Buying a Property in Spain - The Legal Facts

Once you have decided to purchase your dream property in either the Costa Blanca or Costa del Sol you should follow the following Golden rules:-
1. Choose an Estate Agent
2. Find an English speaking lawyer to advise and assist you.

THE ESTATE AGENT
Once you have chosen the right estate agent with experience and knowledge of the property market, he will help you find a suitable property. The agent will show you the finest selection of properties and advise you on the best areas to invest in, compare prices and qualities.

You should ask your estate agent as many questions as possible. Such things as the outgoings payable every year to maintain the property, i.e. the annual Estate Tax (IBI), the community fees, the charges for rubbish collection, the water rates, electricity charges and the property Income and Wealth Taxes in respect of the property you wish to purchase.

When you have found your dream property you will be asked to make an immediate payment of 3000 Euros (approx. £2000) which will secure both the plot and more importantly the price. The further payment plan will be advised but on new properties you should be aware that 50% of the purchase price will become due within 4 weeks.

LEGAL ADVICE
The lawyer will now help and advise you through the purchasing procedure and also after legal completion. There are many excellent English speaking lawyers in Spain and we will be happy to introduce you to one. The right lawyer is your guarantee that Spanish Legal requirements are met, that the property is registered in the vendor's name and it is free from any mortgages, charges, encumbrances, debts or other liabilities. Your lawyer will negotiate and discuss the purchase terms with the seller's lawyer. The terms should not be limited solely to price but should cover in detail all your requirements like the completion date, the form of payment etc. Once you have appointed your chosen law firm they will explain the procedure involved in buying in Spain and the associated costs. The next step after paying the reservation holding deposit is to evidence the terms of purchase in writing. At this stage the lawyers will draw up the contract. On new properties you will be expected to pay 50% of the purchase price at this stage. On re-sale properties you will be expected to pay a deposit of 10% of the purchase price on exchange of the contract, which is not normally refundable if the purchaser defaults. However, if the vendors fail to perform his obligations you will be entitled to rescind the contract and claim damages. Before your lawyer exchanges the contract he will already of completed his investigations and searches on the property.

Finally, on the day on completion your lawyer will go to the Notary Public to sign the Title Deed and make the final payment to the vendor who will release the keys. Immediately after completion, the notary will fax details of the title deed to the local land registry to inform them of the identity of the new owner. In this way the Notary and Land Registry act together to protect and guarantee your interests. You will then have to pay the relevant taxes and have the original title deed submitted to the Land Registry for registration of your title. The lawyer will also arrange for all local utilities to be transferred into your name and arrange for payment through your local bank account.

THE FEES
Lawyer fees of 1% to 1.7% of the purchase price depending on the complexity of the transaction

Notary will charge you a fixed fee which will be in the region of £250 for a property price of £75,000 to £400 for a property price of £200,000

Land Registry Approximately 20% of what the Notary charges.

TAXES
If you are buying a NEW property or a property in the course of construction you will pay IVA (VAT) at 7% plus 0.5% stamp duty. This must be paid within 30 days from the date of signing the deeds.

Re-sale properties are subject to a Transfer Tax of 6%.

IVA (VAT) on Commercial premises or Land will increase to 16%

AS A GENERAL RULE OUR ADVICE IS TO ADD 10% TO THE BASIC PURCHASE PRICE OF ANY PROPERTY TO COVER THE ABOVE LEGAL FEES & IVA (VAT)