This a brief summary of legal advice of buying Spanish property intended to give a broad outline to a first time buyer of Costa Del Sol property for sale in Spain.
Merck Estates legal advice from officially registered solicitors specialising in advising you on buying Spanish property on the Costa Del Sol. Once you have chosen the property you wish to acquire, the next step is to enquire on features of the property; plans, terms of payment and extras if any. At this stage you might require the assistance of a qualified Lawyer who will aid you and clarify any points and costs involved.
Buying a NEW property
Most developments require the purchaser to make payments during the building process making a final payment upon completion and final handing over of keys and Title to it. These payments in advance range, depending on the development you have chosen, from 30% to 50% of the price, payable during the construction and balance at completion.
It is quite common that the amounts to be paid in advanced (30% to 50% of the total price) be distributed the following way:
Security of your investment
Under Spanish law the developer is obliged to provide the purchasing party with an insurance policy or bank guarantee. This will secure that any amount handed over by the purchaser (plus legal interest), will be returned should the property not be completed when agreed.
From May 2000 a new Building Law establishes that all developers that applied for licence after that date will also have to provide the purchaser with a ten-year guarantee duly bonded against major defects of the construction.
These two elements make the purchase of new property very safe in Spain.
Final completion and formalisation in public document
When the building has been finalised and inspected by the purchaser to his satisfaction, the sale will be formally completed before a Public Notary. A Public Title Deed will then be granted by the vendor in favour of the purchaser against final payment and handing over of keys.
The Title Deed is faxed to the Registrar, who will register the purchase at the Land Registry. Your lawyer will also pay, on your behalf, taxes and all relevant fees due to the notar and will handle the formalities of registration of your Title Deed. Similarly, your Lawyer may contract relevant supplies of utility services such as water and electricity and organise their payment through a local bank by standing orders.
Costs of acquiring a new property
Buying a resale property.
Most vendors will require from 10% to 20% of the purchase price to be paid at exchange of contracts and balance at completion.
Before exchange of private contract your lawyer will have completed searches and investigations on the property being sold and will secure it is sold free of charges and encumbrances and up to date in its tax obligations. The private contract will set out the legal description of the property, price, terms of payment and the obligations of both parties.
Security of your investment
Most properties are registered at the Land Property Registry which will allow your lawyer to confirm at completion that the property is sold free of charges and encumbrances and that it is bought from the owner.
Final completion and formalisation in public document
The sale will be formally completed in a Public Title Deed, which will be granted by the vendor in favour of the purchaser before a Public Notary against final payment and handing over of keys.
The Title Deed is faxed to the Registrar, who will register the purchase at the Land Registry. Your lawyer will also pay on your behalf all relevant fees due to the notary, taxes and will handle the formalities of registration of your Title Deed. Similarly, your Lawyer may contract relevant supplies of utility services such as water and electricity and organise their payment through a local bank by standing orders.
Costs of acquiring a resale property
Financing your purchase
Spanish banks will offer to finance up to 70% of acquisition price through a mortgage for non-residents. Your lawyer will be able to advise on costs and taxes regarding these facilities and applications on your behalf. Some developments already have Spanish mortgage facilities for their products, which are worthwhile considering as they usually have good market conditions are cheaper in cost refer to our Spanish mortgage page. Spanish mortgages
Ongoing expenses
Once the property has been purchased the owner will have to pay: community fees, rates, rubbish collection, Income and Wealth Tax, which as a guideline will be approximately 1,5% of the purchase price per year (considering a property with a price of €180,000). Water, electricity and insurance costs should also be budgeted.
Wills
Those who own property in Spain are strongly recommended to have a Spanish Will confined to their assets in Spain, as it will save their heirs having to translate, notarise and legalise any grant of probate or letters of administration issued in their own country. It will also allow them to simultaneously wind up the Spanish and home estates of the testator. Contact Merck Estates panel of lawyers for legal advice on buying Spanish property.
Jorge Farrow
JF&B FARROW Y DEL BARRIO MARBELLA LAWYERS
Tel + 34 952825598
Fax + 34 952776857
jfb@chipsur.com
Home Page
Merck Estates legal advice from officially registered solicitors specialising in advising you on buying Spanish property on the Costa Del Sol. Once you have chosen the property you wish to acquire, the next step is to enquire on features of the property; plans, terms of payment and extras if any. At this stage you might require the assistance of a qualified Lawyer who will aid you and clarify any points and costs involved.
Buying a NEW property
Most developments require the purchaser to make payments during the building process making a final payment upon completion and final handing over of keys and Title to it. These payments in advance range, depending on the development you have chosen, from 30% to 50% of the price, payable during the construction and balance at completion.
It is quite common that the amounts to be paid in advanced (30% to 50% of the total price) be distributed the following way:
- A small deposit of €3000 to €6000 as a reservation fee for the property, for which a receipt will be handed stating the exact unit, total purchase price and payment terms.
