The Buying Process in Spain

The information below gives you an outline of the steps of the buying process in Spain from choosing the property to the complete registration of the notarised title deeds at the Land Registry office. This information should be treated as a guideline only and we recommend that if you decide to purchase a property in Spain, you should appoint a Spanish lawyer (abogado) who will fully outline the process and protect your interests. Investment Homes Abroad can recommend independent lawyers in the region of your choice or you can find your own. The whole process begins with what is known as a 'preliminary agreement'.

Preliminary Agreement

By this agreement, commonly called the 'Reservation Contract' or 'Deposit Agreement', the vendor and the buyer officially express their intention to draft, in the near future (normally one or two months) a private purchase contract on a specific property. The signing of a preliminary agreement is not a compulsory step within the purchase process and on many occasions a private purchase contract is directly signed between both parties. At this stage, the purchaser is normally asked to pay a deposit.

Once the contract has been signed, both parties are entering into a contractual relationship and must fulfil the legal obligations arising from it. In the event that the buyer decides not to buy the property, the deposit paid is not always refundable.

Private Purchase Contract

Once the parties have agreed on the property and the price, a private purchase contract is drafted. Before signing the contract, it is important for the parties to fully understand and agree the nature of the obligations and rights arising from the contract. We strongly recommend that you have the contract checked by a Spanish Lawyer before signing it.

A private purchase contract that complies with Spanish law should state, amongst other things, the personal details of both parties, the price of the estate and the different stage payments to be made, as well as a full description of the property.

If a preliminary agreement has not been signed earlier, the first payment to be made would be the equivalent of a deposit, which normally corresponds to a percentage of the total purchase price.

Bank Guarantee

If you buy off-plan, it will normally take anything from one to three years to complete the project. A worry for some clients is that something could happen before completion which could jeopardise any deposit made, such as the developer going bankrupt etc. However, in those circumstances the purchaser should be protected by bank guarantees or insurance policies. Spanish law obliges developers to guarantee deposits through bank guarantees or insurance policies. If something did go wrong, the total amount of the payments already made should be refunded to the purchaser with a 6% annual interest rate. Your Spanish Lawyer should ensure that you to obtain guarantee documentation.

Signing of the Deeds

The Notary Public (notario) is the only person entitled to grant a 'Public Deed'. He/she issues a deed based on the terms privately negotiated by the parties in the private purchase contract. The public deed is issued to accredit ownership.

The Notary will not certify the title deed if the parties do not identify themselves presenting an original passport or identity card. The parties can attend the signing in person or appoint someone, usually a lawyer, as Power of Attorney, if they cannot attend the signing.

Land Registry

After signing, the notarised deed should be presented and registered at the local Land Registry office. However, before doing so, taxes such as Stamp Duty Tax, Transfer Tax or V.A.T. have to be paid. These taxes vary depending on whether the property is a resale or is recently built. According to Spanish law and prior to the signing of the deed, the Notary is obliged to ensure with the Land Registry that there is no undisclosed charges or encumbrances on the property. The Land Registry is in charge of maintaining all the details of the property and record financial charges and other matters that may affect the title. The registration of the deed therefore provides the highest level of protection.