Buying a House in Spain
By Sheila García Parra - Solicitor/Consultant
The process of buying a property starts with the deposit contract. You have to sign it and transfer the amount that has been agreed. This is done to secure the sale and obviously, to take the house off the market.
Our Civil Code says that: The buyers give to the vendors , money as a deposit for the final purchase of the house, paid in cash when signing this contract ( this amount will be discounted of the final price of the house).The buyers will lose the money in case they don’t fulfil this contract or they will receive double the money they have paid in case the sellers don´t fulfil it.
After doing this, a search on the property needs to be done to make sure that there are no charges or outstanding bills from the previous owner, because if you sign with any outstanding debts or if the house is not in right conditions, you won´t be able to do anything after going to the Notary.
What we need to check is: water bill, electricity bill, Property Tax, see if the property has a habitation certificate, community fees (in case there are...), also if there is a mortgage or any other sort of encumbrance on the property that has to be cancelled before buying it.
Once everything is ready, all the papers have to be taken to the Notary to prepare the purchase of the property.
According to our law, the buyer has to pay for the Notary fees.
On the day of the completion you need to take a translator, because the deeds are only in Spanish and you will be required to take one, and a fiscal representative will also be required if you are a non resident. Your lawyer will do both things.
Once the sale has been completed and the money paid, you will receive the keys (exchanging money for keys), and the property will be yours. The vendors will not be allowed to get back to the property any more.
After being to the Notary, we have 30 days to pay the main Tax (Impuesto sobre Transmisiones Patrimoniales). It is the 10% of the value that is written on the deeds (declared value), unless you are buying directly from the builder. In this case, the Tax is 10%. Make sure you pay it in order to avoid problems with Hacienda (our Tax Office) in the future.
You will probably be asked when you are buying to declare less money in the deeds of the house that the amount you are really paying in order to pay fewer taxes. Be very careful with this because you can have problems after a while. Know that in Spain we have an organization depending on the government which is called ‘Catastro’ and they review all the purchases of the properties, so if after a few years, it is considered that you have paid for your property less money that what you should have paid according to the prices in the market, you could be fined.
So, the right thing to do is to ask your lawyer to check the value of the property in order not to have these problems.
After the Tax has been paid, the house has to be registered at the Land Registry Office. We have to take the deeds there, the registration of the house will be done in your name and the Deeds will be ready in three weeks. The Land Registry Office fees also depend on the price of the property and they also have to be paid by the buyer.
What you also need to take into account if you are getting a mortgage, is that there will be a few more costs involved like the opening commission (it´s normally 1.5% of the money you are getting, but it depends on the Bank), a 1.2 % Tax also paid only in the event of getting a mortgage. Notary and Land Registry Office fees will be paid twice (one for the mortgage, the other one for the purchase of the property). So bear in mind that the obtention of a mortgage will be around 3% more on the price of the property.
To be able to do anything in Spain now, you will be required to have an NIE number, which is an identification number that it is obtained at the Police Station and which will be required for anything you may want to do in Spain.
Although it seems difficult to understand, it is very simple if you do things well from the beginning. Always try to get advice from the beginning and remember not to sign anything, until you are absolutely sure of what it implies.