Ok so there are a load of exciting property bargains to be had if you have the cash ready to buy one and you‘re hot to trot. But buying a property in Spain is different from buying in the UK and so this is what you have to look out for….
Spain property buying process stages
This initial reservation agreement or contract, much like in the UK, should stipulate the basic terms of the purchase, i.e. the price, details of the vendor and buyer, details of the property, when the Private Purchase Contract should be signed. A reservation payment of about €3,000 or €6,000 is paid at the same time. This tends to be paid to the local agent.
The next stage, the signing of the Private Purchase Contract, usually happens 20-30 days later, which allows time for legal due diligence to be carried out. A deposit, usually 10% for a re-sale / secondary market property, is paid on signing the Private Purchase Contract, which details the completion date, balance of monies due and other terms and conditions of the sale. The reservation payment (€3,000 or €6,000) should be offset against this, so it would be 10% minus monies already paid.
This will then give the buyer time either to obtain a mortgage, or get together the money required to complete the balance. Should the buyer fail to complete the sale by the final date, the buyer would lose the deposit. On the other hand, should the seller decide to pull out of the sale, or find another buyer with a higher offer, then the original buyer has the right to claim back twice the amount of the deposit.
The subsequent third and final stage of the Spanish buying process, is the signing of the Title Deed before the Notary Public. This transfers and confers ownership.
Role of a Notary in the Buying Process in Spain
The Notary Public is an official of the state, and his duty is to certify that the property Private Purchase Contract has been signed, monies paid over, and that the buyer and vendor have been advised of their tax obligations. In the UK this is not part of the process, a lawyer or paralegal does all of this as part of the „property conveyancing“. In fact it is not a legal stipulation that a lawyer is used as part of the buying process in Spain (as in the UK), but it isn’t advisable that a lawyer’s services are dispensed with because a Notary is involved. A Notary is not available to help negotiate a contract, or do the due diligence prior to contract signing, or prepare the legal contract and Title Deed. They are there to officially witness the sale and rubber stamp the process
Legal Due Diligence
A lawyer would check the legalities of the property: land ownership, the correct land classification, building licence for off-plan, or habitation licence in the case of a ready-built or re-sale, to ensure the property is legal. The existence of a habitation licence means that a property is legal and has been built according to land use and building licence granted. A lawyer can also check that all running costs and local tax payments are up to date with the local town hall, so no debt, or other charges are inherited. Debts are attached to the property, so if they are not cleared, the new owner takes on the responsibility for this debt.
Title Deeds and Registration
The “Escritura Publica” or “Title Deed” is the final document of the sale and is signed between the buyer and vendor when the final balance due on the property is paid. The signing takes place in the presence of a Notary Public, which makes the document legally binding.
In Spain, the Notary Public keeps the original of the document and the purchaser is issued with a second authorised copy, which is then entered in the property registry (against the payment of the stamp duty or transfer tax). This means that if the buyer loses the buyer’s copy, then the Notary Public can always issue another copy.
In the UK there is a centralised Land Registry which has a record of all legal property transactions. It is electronic and can be interrogated by members of the public, with basic levels of information, like historical price paid for the property, available for free or very little.
Spain is divided into over 8,000 municipalities (basic level of Spanish Local Government), which form provinces and in turn the 17 autonomous communities. And this is where things can get a bit fragmented. The detail of a property transaction is held locally, by the Notary, in the municipality. It is possible to apply for a Land Registry report online, a Certificate of Registration (Nota Simple) to check the property is free of charges, but the service is in Spanish and accessible by lawyers, not members of the public and contains minimal information.
Your property agent and independent lawyer can help check all these things are in place for you, to make the process safer for you to buy your dream holiday home abroad, in Spain.
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