Are you about to buy a property in Spain, but have no idea how to proceed?
Each country has its own rules for buying property and language barriers as well as cultural differences can cause problems during the process. However, we can assist you so that this does not become an issue for your project.
In Spain, the process and its consequences depend on the type of property you plan to buy (re-sale, off plan or new build property).
This article gives you the tools to make sure you purchase a property under the best and safest conditions possible.
Obtain the NIE (Foreigner Identity Number)
Foreigners who, because of economic, professional or social interests need to realise operations in Spain, are obliged to obtain the Spanish Foreigner Identification number (NIE). Thus, this step is compulsory whenever a foreigner wants to purchase property in Spain. You can either apply directly at the Spanish immigration services or through the Spanish embassy of your place of residence outside of Spain.
– Form EX-15
– Accreditation of the motive (required in case the specific office requests it)
Once the NIE is obtained, it is strongly recommended to open a Spanish bank account, in order to pay all the fees and expenses that will arise from the property, such as community of neighbours’ fees, utilities (water, gas, electricity), taxes etc.
The purchasing process
- First, you have to find the property you want to buy
Once you have decided on a property that suits you, the purchase process begins. For the following steps we recommend that you attain the assistance of a lawyer, since there are various aspects where you can run into problems and even be misguided by sellers and agents. Our Real Estate Department would be pleased to be by your side.
- Sign a reservation deposit contract
Usually, before the signing of any purchase document, in order to present an offer and for the agent to take the property off the market, there is a deposit to be paid amounting to approx. € 500 to € 1,000.
- Negotiate an “arras” agreement
The so-called “arras” agreement is where all the contract terms and conditions of the purchase are established, and part of the price that has been agreed upon, is paid. This down payment can be negotiated with the seller. Normally, the custom in Spain is to pay 10% of the purchase price.
The “arras” agreement in its most common form contains a penalty clause which gives the contract its name, stating that:
A. If the seller does not comply with the conditions settled in the agreement, they will have to refund the down payment in double.
B. If the buyer is the one that is not complying with the conditions established or withdraws from the purchase, the seller is allowed to keep the down payment.
The “arras” agreement is one of the most important elements in a property sales transaction in Spain. It protects your rights as a buyer and gives a guarantee that the sale will be completed. This is why it is recommendable that the contract is reviewed by a lawyer.
The “arras” contract constitutes a binding contract between the parties. However, in order to finalise the transaction, the public deed of purchase has to be signed in front of a notary public and the purchase must be registered with the property registry in order for the transmission of property to be valid before third parties.
- Signing of the public deed of purchase (completion)
This is when the transmission of the property takes place, and the client becomes the legal owner of the property. The public deed of purchase is signed at the notary public’s office.
The scheduled date of the deed usually takes place 1 to 3 months after the signing of the “arras agreement”. It can be narrowed or broadened at your convenience.
- Registration of the property in the public registry
Immediately after the signing before the notary, the public deed of purchase is registered with the Property Registry. It can take several months to have the title deed registered, depending on the registry’s work load.
- Fees and Taxes
Finally, as the new owner you have to pay the respective fees and taxes according to the type of the property (re-sale, off plan and new build property) you have purchased.
This article was written by Antonio Torres at Lexidy Law Boutique. You can contact them directly for legal advice regarding buying a property in Spain.
Disclaimer: Always seek professional legal advice when buying a property.