The Spanish Property System is one of the quickest and most secure in Europe. In fact other governments are studying the Spanish System to learn from the benefits and guarantees that it offers. Like any property system, it is vital to follow each and every step with great care. It is highly recommended to employ the services of a Real Estate Agent or a lawyer to guide you through the various steps of your sale/purchase.
ADVISORS OR REAL ESTATE AGENTS
In Spain there are only two groups of professional Real Estate Agents who can provide you with all the necessary guarantees when they work on your behalf in a sale/purchase: G.I.P.E. (Gestores Intermediarios en la Promoción de Edificación), the national head office situated in Málaga and is the sole member in Spain of the "Confederación Europea Inmobiliaria". The second group is called A.P.I. (Agentes de la Propiedad Inmobiliaria) Both professional groups have a prestigious reputation throughout Spain, having undergone rigorous tests to practice their profession, and are therefore well competent in looking after your interests as the vendor or purchaser of a real estate property. These two groups also have their own lawyers, technical teams, informative literature, professional insurance, etc… Look for the G.I.P.E or A.P.I insignia in your real estate office as a guarantee of quality and professionalism.
HOW CAN I RESERVE A PROPERTY
To reserve a property that you wish to buy, it is necessary to pay a deposit of the total price (10%, 15%, etc). The vendor will then consider the property sold and will take it off the market with the obligation to respect the agreed price. If the deposit is not paid from the beginning, there is the risk of loosing the property because the vendor may sell it to a third party. It is usual, when the deposit is paid, to sign at this time a private purchase contract or to order the purchase to our representative (Real Estate advisor or lawyer) with a document called "Contrato de mandato de compra". Both documents define the price, the conditions of payment, dates and other specifications of the purchase.
These letters stand for 'Numero de Identificación para Extranjeros' (Foreigner Identity Number). You will obtain this document from the Ministerio del Interior via the Policía Nacional. You will have to fill in a form and present it together with your passport. This will take between three and four weeks to be issued. It is vital to apply for this document from the beginning because it will be required for all dealings with official entities, banks, etc.
WHAT IS THE "TITLE DEEDS"
At the time of the last payment of the private contract, you will be asked to sign, in front of a Public Notary, the document that recognises you as owner of the property you have bought. This document is called the "Escritura Publica de Compraventa" (Public Title deed), which states full details of the vendor and purchaser, exact description of the property, its 'linderos' (property boundaries), community fees related to the urbanisation where the property is located. It also states that the property is sold 'free of charges' and without any tenants, as well as other relevant details.
THE LAND REGISTRY OFFICE
Any changes regarding the property are registered on this document including inheritance, donation, mortgage, debts, etc. For this reason this document is an up-to-date record regarding the current status of the property that you are buying. Even though in Spain it is not obligatory to register with the 'Registro de la Propiedad' (Land Registry Office) it is highly recommended.
WHAT ARE THE LEGAL COSTS IN A PURCHASE/SALE
As well as the price of the property, there are some professional expenses and taxes that you will have to pay. They are:
1. Notary fees: These don't have a fixed percentage but vary according to a property price scale. They are also affected by the number of pages of the document, but are usually between 0.3% and 0.6% of the value of the property. 2. Taxes: When the property is new, you will be required to pay 7% V.A.T. and 0.5% of 'Actos juridicos documentados' (Mod. 600). When it is a resale, the tax will be 6%. 3. Registry fees: These are also calculated according to a property price scale and the number of pages (not calculated by percentage), and are usually lower than the notary's fees. 4. Plusvalía : This is a local tax calculated on the re-value of the land where the property is located, the base being the value of the land, the year when the vendor bought the property and the year of sale. The law states that the vendor has to pay this tax, but as a common practice, the purchaser pays it together with the other purchase expenses. 5. Advisor fees: Fees corresponding to the professional who will present and collect the 'Escritura' from the Land Registry Office, and who pays the plusvalía, etc…
CHECKING THE POSSIBLE DEBTS ON THE PROPERTY
Your Real Estate Agency or lawyer will apply for a 'current status declaration' of the property that you want to buy from the "Registro de la Propiedad" (Land Registry Office) to check to see if there are any debts on the property ('Nota simple' or 'Informe Registral'). He/she will check the electricity bills, local taxes, and any relevant community details. On the day of the signing in the presence of the Notary, a certificate stating that the property is 'free of charges' will be supplied. On his/her part, the Notary will apply to the Registro de la Propiedad (Land Registry Office) for the information relative to the property. This is to double-check and guarantee the rights of the purchaser.
WHEN THE VENDOR IS A FOREIGNER AND NOT RESIDENT IN SPAIN
If the vendor is a foreigner (i.e.a non-resident), and bought the property before December 1986, the equivalent of 5% of the value of the purchase price will be retained and given to the Hacienda Publica Española to guarantee the payment of any possible pending taxes from the vendor. It will be necessary to present a form called "211" If the vendor is a foreigner but has got a residence card, this retention will not be practised.
NOW I AM THE OWNER, WHAT NEXT?
Each year apart from the electricity and water, you will be required to pay a local tax called IBI as well as the community fees relevant to the community of owners where the property is situated. From the second year, you will be required to pay as well a small tax (approx. 0.8%) to the Spanish government ("Renta y Patrimonio"). We suggest you take out an insurance policy to cover any possible damage, and as well a maintenance agency to look after the property and deal with the tax department on your behalf when you are abroad. You can obtain a good income renting out your property through a specialised agency. Of course, enjoy the sun and beaches, the customs and the people, the Mediterranean cooking and the many leisure activities that you will be able to practise in Spain.