The information contained within this "Buyers Guide" has been provided to Mosaic Realty by its preferred legal partner, Martínez-Echevarría, a highly renowned Spanish law firm acting within the Real Estate sector as an independent legal assistant for the client. The information provided is intended to provide an overview of the processes and costs involved in purchasing a residential property in Spain from a typical buyer´s perspective and is accurate as of Q1 2017. Certain information may change over time and you are recommended to only use this information for guideline purposes and to directly engage a reputable law firm at the time of purchase to ensure that you are correctly informed with regards to your specific circumstances.
When a client decides to purchase a property in Spain, the first step is to choose a reputable real estate agency that is able to find a property which best suits their needs. When the client has decided which property they wish to acquire, we begin to carry out the relevant procedures:
a. The Deposit
In order for the Real Estate Agency to remove the chosen property from the market, the client has to pay a deposit of approximately 6,000 Euros (this amount can vary, depending on the property). In order to protect our clients’ interests, we always recommend them to transfer this amount to our clients’ bank account, until we have verified that all the details related to the property are in order.
b. Due Diligence
Once we have received the deposit, we request that the Real Estate Agency provides us with the contact details of the vendor/vendor’s lawyer to notify them of our representation and then request the following documentation from them:
i. public title deed of purchase;
ii. invoices corresponding to the municipality tax and waste collection tax;
iii. electricity and water supply invoices; and
iv. contact details of the community of property owners.
When we receive the above documentation, we proceed to carry out our main task, which is the due diligence by which we verify all the aspects related to the property, such as:
i. Ownership (whether the Vendor is the registered owner of the property;
ii. Possible debts the property may have with the Town Hall, Community of Property Owners or utilities (the property should be sold up to date with payments therefore we verify this)
iii. Charges or encumbrances ( the property should be sold free of debt, therefore we ensure that any existing debts are cancelled prior to completion);
iv. Urban situation(whether the property has the corresponding licences granted by the Town Hall and complies with the urban law);
v. Utility supply contracts (whether the property has electricity and water supplies).
c. Private Contracts
Once we have completed our due diligence, and everything is in order, we will proceed with the preparation of the private contract for the payment of the amount agreed with the vendor.
The private contract is a very important step in every purchase, as it will set the conditions of the purchase therefore we carry out all the necessary negotiations with the vendors in order to defend the client’s interests.
d. Public Deed of Purchase
After the signing of the private contract, in a period of 3-4 weeks, depending on the conditions agreed with the vendor, the public deed of purchase will be signed by the client with our assistance (in the event that the client signs the Deed in person) or by us (in the event the client grants us power of Attorney).
e. Taxes and Community Fees
Finally, our work does not end with the public deed as we also assist by arranging the water and electricity supply contracts, opening a bank account and as well as setting up direct debits for the utility contracts, the municipal taxes, waste collection and the community of property owner’s fees.
f. Other Arrangements
We also arrange to obtain the NIE number (which is necessary to purchase a property in Spain) and assist with preparing a Power of Attorney (in Spain or abroad) in the event that we are required to sign on behalf of the client.
The expenses payable by the buyer and seller when purchasing a property in Spain are defined by Spanish law. Whilst there is not a great deal of room for negotiating these fees, most of which are paid by the seller, in some cases, it may be possible to come to an agreement whereby both parties can share the expenses.
Notary costs are primarily determined by the value of the property, however, their fees can be increased by factors such as the amount of pages the title deed has. For example, if the buyer and the seller were both being represented by a lawyer under a power of attorney, it would be necessary to include the copies of both power of attorney deeds in full, in the title deed.
|Purchase Price||Notary Fees|
|25.000 €||600 €|
|50.000 €||625 €|
|100.000 €||675 €|
|150.000 €||710 €|
|200.000 €||750 €|
|250.000 €||790 €|
|300.000 €||830 €|
|400.000 €||850 €|
|975.000 €||875 €|
The fees for registering your property on the Land Registry are also set by regulations and again this cost is largely dependent of the price of the property. There are some differences that modify the general guidelines for costs such as changes to housing of official protection, forests or farms.
|Purchase Price||Registry Fees|
|25.000 €||395 €|
|50.000 €||420 €|
|100.000 €||445 €|
|150.000 €||470 €|
|200.000 €||510 €|
|250.000 €||550 €|
|300.000 €||590 €|
|400.000 €||630 €|
|975.000 €||650 €|
Although notary and registry fees are fixed tariffs, established by the Spanish government, your solicitor will typically recommend that you budget 1% with a minimum of 1,500€ (or 2% if buying with a mortgage). They can always refund any surplus to you after completion!
In most cases, a Gestoria (a professional who deals with administrative bureaucracy on behalf of a client) is only used if the property is being purchased with a mortgage. The Gestoria is selected by the bank and is responsible for carrying out all of the administrative procedures, so that the mortgage and the new owners of the property are registered at the Land Registry. The rate charged by the Gestoria is not regulated so may vary from company to company.
There are two different types of taxes depending on whether you are purchasing a newly developed property or an existing building with previous owners/tenants.
1. Purchasing a Newly Developed Property (First Owner after Construction
2. Purchasing a Property Previously Owned/Tenanted
ITP (Property Transfer Tax) is the tax levied on sales of real estate (as an alternative to VAT) for houses which have been previously owned. Although this varies from region to region and there may be reduced rates for young buyers, large families etc. The general rule to apply in Andalucía is that the following percentages are payable:
Unlike purchasing a new home, the IAJD (1.5%) is payable on the mortgage liability. So, for example, if you purchase a property for 200,000€ with 100,000€ cash and the balance with a mortgage, your IAJD bill will be 1,500€. Cash buyers of resale properties do not pay this tax.
In general, all the above funds are all required the day before signing at the notary, to be able to pay for the above procedures. Any funds remaining will be refunded once the purchase and the mortgage is registered at the Land Registry.
*The information in this document is correct as of 07/02/2017. Neither Martínez-Echevarría nor Mosaic Realty is responsible for any changes that may be made to the above estimated costs.
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