Purchase in Spain
The purchase in Spain. Part. 1.
I’m going to explain all the aspects of Spanish legal system in order to achieve a complete purchase in Spain. I perfectly know that many of you have tkmpurchased a house in Spain at any time, but I’d like to explain step by step the whole procedure in order not to make terrible mistakes which could bring you to Court or to face any Sanction from the Planning Authorities after purchasing your dream house.
The first thing you must do if you are buying a new house is to ask to the builder or developer for the plans of your own house with all the measures and so on, g oto the Ayuntamiento and ask for a copy of the Plan Parcial which have been approved in your area, then you can see if the urbanización or your own plot is legal and allowed to be built. The property must also be declared to Dirección General del Catastro, which is an organism that belongs to Hacienda or the Tax Office, and where all the IBIs are submitted. Make sure your Developer has the Declaración de Obra Nueva or declaration of new building settled, and the corresponding tax paid, ask to see the receipt. Also make sure your escritura or deed mentions the house you have just purchased, as well as the plot of land or finca on which stands, because sometimes only the land is referred in the deed.
Once you have all the above mentioned clear and checked you can go ahead with the purchase contract.
On the other hand, when buying a second hand property, before you even pay an eventual deposit as a reservation for the house you should see some documents from the seller:
1.- The seller’s Escritura Pública or title deed which shows the ownership of the property.
2.- A Nota Simple from the Land Registry, which is a certificate where you may check if there is any attachtment or encumbrance on the property, or if the property has any mortgage or debts. This nota simple must be a current one, and not from two or three years ago.
3.- A certificate from the Catastro where all the exact boundaries, square metres of the area and the Catastral value are given. This Spanish Catastro Registry belongs to Hacienda and is not connected with the Land Registry.
4.- A paid-up receipt of the annual IBI tax.
5.- Paid-up receipts for the annual fees of the Community of property owners, and if posible, the minutes or Acta of the last AGM.
6.- Paid-up receipts of water, electricity, waste collection, telephone, just to make an idea of what it will cost to run and own te place.
As this can be a bit tricky and tough for most of you, it’s advisable to have the helpful advice of a Spanish Lawyer or Solicitor. Then, once you have seen and checked everything, if there are no debts or encumbrances, all the bills have been paid, the escritura is all right, the price of the purchase agreed, etc., you are ready to sign the contract in the Notary Office.
Next week I’ll explain the second part of the purchase, which is the arrangements, clauses and agreements that must be included and signed by the two parties, how to inscribe the deed in the Land Registry and all the taxes affected and related to this legal subject.
Anyway, if you have any queries about all the above mentioned, don’t hesitate to send me an email to my personal email address: firstname.lastname@example.org, which I´ll pleasantly reply as soon as I can.
The purchase in Spain. Part. 2.
I’m going to explain the second part of the purchase, which is the arrangements, clauses and agreements that must be included and signed by the two parties, how to inscribe the deed in the Land Registry and all the taxes involving this subjetc.
After the verbal agreement of the purchase, such as the conditions, the way of payment and the total amount to be paid, then you are now ready to write down the draft of the contract, including all the aspects of the purchase.
Prior to go to the Notary it’s very usual for the buyer and the seller to make aprivate contract, in which a deposit is paid up. This deposit can be agreed between the two parties but it’s usually about 10 per cent of the total amount. This reserves the property for the buyer until the day that the purchase is signed in front of the notary. If the day agreed the buyer does not appear in the notary, the buyer loses all the money given as deposit. But if the seller finds anyone else who gives more money than the agreed buyer, and the deposit has previously paid, according to the Spanish Civil Code, the first buyer could claim twice the amount paid back, this is called “arras”.
In the contract make sure that the property is perfectly mentioned and described. This can be checked by having a look to the Escritura of the seller and also is advisable to check the Catastro certificate, where all the physical measures, charateristics, boundaries and square metres are described. It’s also a very important item to check in your contract that the property is free of charges and liens, which means, as I mentioned last week, that there are no outstanding debts, attatchments or encumbrances such as mortgages or so on the property. The final item to include on the contratc is the final and declared amount. It’s very well known that in Spains there are lots of taxes and fees to pay, but trying to avoid them sometimes may bring you trouble. Don’t declare a ridiculous amount for the value of the house, because Spanish Tax Office, Hacienda, could start a review of the purchase six or seven months later with an inspection, this i called Comprobación de valores, and allows the Tax Office to use its own tables of values and charge you some more thousands Euros, if you don’t know what value to put in the escritura you could go to the Oficina liquidadora, located in the Land Registry where the property is inscribed and ask for it.
Once you sign the purchase or escritura publica de compraventa in front of the Notary you are ready to inscribe it on the Land Registry. The best way to do this as it the Notary itself, who can send by fax the Escritura to be inscribed. This inscription could take one month and half or two months maybe, depending o the Registry’s Bureaucracy. And it’s advisable to have a Spanish Lawyer or solicitor with you in order to supervise that everything it’s ok in all stages of the purchase and he or she will tell you the taxes you must pay.
The taxes to pay vary if you are the seller or the buyer. The seller only will have to pay the Plusvalía which is the municipal taxo n the increase in the value of your property since its las sale. But the buyer normally pays the Notary fees, the Impuesto de Transmisiones Patrimonionales, which is the Transfer Tax and may vary from each region. In Valencia Community is 7 per cent. Then the tax of the document’s fee or Stamp Duty (Actos jurídicos documentados) which is 0,5 % of the total amount. So if the purchase is between two parties and no company comes into the operation, the total taxes could reah the 7´5%. However, if a promoter company sells the property to someone IVA must be paid, and this IVA is only the 7% of the operation and must be paid by the buyer.
Next week I’ll explain how to make a lease contract or Contrato de Arrendamiento, explaining the different kinds of leasings, for example, house, premises, or seasonal lease.