend to return to Spain to sign the Escritura yourself, it is sensible to have a contingency arrangement in place so that the Notary/Agent can act on your behalf if there is some last-minute hitch.

Escritura (title deeds): These are drawn up by the Notary and the deal is completed when you sign them in front of him (or he - or the agent - does so on your behalf) and at this point you hand over the balance of the money. When you have signed, you will be given all the keys and the property is yours. At the same time, you pay the Notary's fees and you will be given a copy of the Escritura which will be signed and stamped by him. The original documents will take about 3 months to arrive from Madrid. Property taxes are due within one month of signing the Escritura.

Transfer of money to Spain: Whether or not you intend to go to Spain to sign the Escritura, you will have to make arrangements for the full deposit and the final balance of the money to arrive in Spain well before the due dates. Banks usually quote 4 days for transferring money, but it can sometimes take up to two weeks, especially if you are purchasing property in a rural area. Also, many banks in the UK are not used to doing this, so it is really important to start the process well in advance of the due dates. (This is not an exaggeration - the author has personal experience of this!) Specialist currency exchange companies usually offer a better deal than the high street banks, and most have excellent literature. If you choose to do business with them, you will be assigned a personal manager who will take care of everything for you. Again, this is something to do well in advance of the completion date - indeed, it is something which you can set up even before you start to view property.

When transferring money from the UK you will need the the following information relating to the Bank to which your money is being transferred: IBAN number, the Swift Code, and the Sort Code. (You may be told that an Iban number is sufficient as it contains all the information, but most banks and currency exchange companies will insist on having all three).

Fees: We recommend that you mentally add 10% to the purchase price of a property, which should cover all the fees, property taxes and expenses involved in the purchase.

Finally...... official procedures (or even unofficial ones) can take time in Spain, so you will need to be patient..... but they always seem to get there in the end!

Nota simple: A nota simple is a certificate given by the local Property Registry which contains a full description of the property you are going to purchase in Spain. This description should include the following information:

Whether the property has any outstanding debts (unpaid community charges, mortgages or local taxes)
The full name of the current owner
The boundaries of the property
The total square metres of the property (house + land)
Classification of the property (rústico, urbano, or urbanizable). This is very, very important if you are intending to build on the land
The rights that others may have over the property (eg public paths, railway lines, pipes or waterways).

This company will assign you a
personal manager who will guide
you through the whole process
of transferring money.
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