- A further amount is paid at exchange of private contracts normally fifteen days after reservation.
- Payments are made during construction, distributed in periodical instalments.
- Finally the balance of the purchase price is paid at completion.
Security of your investment
Under Spanish law the developer is obliged to provide the purchasing party with an insurance policy or bank guarantee. This will secure that any amount handed over by the purchaser (plus legal interest), will be returned should the property not be completed when agreed.
From May 2000 a new Building Law establishes that all developers that applied for licence after that date will also have to provide the purchaser with a ten-year guarantee duly bonded against major defects of the construction.
These two elements make the purchase of new property very safe in Spain.
Final completion and formalisation in public document
When the building has been finalised and inspected by the purchaser to his satisfaction, the sale will be formally completed before a Public Notary. A Public Title Deed will then be granted by the vendor in favour of the purchaser against final payment and handing over of keys.
The Title Deed is faxed to the Registrar, who will register the purchase at the Land Registry. Your lawyer will also pay, on your behalf, taxes and all relevant fees due to the notar and will handle the formalities of registration of your Title Deed. Similarly, your Lawyer may contract relevant supplies of utility services such as water and electricity and organise their payment through a local bank by standing orders.
Costs of acquiring a new property
- The buyer will have to pay 7% VAT on the purchase price. Please note that this tax accrues with each stage payment meaning every payment you make will be subject to an additional 7%.
- 1% Stamp Duty on the purchase price, which is paid in a one off payment at completion.
- Plusvalia is a one-off local tax on the increase in value of the land on which the property is built, since the last recorded transfer of ownership. It is based on the rateable value of the land. The vendor is the subject of this tax, but it may be stipulated that the buyer pays it.
- Legal fees
- Notary and Land Registry fees. These are set by law and the scale for the notary will range from €500 to €1,500.
- Land Registry fees are also set by law and are approximately 50% of those of the notary.
- Provision should also be made for bank charges when transferring monies abroad.
Buying a resale property.
Most vendors will require from 10% to 20% of the purchase price to be paid at exchange of contracts and balance at completion.
Before exchange of private contract your lawyer will have completed searches and investigations on the property being sold and will secure it is sold free of charges and encumbrances and up to date in its tax obligations. The private contract will set out the legal description of the property, price, terms of payment and the obligations of both parties.
Security of your investment
Most properties are registered at the Land Property Registry which will allow your lawyer to confirm at completion that the property is sold free of charges and encumbrances and that it is bought from the owner.
Final completion and formalisation in public document
The sale will be formally completed in a Public Title Deed, which will be granted by the vendor in favour of the purchaser before a Public Notary against final payment and handing over of keys.
The Title Deed is faxed to the Registrar, who will register the purchase at the Land Registry. Your lawyer will also pay on your behalf all relevant fees due to the notary, taxes and will handle the formalities of registration of your Title Deed. Similarly, your Lawyer may contract relevant supplies of utility services such as water and electricity and organise their payment through a local bank by standing orders.
Costs of acquiring a resale property
- The buyer will have to pay 7% Transfer Tax on the purchase price, which must be paid within a month from completion and prior to the registry of the Title Deed.
- Plusvalia is a one-off local tax on the increase in value of the land on which the property is built, since the last recorded transfer of ownership. It is based on the rateable value of the land. The vendor is the subject of this tax, but it may be stipulated that the buyer pays it.
- Legal fees
- Notary and Land Registry fees These are set by law and the scale for the notary will range from €500 to €1,500. Land Registry fees are also set by law and are approximately 50% of those of the notary.
- Provision should also be made for bank charges when transferring monies abroad.
Financing your purchase
Spanish banks will offer to finance up to 70% of acquisition price through a mortgage for non-residents. Your lawyer will be able to advise on costs and taxes regarding these facilities and applications on your behalf. Some developments already have Spanish mortgage facilities for their products, which are worthwhile considering as they usually have good market conditions are cheaper in cost refer to our Spanish mortgage page. Spanish mortgages
Ongoing expenses
Once the property has been purchased the owner will have to pay: community fees, rates, rubbish collection, Income and Wealth Tax, which as a guideline will be approximately 1,5% of the purchase price per year (considering a property with a price of €180,000). Water, electricity and insurance costs should also be budgeted.
Wills
Those who own property in Spain are strongly recommended to have a Spanish Will confined to their assets in Spain, as it will save their heirs having to translate, notarise and legalise any grant of probate or letters of administration issued in their own country. It will also allow them to simultaneously wind up the Spanish and home estates of the testator. Contact Merck Estates panel of lawyers for legal advice on buying Spanish property.
Jorge Farrow
JF&B FARROW Y DEL BARRIO MARBELLA LAWYERS
Tel + 34 952825598
Fax + 34 952776857
jfb@chipsur.com
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