How does buying a property in Spain work?
As a real estate agent in Marbella, we regularly get the question from concerned people how the purchase of a (second) home in Spain exactly works. We would like to explain the buying process of a Spanish property to you here.
Have you come across a Spanish property that (almost) meets your requirements? You can then make a reservation or take an option on this Spanish property. You will then have to pay a certain amount of money. That amount is usually around 6000,- euro and can be paid by credit card.
In principle, you will always lose the down payment. That is not unreasonable because the property in Spain is held for you. Also on this website, your property will be registered as sold. You then have time to do some research and arrange things like financing. The down payment will be taken off the final amount if the sale goes through.
It is wise to include in the contract that if the seller withdraws, he will owe you this reservation amount - in addition to repaying the deposit itself.
Provisional purchase contract for Spanish house or holiday home
The sales contract can also be a provisional agreement that you draw up with the selling estate agent. You can also engage the services of a notary. If you are not yet sure whether you will be able to make the payment, you can agree with the seller that you can still renounce the purchase. This must be explicitly stated in the agreement. Often you will have to make a down payment. If you cancel, however, you may not get the entire down payment back, but this too is negotiable.
The role of the notary
In Spain, the notary's role is not as heavy as we are used to. He is mainly there to record the agreements between buyer and seller in an official document. He will check whether the seller is really the owner of the property. The Spanish notary also examines whether there are any attachments or mortgages on the property. If the purchaser does not speak the language well enough, the notary will call in an interpreter/translator. Although the notary has a duty to investigate, it is also important to check important matters yourself or to have them checked.
It is not unusual for the notary to state in the deed of title that he cannot be held responsible for any errors in his research. The extra check can be carried out by a lawyer or a so-called gestor. The latter is engaged to check administrative matters. The rates of gestors are free; compare prices and put agreements in writing.
Purchase contract for a Spanish property
If you decide you definitely want to buy the holiday home or your second home in Spain, then the purchase contract will be made. In this contract all parties are mentioned. A Spanish estate agent, gestor or notary normally finds out for you who the official owner is according to the property register (registro de la propiedad). It is very important that this person signs, otherwise you will pay but you will not be the official owner! You can really be 100% sure if a lawyer checks for you who is listed in the register.
As soon as the sales contract is signed, you have to pay 10% of the sales price. If you cancel after this payment has been made, you will lose the 10%. Again, it is wise to include in the contract that if the seller withdraws, he must pay 10% to you.
How to pay for your Spanish home?
When do you have to pay for the Spanish property?
- When is the delivery of the Spanish house or your holiday home?
- When do the payment deadlines expire in the case of the construction of a new Spanish home?
Deed of transfer of the Spanish residence
Normally, the transfer of existing properties in Spain takes place within 3 months. The notary writes the deed in the register. If you are financing the property with a mortgage, someone from the bank will also be present to sign the deed.
The delivery, the keys...
A last critical tour through and around the property in Spain is not unwise. If you take over the Spanish house or the holiday home in Spain with inventory, check whether there are any items missing. Think of the butane gas bottles, and all the sets of keys. Of course, you can also ask your estate agent to do this for you.
It is often difficult to return to such matters afterwards. In such cases, it is better to check than to trust, even if that might make you appear suspicious or unfriendly.
Escritura is the Spanish word for proof of ownership. When a property changes hands, an escritura is drawn up. The new owner of the property in Spain, gets a new escritura. The old escritura must be given by the old owner to the new owner.
The escrituras you get when you buy a property:
- Escritura publica de compraventa - this is the title deed. It states who owns which property with dates.
- Escritura de hipoteca - this is the mortgage deed you get when you take out a mortgage. It states the property, the amount and the owner.
Should you lose the escritura, a copy is always available at the notary. This can only be requested by the owner, who will have to appear with a passport.
Registration at the municipality in the land register
As soon as the purchase of the property in Spain is complete, you will have to register at the municipality (in the catastro). This will make you liable for the Spanish real estate tax.
You will have to take care of the declaration of this tax yourself. You really have to do this yourself, because you will not automatically receive a tax return form. If you fail to do so, the tax may appear after many years.
The Seguro decenal is an obligatory 10-year insurance on new builds in Spain. This insurance covers damages caused by construction defects.
The Spanish law states that as long as a Spanish property is less than 10 years old, this insurance must always be in place. If, for whatever reason, the insurance is not in place, the property cannot be transferred. This can be quite tricky if you are about to emigrate to Spain. The notary is obliged to make a note in the Property Register if the 'Seguro deenal' is missing.
It is therefore not advisable to buy a property, less than 10 years old, without a seguro deenal.