| Phone: | +34 902 585 435 | |
| +34 932 155 393 | ||
| Fax: | +34 911 817 574 | |
| Skype user: strongabogados | ||
| Business Hours Monday to Friday 9:00 - 17:00
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| Barcelona office: Balmes 177, 4 2 08006 Barcelona Spain (Click for map) Tenerife office: Plaza 25 de Julio, 4, 1D 38004 Santa Cruz Spain (Click for map) | ||
For our start-up service, we perform the key tasks to avoid problems later on: background checks on the property, and a full review of all the paperwork and pre-agreements.
Our premium service is a full package from start to finish to ensure your real estate purchase goes smoothly.
Articles:
The steps to buying a house in Spain
FAQs:
What are the pitfalls in buying a property in Spain?
The seller wants the declared price to be less than what I'm actually going to pay. Should I do this?
If I'm buying a property, can I save on taxes by creating a company?
What information should I get from my real estate agent?
Are real estate agencies regulated?
When I sell my house, are there any required inspections?
What do your services include?
What other costs are involved in buying a property?
Your offices are in Barcelona. Do you offer your services in the rest of Spain?
Can I avoid travelling to Spain for the closing?
What is the role of a notary in Spain?
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The steps to buying a house in Spain
Once you have decided on the property that you want to buy, the process is this:
Nota simple informativa
With a nota simple from the Property Registry (Registro de la Propiedad), you'll find out
if the property is free of debt, if it really belongs to the seller, and if the description of the property matches what the buyer has been told (to avoid surprises about missing square meters).
The pre-agreement
Between the seller and the buyer, it's best to
have a contract in place until the public deed of purchase is
ready. It's usually a simple document in which the
seller expresses their intent to transfer the property to the
buyer, and the buyer expresses their intent to buy at the price and
conditions agreed upon. At this time, the buyer also gives to the seller
a percentage of the agreed-upon price, typically 10%. The typical agreement in Spain (called contrato de arras) is if the buyer backs out of the contract, they lose the deposit; if the seller
backs out, they have to pay double. Of course, the buyer and seller may choose another type of agreement if they prefer.
The mortgage
The documents typically required by a bank are:
If you get a mortgage, you will become acquainted with an appraiser (tasador). The bank requires an appraiser to ensure that their loan to you is safe. You will need to pay for the appraiser's work, usually between 300-500 euros. Note that the tasador by law is a licensed architect, so even if you don't need a mortgage, but have doubts about the structural integrity of the house, you might want to hire an appraiser.
The closing
The property transfer must be certified by a notary. The deed of purchase will be given to the buyer after the
notary reads it and the parties present agree to the contents of
the deed. The following must then be presented: proof
of identity (or power of attorney) of both parties, the seller's
title of property (a form that reports the investment to the
Central Register), and the buyer's payment. The buyer and
seller sign the contract; beneath their signature, the notary signs using his
firma protocolizada and the deed is ready for taxes.
Taxes
For the buyer: transfer tax(impuesto de
transmisiones patrimoniales) and stamp duty(impuesto de actos jurídicos documentados).
If the seller is an individual, the buyer pays a tax of 6% (7% in some regions)
of the price specified in the deed. If the seller is a real
estate developer and the building
or land to be built on represents a first-time transfer, then the buyer pays
VAT tax instead, meaning 7% for
housing, 16% otherwise. If for housing, you have to add a
stamp duty, in this case reduced to 0.5%, depending on the region
(for Madrid it's 1.5%). Some special conditions apply for the
Canary Islands.
For the seller: a local tax called the plusvalia (sometimes it is agreed that the buyer pays this tax).
With a copy of the deed in hand, the seller must go to the City Hall (or
wherever local taxes are paid). After filling out the form, the
seller will receive in the mail a notice of how much they have to pay.
This amount is calculated based on the number of years the property
was held, and on the property's valor
catastral. Be aware that each town has a different
procedure regarding payment of this plusvalia. It's
best to ask at the notary's office about this payment.
Property Registry
You must register your deed at the local office. This guarantees that your ownership rights to the property are fully protected. (Some small towns don't have an office, some big cities have many -- check the original deed of the seller to find out which
office corresponds to you). You will be charged a standard fee
(about .4% of the first 6010 euros, going down to
.02% for over 6,010,121 euros).
Extended example
Bob and Judy found an apartment in Barcelona and negotiated a price of 340.000. The seller, Jordi, did not use a real estate agent. Bob and Judy signed a contrato de arras. The seller asked for a downpayment of 40.000, a bit more than the usual 10%, but Bob and Judy didn't want to argue this point. They then went to a bank for a mortgage of 260.000. The bank offered them a variable-rate mortgage for Euribor + .50%, with no opening fee, no cancellation fee, and a first-year rate of 3.50%. Since Euribor was currently 2.31%, they saw that this would cost them an additional 1300 the first year. They asked the bank to give them Euribor + .50% for the first year also, which the bank agreed to.
