Let's assume that you’ve found the perfect property. What are the next steps and what potential pitfalls may be encountered before you can expect to own your dream home in Spain.
The first step would normally be a meeting with an English speaking Spanish solicitor (abogado). During this meeting the solicitor will explain to you the legal implications of your purchase. You will be told that you are required to place a small reserve on the property, typically €6,000, in order for the owner or developer to take the property off the market.
This is a very important step as decent, well positioned, attractive properties that are also bargained priced move very fast in the current market where due to the worldwide financial crisis some properties are selling for 65% less. There’s never been a better time to buy!
Your lawyer will outline in detail his charges and what he will provide by way of service in return. This includes searches on the property to establish ownership and resolve outstanding debt and more importantly, checking that the deed (Escritura) is in order and that it matches the building and land being offered.
He will also check building licenses are in order and that the owner or developer has satisfied any local planning conditions prior to offering the property for sale. You can also expect that your solicitor will handle any financial transactions on your behalf, although it’s more practical to allow them power of attorney to complete the sale.
Depending on when you would like to take possession and your personal circumstances you will now set the payment schedule. In one example if the property is vacant and you are a cash buyer you can pass notary within 3 weeks and have possession of your new home! Another example would be if you need a mortgage you will now pass a further 10% of the purchase price minus the original reservation deposit. You will now have 3-6 weeks to make mortgage arrangements and then pass notary. In the first example the 10% stage is eliminated and the remaining purchase price less the reservation deposit is paid.
The notary office will have the new Escritura drafted before you or your solicitor goes before the notary to have the sale completed. The notary will also register the new deed on your behalf.
On the day of notary you will be required to provide funds to meet the sale price of the purchase. You should allow for an additional 11%-14% of the sale price of the property to cover fees and costs. The bulk of this being Spanish sales tax which on a new property is charged at 4% or stamp duty in the case of a resale which is charged at 8% (as of January 2012) of Escritura value. The rest is solicitor's fees, notary fees and land registry fees and charges. This may vary according to work required.
It makes sense to find a lawyer the same way you found your dream property. A simple search on the internet should easily direct you. We always suggest that you find your own lawyer and you should be wary of Agencies or Developers who offer ‘in-house’ legal services or that recommend a local lawyer. In Spain notaries are also solicitors so you have 2 professionals working on your behalf. It’s imperative that you have independent advice for what will likely be one of the largest purchases of your lifetime.
All doubts and media panic aside; the buying process in Spain is a fairly simple and painless one if you work with the right, professional and ethical suppliers.
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