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When purchasing Spanish property, it should not be assumed that the procedure
is the same as in your home country. There are a number of pitfalls to be
avoided and matters to be dealt with. It is therefore essential to take proper
advice from a firm of lawyers versed in the steps to be followed. Such a firm
can try to protect your interests and ensure that the procedure goes as
smoothly as possible. We will be pleased to help you to find a reputable law
firm, which will be able to deal with the steps involved in the purchase.
Also, it is important
to contact an specialised estate agent with time enough to show you around the
area, giving you an idea of both advantages and disadvantages of each place and
explaining the particular details of the purchase operation. A good estate
agent should always try to asses you, helping you to take the right decision,
rather than pressing you to buy whatever is more convenient for him or her.
We now go on to explain
something about the purchase process. Please bear in mind that the following is
only intended to give you a very general idea of what is involved, and that
each transaction is different and raises its own issues. We hope, however, that
you will find the following to be useful. All the information has been kindly
provided by SPANISH CONVEYANCING SERVICES, SL, a law firm in Mojacar, Almeria,
situated in Parque Comercial, Local, 73, to whom we are especially grateful for
all their expertise and suggestions.
THE PURCHASE
CONTRACT. Once you have found a property you wish to buy, to secure
this, freeze its price during the whole transaction and take it off the market,
you may well have placed a small reservation deposit with an Estate Agency in
the area. This reservation could vary depending on the vendor, but a minimum
sum of € 3,000 is normally considered. Shortly thereafter you will probably be
asked to sign a purchase contract. MojacarSun will try to ensure that the terms
of this contract are correct. However, we always recommend that, before signing
the contract, it is important that that your lawyer checks the proposed
contract and gives you an idea of its contents. The lawyer may well suggest
that certain terms of the contract be amended and will try to negotiate these
changes with the vendor.
LAND REGISTRY AND
BUILDING LICENCE. Before paying a substantial sum to the vendor –
for example when the purchase contract is signed – it is advisable that a
search is made at the Spanish Land Registry to try to ensure not only that the
seller has title to the property, but also that the property you wish to buy is
free of registered charges and encumbrances (mortgages, etc.). Apart from this,
in the case of properties to be built, it is also important to ascertain that
the builder has a building licence for the property. This will usually require
a visit to the local Town Hall to make verbal enquiries, given that there is
often insufficient time for a copy of the building licence to be obtained.
Often the planning permission will not be totally in order, given the time the
planning process takes and the speed with which development and building occurs
in this area. MojacarSun can this for you and will try to give you the
information you should know before you start paying.
COMPLETION.
Completion of the transaction in Spain takes place before a Notary Public. It
is at this time that you will be asked to pay the last part of the purchase
price. The Notary will check the identity of the parties and the registration
of the property at the land registry. The deed of sale and purchase, known as
the “escritura”, will be signed before him, and he will issue a true copy of
the deed to the purchaser. A member of our staff will accompany you to the
Notary’s office to explain the contents of the “escritura” to you and deal with
any problems that arise. It is important that you try to attend personally at
the Notary’s, but if this is impossible, or inconvenient, your law firm can
assist you with the drafting and execution of a power of attorney so that they
can sign the “escritura” on your behalf. It is also advisable that you visit
the property you are buying just prior to the execution of the “escritura” to
ensure that the property is ready and is to your satisfaction. Upon the
signature of the “escritura” you should request and be given the keys to the
property.
THE REGISTRATION
PROCESS. After the execution of the “escritura”, the fees and taxes
due on this should be paid and the deed presented for registration at the Land
Registry in Spain. Your law firm can deal with this on your behalf. You should
bear in mind that, depending, for example, on the workload of the Land
Registry, it can take a number of weeks for the registration process to be
complete.
PURCHASE COSTS.
As to the total of purchase costs (fees and taxes) to be paid on buying the
Spanish property, these vary from transaction to transaction. The usual rough
rule of thumb, for the purchase of dwellings, however, is some 10% over the
purchase price.
UTILITIES.
After completion, it is important that your estate agent is asked to register
the various utility services to the property in your name. These include local
rates, electricity, water, rubbish etc. Of course, MojacarSun will be pleased
to do this for you. If there is any problem we will keep in close touch with
your lawyer to report what the problem is and to assist him or her with any
matter we can deal with.
SPANISH BANK
ACCOUNT. It is important that you open a bank account at the outset
of the matter in Spain, so that you can, in due course, for example, arrange
standing orders to pay for the utility bills, taxes, etc from this account.
MojacarSun can assist you with the opening of the account and the setting up of
the standing orders. You should also ensure that you obtain a cheque book for
this account. In this way cheques can be drawn from this account to pay,
amongst other things, the fees and taxes arising from the purchase.
SPANISH WILL.
It is advisable that you sign a Spanish Will when you acquire your Spanish
property. In fact, the Will can also be signed at the time the “escritura” is
signed. One should not rely on any foreign Will, which has been signed, because
such a Will may not be valid in Spain. At best, relying on a foreign Will
result in difficulties and expense in Spain, which could have been avoided had
a Spanish Will been signed. Care must also be taken after signing a Spanish
Will that any future non-Spanish Will is appropriately worded so that it does
not inadvertently revoke the Spanish Will. Check these matters with your
lawyer. You should also bear in mind that the Spanish Notary raises a small
charge for the Will, which has to be paid by you.
TAX
IDENTIFICATION NUMBER (NIE OR NIF). Anyone acquiring property in
Spain must obtain a NIE or NIF number (both numbers are the same). Your
original passport must be shown to a Notary public so that he issues a true
copy of this. This copy is then used to apply for the NIF.
FISCAL
REPRESENTATION. Unless you intend to take up residence in Spain, it
is advisable that you appoint a Fiscal Representative who can represent you
before the Spanish tax authorities, receive any notifications, and make the
standard yearly tax returns. For a non-resident merely owning a house, one or
two bank accounts, and a car, the amount of tax to be paid is normally not
substantial – unless these assets are of a considerable value.
MORTGAGES.
Should you require a mortgage from a Spanish Bank, you should raise this as
soon as possible, at the outset of the case, to avoid delays and problems at
completion. In MojacarSun, we can assist you to get a mortgage from a Spanish
bank should you wish.
BANK GUARANTEES.
The first point to note is that, when a property to be built is being bought in
Spain it is advisable that the developer should offer a bank guarantee or
insurance, for the payments made prior to the property being handed over.
Often, however, developers are unwilling to offer such guarantees due to the
extra cost this raises for them. Where no such guarantees are in place, the
risk faced is if the property is not completed, or the developer enters into
financial difficulties. MojacarSun aim to advise you at the time if there are
no guarantees so that you can discuss the matter with you lawyer.
THE DECLARED
PRICE. Sometimes, you will find that the vendor does not wish to
declare the full price being paid for the property. This practice used to be
rife in Spain and still sometimes occurs. The intention of the vendor in this
situation is to keep down the tax due on the sale. This also reduces the
purchase costs for the purchaser (in particular transfer tax or Spanish VAT);
however, apart from this being a practice we cannot recommend, the problem for
the purchaser is that he could be faced with an artificially high capital gain
should he wish to sell in the future.
LOCAL PLUS VALÍA
TAX. The purchase of Spanish property can give rise to the need to
pay local “plus valía” tax. This is a local tax raised by the local authority.
It varies from property to property and from one Town Hall to another. By law,
the vendor should pay this tax, but often, the vendor and the purchaser
negotiate who should pay this.
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