Steps to the Purchasing Process
1. Once the buyer decides on a specific apartment and a purchase price was agreed by seller and buyer, a reservation deposit is paid, and the property will be taken of the market by the vendor. This deposit averages €6000. This amount is kept by the lawyer in their lawyers’ account and is stipulated to be a ‘reservation deposit’. It is part of the initial private contract between the 2 parties. This payment can be refunded if, upon making all due diligence research , your lawyer were to find any irregularities to the property and would recommend you not to go forward with the purchase. Also this amount can be refunded if the contract stipulates: subject to obtaining a mortgage for the purchase. If your mortgage application were to be rejected by the bank, the purchase would be cancelled and your deposit refunded to you.
2. At this time, the buyer’s lawyer requests the vendor, or his/her legal representative for the documents of the property, so the lawyer can start due diligence checks for example the urbanistic and legal situation (charges, encumbrances, etc). The buyer’s lawyer will also prepare a draft of the contract that will be signed in the next step. In this contract the agreed purchase price is stated and the time frame for completion or if a completion of more than 1-2 months is requested by the buyer, a 10% depositwill be requested whilst waiting for final completion of the purchase.
3. Completion: In a estimated period of 4 weeks (depending on what is agreed with the vendor) the rest of the price up to the 100% is to be paid, and the title deed to be signed in front of a Spanish notary. When some bank financing is necessary to buy, completion will take place when the mortgage is ready. The buyers need to sign this deed personally, or a representative can sign on their behalf with notarized power of attorney. You can organize this power of attorney (POA) with your lawyer at a minimal cost. Your lawyer can then do all the necessary steps up until handing you over the keys after signing at notary.
*When the buyers are going to be physical persons it will be necessary to provide their passports, marital status and addresses. If the buyers are foreigners, they will need to apply for the NIE – which is a tax number for foreigners – at the police office. Every foreign buyer needs to have a NIE number (Número de Identificación de Extranjeros). The NIE number can take up to 3 days to be obtained after the application is submitted. Again a POA can be given to the lawyer to obtain this NIE in your absence.
If you wish to grant POA to your lawyer, we will need to receive copies of passports and the address and profession from every buyer.
**Very important notice: Due to the Money Laundering regulations in Spain, the funds for the purchase of a property in Spain need to come from the country of origin of the person who is buying the property, and also from the bank account in the country of origin in this persons’ name.
4. After completion, the lawyer takes the deeds to the Land Registry office. The registration will take approximately 2-3 weeks. This means the property is already in your name at the moment the deeds are signed at notary, payments are made and keys are received. However the registration at the Registry takes a few weeks.
5. The lawyer will also prepare the water and electricity contracts for your property, and organiSe direct debits for the payment of the water, electricity, community fees, municipality tax and rubbish collection.
6. The costs when buying a resale property are:
- Transfer (purchase) Tax
- 8% for amounts up to €400.000
- 9% for amounts between €400.000 and €700.000
- 10% for amounts higher than €700.000
- Notary and Registry fees = 1% of purchase price (+21% VAT)
- Lawyers’ fee = 1% of purchase price (+21% VAT).
If you are using a mortgage, then add an extra 1% – Notary and Registry Fees and 1,5% – Stamp Duty on the mortgage liability.
As a rule of thumb we recommend clients to add to the purchase price an additional 10-11% to account for costs and taxes of the purchase.
When using financing add another 2.5% to this.
Using a lawyer when purchasing in Spain is a must and will give you complete peace of mind. They will guide you through the whole process and beyond. After completion they are available if any further queries or issues need solving. They also will recommend and assist with tax declarations, payment of taxes, community fees, making a will here in Spain etc.