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Purchase Guide
The following is a general guide to purchasing new and resale property in Spain and as such does not attempt to cover all the legal aspects and financial points encountered and we therefore recommend that you employ the services of a lawyer.

Reservation; Once a price has been agreed for the purchase of a property normally a reserve deposit,(or ‘senal’) is paid to remove the property from the market and fix the price. Usually around 2000 – 3000 euros. After initial searches by the lawyer a purchase or private contract will be drawn up.
Private Contract
A private contract will be drawn by your lawyer as an agreement between seller and purchaser. This contract will contain all details relevant to the property including:- Description, purchase price and deposit, form of payment, penalty clauses, inventory (if applicable), and an “on or before” completion date. When both parties are agreed then the contract is signed and the deposit will become payable, usually 10% of the purchase price.

At this stage you must be sure that the property is the one for you as usually there is a clause in the contract stating that if the buyer rescinds then they lose their deposit, or if the seller rescinds then they must return double the deposit to the purchaser.
Prior to signing the Title deeds (escritura) the lawyer will conduct searches and obtain a “Nota simple” to ensure the vendor is the registered owner, all taxes have been paid, if any charges or debts exist on the property and that clear title can be obtained.

The deeds are signed at the public notaries office in person by vendors and purchasers or by their representative if a notarised Power of Attorney is available. It is therefore important to inform your agent as soon as possible if you are unable to attend at the notaries to enable Power of Attorney to be arranged.

Usually the Deeds are signed, (completion), within 30 days of the private contract but this can be extended to any period if mutually agreed. Prior to signing all bills relating to the property must be proven to be paid up to date, (electricity, water, rates, etc,) the lawyer or ourselves will make these available for inspection by the notary.
Making Payments
The full balance of the payment is required before the title can be transferred to the purchaser, therefore it is essential that arrangements are made for funds to be available prior to completion.

If a Mortgage is required we can arrange one for you but would need to be informed as soon as possible.

A Bank Account is also necessary here in Spain and we can guide you as to the best type for your needs.

A fiscal number or “NIE” must also be obtained by the purchaser in order to register the property, we will of course help you obtain this. Payment can be made in various ways, but usually by bank transfer or bankers cheque or draft, and can be in Euros, the local currency, or a foreign “currency”, if again mutually agreed.
Total expenses incurred by the purchaser are normally about 10% of the purchase price and are made up of the following:-

Stamp Duty For Transfer Tax is charged at 8% of the declared price for resale properties, this tax is not applicable for new properties which instead are subject to I.V.A. (V.A.T) of 8%.

Notary And Registration fees total approximately 2% of the declared value.

Lawyers usually charge up to 1% of the purchase price.Plus Valía Tax is applied by the local authority and calculated on the increase in value of the land occupied by the property since the last purchase, the value or the size of the building does not affect this tax.

Although officially the responsibility of the vendor to pay this tax often as is more the custom of late the onus is on the purchaser to pay. This is sometimes a “bone of contention” in purchases and has to be established who is liable at an early stage and must be stated in the private contract.
Retention & Capital Gains Tax - Vendors
A non-resident Vendor is liable to a tax of 3% of the purchase price withheld or retained in lieu of capital gains tax, it is however the responsibility of the purchaser to enforce this retention, (the lawyer normally arranges this for you), deducted from the final payment. Properties registered prior to 1st January 1.986 are exempt. Capital gains by resident owners is calculated on the difference between the declared price when purchased and the sale price and is currently around 21% depending on length of time owned.
Taking Possession
Takes place once the title deeds have been signed and full payment made, it is then that you will need to arrange the following.
Transfer of Services
Electricity, water, rates, telephone and if applicable community fees are usually paid by “direct debit” or standing order through your bank in Spain and we can arrange for these to transferred to your name on completion. Insurance of the property becomes your responsibility on completion and we can recommend and arrange quotes as required.
We strongly advise the making of a Spanish will to cover your Spanish estate. Whilst a foreign will is recognised this may lead to delays and prove more costly in the long run. Usually a lawyer draws up the will which would need to notarised.
Congratulations on your New Home!
Although it appears daunting the Spanish conveyancing system is straightforward and used properly gives both the purchaser and the seller complete safety.
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