Purchase Contract
A private purchase contract (Contrato de compra-venta) is made between yourself and your builder as vendor. The original contract is in Spanish and is accompanied by a translation in English.
When the villa or apartment is completed the official Deed of Sale (Escritura Publilca de Compra-Venta) will be prepared by a Spanish Public Notary (Notario) and signed by both the purchaser and the vendor.
Care with Contract and Payment
Once you have chosen a property, a contract is drawn up. The contract will include payment details, terms and conditions, and completion date. On signing the contract payment of a deposit is required.
The main contract is the document that protects the purchaser's legal status to the property. It clearly lays out both the purchaser's and the vendor's (developer's) contractual obligations and responsibilities.
Buying a home in Spain is as safe as purchasing a property in the UK, provided you have the appropriate legal assistance. The Spanish legal system is quite different from that of the UK. We strongly recommend that all purchasers use legal assistance when buying a property so that their interests are safeguarded thoroughly.
Payment Terms
We act solely in the capacity of selling agents for, builder and developer in connection with new property, and for the vendor regarding second-hand property.
Example of usual payment structure for new build (however this does vary from builder to builder).
• 10% deposit on reservation of property
• 40% interim payment must be made within 30 days of above
• 25% interim payment*
• 25% balance of purchase price payable on completion*
*if the client is obtaining a mortgage, then balance of 50% will be paid on completion
Example of payment structure for second-hand property
• 10-20% deposit to reserve the property
• Balance to be paid at Notary's office
Legal Advice
When a mortgage is required the bank use their own solicitor (Abogado) to ensure everything is legal. If no mortgage is required we strongly recommend that you appoint an Abogado or Gestoria (legal representative) who has experience of purchasing Spanish property to make the necessary searches to ensure that the land belongs to the vendor and is free of charges; that the land has the necessary planning and building permission and to ensure that the contract is fair and legal.
Lawyers and Legal Representatives are also used to complete town hall taxes and general accounts. Spanish legal offices communicate with clients more often via telephone than correspondence as the postal service within Spain is much slower than that in the UK!
Some clients may need to organise Power of Attorney (authorisation for someone to act on your behalf) so that the purchase of their property can be completed after they return to UK and this can easily and inexpensively be arranged.
Spanish Will
It is strongly recommended that you make a Spanish Will, as laws of inheritance are different in Spain. Spanish Wills can be made quickly and inexpensively. You should be guided by your Spanish legal representative.
Typical questions when purchasing a property in Spain
1. What expenses do I pay when purchasing a home in Spain?
We suggest as a guide you budget for additional costs of approximately 10% of the purchase price.
These costs cover the following:
• Search fees at registry to check legality and for debt
• Notary fees
• IVA (VAT) or transfer tax is 7% on price declared on Escritura
• Contracts for connection of water and electricity
• Local taxes
• New house taxes
• Legal assistance
2. What about a mortgage in Spain?
Mortgages with Spanish banks are organised quickly. The maximum mortgage for a non-resident is 70% of purchase price subject to status and survey. The period of a mortgage can be 5, 7, 10, 15, 20 or 25 years. Interest rates may fluctuate according to the base rate set by the European Central Bank
You will be required to provide the following information when applying for a mortgage:
• Proof of income, eg last three pay slips, P60 or certified accounts if self employed
• Last 3 bank statements (not always necessary)
• Copy of your passport
• Amount you require to borrow
• Term of years you would like the mortgage
Please note without the above information we cannot ask the bank to process your mortgage.
Additional costs associated with using a Spanish Bank:
• Commission of between 1% and 2% of the bank value of the property
• A property valuation fee
• Notary fee for the bank
• Registry fee for the bank
Please be advised that your Spanish home is at risk if you do not keep up repayments on a mortgage or other loans secured on it.
3. What are the annual outgoings of keeping a property in Spain?
Water and Electricity
Consumption of electricity and water is metered, with charges similar to those in the UK.
Community Fee
This fee is controlled by the owners' association committee, and covers the maintenance of the urbinisation. For example, public lighting; maintenance of community swimming pools and common areas; and security etc. The fee corresponds to the size of your plot as a proportion of the whole development.
Property Tax - approximately 0.2% of the rateable value of your property in Spain.
Contribucion Urbana - local rates payable to the town hall.
Insurance - house and contents.
Fiscal Representative - most owners appoint a fiscal representative to make their annual tax return (in May) and normally this person will also handle other payments such as local rates, insurance etc.
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