Checklist Before Buying Property in Spain
We have added together a checklist of most important matters you need to do before to buy your dream property. Once you have decided on the property you wish to buy, there are a few steps for you to know, which will help you going through the purchase process.
WHAT CAN I AFFORD?
You should never spend more than 30% of your monthly income on a mortgage payment. An alternate rule states that you can afford to buy a property that runs about two-and-a-half times your annual salary. For a more tailored look at what you can afford, use our online mortgage calculator to see what your monthly mortgage payments would be.
USING A PROFESSIONAL PROPERTY AGENT
As a professional property agent we try to be as helpful as we possibly can. We provide a selection of properties and local information. We may also help you to seek out the perfect property even though we do not have it already listed. Agents do not normally make a charge to buyers and therefore it makes sense for a buyer to use the helpful and knowledgeable services of an experienced agent. Agent’s fees are usually paid by the seller as an agreed percentage of the purchase price.
MAKING AN OFFER ON A PROPERTY
When you have decided on the property, the first step is to make a verbal offer through MiCasa24 Real Estate. Negotiations will then proceed until a price is agreed when you should appoint a lawyer to formalize the agreement.
APPOINT AN INDEPENDENT LAWYER
The lawyer, who should be fluent in Spanish and your own language will carry out the necessary checks on the property and complete the legal requirements of the sale. The first check is to obtain from the property registry a “Nota Simple” which will identify the registered owner and provide details of mortgages or embargos on the property. You should obtain from the seller receipts for payment of IBI (Impuestos sobre bienes Inmuebles), the annual real estate tax.
THE HOLDING DEPOSIT
After the price is agreed and the “Nota Simple” has been checked, you will have to pay a holding deposit to take the property off the market and reserve it until you can reach completion. Your lawyer will prepare a formal offer and agreement contract for this purpose.
EXCHANGE OF PRIVATE CONTRACT
The exchange of private contract or the signing of an option to buy would normally take place about two weeks after the formal acceptance of an offer, when the lawyer would have completed his searches. The contract would set out all the agreed terms and set a date for completion. At this stage, it is usual for the buyer to pay a 10% deposit to the seller.
COMPLETION AT THE NOTARY
On the assigned day, buyer and seller (or their authorized representatives) will attend the office of the notary to sign the “Escritura de Compraventa” (the Title Deeds), which should state that the property is sold free of charges, mortgages and tenants. The Notary does not check the terms, but solely certifies that the parties have agreed them. At this point, the balance of the payment is made and property possession passes to the buyer. Your lawyer will arrange payment of taxes and fees, and register your title deed at the property registry.
PROPERTY PURCHASE TAXES & FEES
There are three fees to be paid: Lawyers fee, Notary fees and Property Registry fees. Also there are two taxes: Plus Valia and transfer tax (ITP) if buying a resale home, or IVA tax if you are buying from a developer.
WHO PAYS WHAT?
It is normal practice for the buyer to pay the above fees and taxes with the exception of the “Plus Valia”, which normally is paid by the seller. The vendor will pay his own capital gains tax and also the estate agents fee.