In order for a property to be removed from the market, it is customary for the potential buyer to place a deposit of between 6,000 – 10,000 Euros (this amount varies depending on the proper purchase price). This deposit can be paid to the Real Estate agency or to the lawyers clients account, as the buyer’s legal representative
PURCHASE FROM A DEVELOPER (OFF PLAN OR NEW PROPERTIES)
After the deposit has been paid, the lawyer will promptly contact the real estate agency to obtain the contact details of the vendor’s lawyer. This is done to formally establish representation and to initiate the process of obtaining the required documentation for conducting thorough due diligence.
1. Verify the legal identity of the property owner/seller.
2. Confirm that the property under construction is registered in the corresponding Land Registry.
3. Ensure that the property is free from any charges, mortgages, liens, or encumbrances. If the developer has obtained financing through a mortgage, consider whether the buyer wishes to take over the proportional part of the mortgage or have it cancelled at their expense.
4. Verify that the property has obtained the necessary municipal building permit and, if applicable, a habitation license, and complies with local urban planning regulations.
5. Obtain and review the construction specifications or quality specifications, ensuring they are included as an annexe to the purchase agreement.
6. Verify the existence of a Bank Guarantee or Insurance Policy that provides coverage for all payments made to the developer during the construction process.
7. Confirm the coverage and details of the mandatory 10-year insurance guarantee (Seguro Decenal) that protects against structural defects.
8. Thoroughly review the purchase contract drafted by the developer to ensure it respects the buyer’s rights, is fully understood, and addresses all necessary aspects of the transaction.
PURCHASE FROM AN INDIVIDUAL (RESALE OR SECOND TRANSFER)
1. Obtain and verify the legal identity of the property owner/seller of the property you intend to purchase.
2. Confirm that the property is legally registered in the appropriate Land Registry.
3. Ensure that the property is free from any charges, such as mortgages, liens, or encumbrances.
4. Verify that the property has obtained the necessary municipal building permit and habitation license from the relevant Town Hall and that it adheres to local urban planning regulations.
5. Manage the study, preparation, and signing of all required contracts, whether private (reservation agreement, option contract, sale contract) or public, notarial documents (purchase/sale deed). Typically, the initial step involves signing a private contract, usually accompanied by a 10% deposit payment, followed by the execution of the public deed of sale/purchase after a reasonable period of time.
6. Thoroughly examine any outstanding debts associated with the property, including Council Tax Rates (IBI), horizontal property(community) charges, unpaid utility bills, and calculation of the applicable Plusvalía Tax. In cases where the vendor is a non-resident, it is essential to adhere to Spanish law, which stipulates that the corresponding amount of Plusvalía Tax must be retained from the purchase price.
7. Arrange for the payment of all expenses and taxes associated with the public deed of sale/purchase and its subsequent registration in the relevant Land Registry.
01 – First Transmission (New Development):
· Additional Costs: Approximately 10-13% of the propertyprice.
· VAT: 10% of the property price for residential properties.*
· Stamp Duty (Andalucía): 1.2% of the property price.
· Notary & Land Registry fee: 1% of the property price.
Legal fees: 1% of the property purchase price plus 21% VAT.
02 – Second Transmission/Resale:
· Additional Costs: Approximately 10% of the property price.
· Transfer Tax: 7% of the property price.
· Notary & Land Registry fee: 1% of the property price.
· Legal Fees: 1% of the property purchase price plus 21%VAT.
Upon completion of due diligence by the lawyer and confirmation that all necessary checks are in order, the preparation and subsequent signing of the private purchase contract will take place within 2-3 weeks from the reservation deposit. The agreed-upon amount with the sellers will be paid at this time. It is customary for the buyer to pay an amount equivalent to 10% of the purchase price for resale properties and 30% of the purchase price for off-plan properties upon signing the private purchase agreement.
The private contract is a crucial step where all terms and conditions of the purchase are defined.
To facilitate the buying process, clients may choose to grant a power of attorney to their lawyer, authorising them to act on their behalf in Spain. This grants the lawyer the authority to sign relevant documents related to the purchase and, if necessary, the mortgage. The power of attorney can be granted in Spain by a public notary, which is the simplest method with an estimated cost of 70 Euros. Alternatively, it can be granted in your country of residence before a public notary; however, in this case, it must be legalised with the Apostille of the Hague Convention or through consular legalisation for it to be legally recognised in Spain.
Following the signing of the private contract, the public deed of purchase will be executed within a period of 4-6 weeks, as per the agreed conditions with the vendors. The client will sign the deed with the lawyer’s assistance, or alternatively, the previously granted power of attorney can be used to sign on your behalf.
During this important stage, the remaining balance of the purchase price is to be paid to the seller, while the buyer takes physical possession of the property, thereby completing the transaction.
*The buyer’s lawyer’s fees include the necessary services for changing the utilities’ titular information, managing rates, garbage collection, community fees, and taxes.