The bank requested the following documents from Jordi:
Once all of Bob and Judy's documents were presented, it took one week for them to be pre-approved. It took another 1 1/2 weeks for the bank to get an appraisal (tasacion) done on the property (no delays on Jordi's side in letting the appraiser in), and another 3 days for the bank to hear back from the appraiser. The appraised value was 413.000, so the bank approved the loan. Bob and Judy went to the bank to sign the mortgage contract. They were also required to get property insurance (118/year) and life insurance (which they got on Judy, since it only came to 178/year for her). Bob and Judy confirmed that after a year they could cancel both policies (since Bob, in fact, already had a life insurance policy). They were also required to domiciliar a few things in the bank account. They called the gas, electric company, and nursery to have automatic withdrawals done through this account. The bank then gave them an estimate of what the mortgage payments would be, as well as a listing of the various retainers (provisión de fondos) that they would need to pay. The provisión de fondos appeared as follows:
| Compraventa/Purchase (340.000) | ||||
| Notaría | Hacienda | Registro | Gestión | Total |
| 795 | 8500 | 415 | 418 | 10128 |
| Préstamo/Loan (260.000) | ||||
| Notaría | Hacienda | Registro | Gestión | Total |
| 909 | 5200 | 439 | 441 | 6989 |
| Cancellation of prior mortgage (86.441 remaining) | ||||
| Notaría | Hacienda | Registro | Gestión | Total |
| 425 | 216 | 244 | 885 | |
| Bank fees | ||||
| Com. Ap. PH | Seguros | 5% NIE | Otros | Total |
| 300 | 42 | 342 | ||
| Receiving party | Amount received | |
| Gestor | 18.002 | 10.128 + 6.989 + 885 |
| Bank of prior mortgage | 86.441 | |
| Seller | 212.673 | 340.000 - 40.000 (already paid) - (86.441 + 885) |
| Total | 317.459 |
The total at the bottom says 317.459. Bob and Judy already paid 40.000. Did this mean they actually had to pay 357.459 in total? Yes, at least initially. The 10.128 and 6.989 are the retainers for fees that will need to be paid to the notary, the property registry, to the tax office (Hacienda), and to the gestor. The property purchase, the new mortgage, and cancellation of the seller's mortgage all have to be notarized and registered. This bank contracts a gestor to manage this and make the various payments. At the closing, the bank rep/gestor will tell you that they will send you the title for the property in 2 months (once it has been registered). At this time, be sure to ask the bank for all the notary, Hacienda, and Registry receipts. The bank must refund you the difference between these actual receipts and the retainer that was paid.
Then note the cancellation costs of 885. Bob and Judy don't pay this. Their bank will charge this to Jordi. Jordi then complains to his own bank, "How come I have to pay this? You told me I had a 0% cancellation fee." His bank responds that this is not a cancellation fee. This is the cost to register the cancellation with the property registry (and all registry changes require a notary's signature).
The bank then charges 300 to handle the life and property insurance forms. Jordi is a resident of Spain, so no 5% tax to nonresidents is withheld.
Bob and Judy transferred 57.459 to the bank to pay the rest of what they owed. Four days later was the closing in Barcelona; 30 days in total from the day they presented the documents to the day of the closing. The closing went smoothly, though Jordi made a long face when he heard the property had been appraised at 413.000. Jordi received the check from the bank rep and gave Bob and Judy the keys to the apartment. Two months later Bob and Judy received the title from the bank rep.
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What are some pitfalls in buying a property in Spain?
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The seller wants the declared price to be less than what I'm actually going to pay. Should I do this?
And the broker tells you this is common practice, right? In truth, it's a known practice, but not so common. What is happening is that the seller wants to declare lower capital gains so they can pay less taxes. The problem for you as the buyer is that when you go to sell the property down the road, you will then have to pay more capital gains (unless you also find a buyer willing to make this deal). You will pay in taxes all that the current seller didn't pay. So why would anybody accept this? It's because some people in Spain have a sizeable amount of money tucked under their pillow that they never declared as earnings to the tax office. Giving this money as cash to the seller effectively launders it. If this is not the case with you, then don't make a deal with the seller. In fact, this should be made clear in the pre-agreement, so the seller doesn't try to force in this provision a week before the closing.
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What information should I get from my real estate agent?
For a new construction, you should get:
For an existing house, you should get:
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Are real estate agencies regulated?
There is a national registry of real estate agents -- Agente de la Propiedad Inmobiliaria (API) -- but agencies are not required to become members. In fact, many large agencies are not members. With an API agency, there are more controls. For example, there are declared fee guidelines (between 3% and 5%).
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When I sell my house, are there any required inspections?
No. In Spain, there are no required inspections, such as for excessive radon levels or termite damage.
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What do your services include?
Our start up conveyancing service includes:
Our premium conveyancing service includes all of the above, plus:
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What other costs are involved in buying a property?
Whether the buyer or the seller pays the various fees and taxes is always negotiable. Who pays the fees should be clearly specified in the pre-agreement. The following, however, are the fees and taxes generally ascribed to the buyer.
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Your offices are in Barcelona. Do you offer your services in the rest of Spain?
For our start up service, we do all the work from our office. Our premium service is only offered in Barcelona and the surrounding areas, unless you are interested in our including travel costs in our fee.
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Can I avoid travelling to Spain for the closing?
With our premium service, yes. You can give us power of attorney by a qualified notary in your country, and we will represent you at the closing.
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What is the role of a notary in Spain?
A notary in Spain has a more elevated role than in the UK or USA; they do much more than just verify signatures. To gain the title of notary requires years of additional studies. At the closing, the notary takes over, acting on behalf of both parties to make sure that the transaction is proper and agreed to.
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