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Prior to viewing
It is essential to have sufficient funds at your disposal to cover the
reservation deposit. A sum of between 3,000 and 6,000 Euros is usually
sufficient and payment
by cash or credit card is recommended.
Negotiating the purchase
Once a suitable property has been chosen, the purchase terms and price may
need to be negotiated with the vendor. You may wish to make your offer
subject to mortgage, which can be arranged on your behalf.
Choosing a lawyer
There are many excellent local lawyers in Spain who may be fluent in your
language. A Lawyer will provide the legal guarantees for the purchase of the
property ensuring that Spanish legal requirements are met and that the
property is bought free of encumbrances, charges, liens or debt and up to
date in all its payments of local contributions and community charges etc.
Making the purchase
The reservation deposit is paid to the selling agent. This is refundable if
the vendors change their mind but is not refundable if you cancel. This
guarantees that the property is taken off the market and reserved for you at
a fixed price. The purchase terms will also be agreed,
such as completion date and your required
method of payment.
Exchange of private contracts
Once you have paid the reservation deposit, you have a period of up to 30
days to exchange the private purchase contract with the vendor. At this
stage the balance of the deposit must be paid. You can arrange your lawyer
to handle this stage on your behalf if you are unable to attend. Before
exchanging contracts your lawyer will have completed
detailed searches and investigations on the property and the cancellation of
any outstanding debts.
Completion
A sale is formally completed
in Spain when the public title deeds of purchase are signed
before a Notary, the final payment made and possession given to the buyer.
Registration
Once signed, the Notary will fax a note of the title deed
to the local land registry confirming your identity as the new owner. Your
lawyer will also pay on your behalf all the relevant transfer taxes
associated with the purchase. Final registration of the deed
may take up to two months.
Costs involved
when purchasing a property
As a rule of thumb, you should allow a combined
total of around 10% to cover the fees and taxes when purchasing a property.
Fees and taxes
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LEGAL FEES: min 600 Euros or 1% of the purchase value, whichever
is the greater, plus value-added
tax (IVA) currently charged
at 16%.
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NOTARY FEES: the scale is fixed
by law and may range from 300 Euros for lower priced properties to 840
Euros for higher priced
properties.
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PROPERTY REGISTRY: as a rule of thumb, 60% of what the
notary charges.
THE TAXES:
transfer tax (ITP) at 7%, or when buying from a promoter, developer or
habitual trader, IVA at 7% plus stamp duty at 1%. The IVA rate of 16% is
applicable when purchasing plots of land, commercial premises,
or garage spaces. `Plus Valia' tax is normally payable by the vendor but it
may be stipulated that the buyer pays. The tax may range from a
few hundred Euros to as much as several thousand Euros on
larger properties with a lot of land. Who pays this will be discussed
in the negotiations and in consultation with your lawyer. |
