GUIDE FOR BUYING PROPERTIES IN SPAIN FOR UK BUYERS AND INVESTORS UPDATED 2014-2015
Welcome to TLACORP. Our team of specialists has prepared a legal guide with all the necessary steps and information to complete the acquisition of a Spanish property.
If you are reading this report is because, maybe, you are thinking in Spain as your “Place in the Sun”. Our company is delighted to help to form your
decision from a professional an independent point of view.
In this guide you will find detailed information from how to buy a new property, or to buy a resale, or a repossession, and passing by all the steps of the process, main points to check, and parts involved in the process.
We really do hope you are satisfied with it, and special thanks for trust in our company.
“Prior information is the key of success” – Winston Chuchill
I.- Buying a new property (off plan)
1.- Check your promoter/developer
2.- Points to check
3.- Documents involved
4.- Expenses for the buyer
II.- Buying a Spanish resale
I.A) Points to check
I.B) Steps to buy a resale in Spain
I.B) Buying a Bank’s repossession
III.- Selling properties in Spain
1.- Documents before the sale
2.- Taxes involved in the sale
– Rustic land
Catastro and Registro de la Propiedad
Cédula de habitabilidad – Is this obligatory? – Who has to supply it?
What is NIE? – Better in Spanish Consulates?
I.- Buying a new property (off plan)
Our team of Spanish Lawyers experts in Spanish properties will guide you in the process to buy a Spanish property either in Alicante, Costa Blanca, Almería, Murcia, Cosat del Sol, Málaga, or Catalonia.
The process of buying new Spanish properties is very similar that to buy resales, but there are important differences to consider. Our team of Spanish lawyers have prepared a practical guide with the main aspects involved in the acquisition of Spanish properties, in the conyenace process.
– Buying off-plan: In the majority of the cases, the first agreement for the purchase of the Spanish properties is done when the construction is still in project, and the works are not started yet.
It creates insecurity in investors, especially when they have to deposit some money and to assume obligations towards a property which is only a “project”, and they do not know in a high number of cases the Builder´s reputation and the economic situation of the Construction company, and the most important how getting the proper guaranties and payment protections to the required payments?
– Legal and Administrative construction documents: When buying a new property there are several documents which must be studied, and properly checked, in order to control the legal situation, and the proper development, from the construction.
This is a task which must be done by Spanish solicitors, in all steps of the evolution of the construction till the end. So, at any stage of the building works, there are documents which must be studied by the purchasers, or by their lawyers, in order to guarantying that all the legal, and administrative, requirements are fulfilled properly.
– Expenses, taxes and other costs: In general, the process, and expenses are more or less the same as in a Resale. But there are determinate aspects, elements, costs, taxes and expenses which have a different concept and treatment, and which deserve a special consideration in this report.
ASPECTS TO CONSIDER WHEN YOU ARE BUYING AN OFF-PLAN :
1.- CHECK YOUR PROMOTER/DEVELOPER
One of the most important decisions when someone buys off plan is to pay the initial deposit and the following payments of the purchase over a property which is not built yet.
In the majority of the cases, the first agreement for the purchase of the property is done when the construction is just a project, and the works have not started yet, or are poorly developed.
As explained above, this situation creates insecurity in the investor, which is demanded to pay from the first very beginning. Knowing aspects like if the developer is a legal registered company, duly inscribed in the Companies Legal Registry, or others like if the builder really own the land where building, and if it is owning it in the right conditions, etc, will reduce the risk, and will help to confirm the position on the sale.
This is why is very important to follow the essential points list to check at this stage.
2.- POINTS TO CHECK
If you are buying from a Developer, it is even more important to carry out the relevant pre-contract checks. In particular you need to instruct your Spanish lawyer to ask the builder to:
Proof that the Developers own the land: you need to see his “escritura de compra”.
Check that there are no loans outstanding: you need to obtain a “nota simple” from the LAND REGISTRY.
Ensure that the Developer has paid his “Impuesto sobre Bienes Inmuebles” (IBI-Council YTax): If it is unpaid, this tax is attached to the property so the new owner will become liable. You should ask to see the receipt for previous years and check they are duly paid.
Obtaining a “certificación catastral” and check the “plan parcial” (planning development from the Town Hall) to ensure that the “urbanización” (urbanization) itself is registered.
Check with the “Urbanismo”, (Construction Dpt.) from the Town Hall (also Planning Department ) to ensure that the development is in an area allowed for building and that planning permission, Also, check that there are no other developments planned nearby that could affect your new property.
Check that the builder has obtained a Licencia de Obra ( Building Permit).
If every point indicated above is right then you can proceed to the “contrato de compraventa”. You should ensure with your Spanish Solicitors that this contains the following points:
The total price of the building, completed and ready for occupation, including obtaining the “Licencia de Obra” (Building Certificate), “Garantía o Aval Bancario” (Bank Guarantee), “Declaración de Obra Nueva y Division Horizontal” (Declaration of new work and Horizontal Division) “Seguro Decenal” (Ten Years Insurance), “Certificado final de Obra” (Construction Completion Certificate), “Licencia de Primera Ocupación” (Licence for First Occupation). These documents are essentials, as without them you will not be able to obtain and “escritura” or register the property for utilities. The Builder or Developer should be responsible for obtaining these and paying for them.
Arrangements to pay an initial deposit and payment schedule: The contract should provide the payment specifications with the correspondent V.A.T.
The Bank Guarantee (Aval Bancario – Certificado de garantía) Any stage payments made must be covered by an equivalent bank guarantee or insurance bond in the event of non- completion. In this way, in case of breach of the contract for builder’s responsibility, buyers are entitled to get the return of all amounts paid during construction + legal Interest.
Completion date for the building: Completion should be specified, and also the date when the whole building, and infrastructure has been completed, and all the necessary certificates obtained. A penalty should be provided for late completion. Equally, there will be a penalty clause to protect the Builder or Developer that if you fail to make the payments specified, the contract becomes null, and any rights or obligations provided by the contract will lapse.
A detailed plan of the property must contain dimensions and specifications of the fixtures and fittings: this is often annexed to the contract and it is called “memoria de calidades”= quality specifications.
The Builder or Developer is responsible for the installation of gas, electricity and water and sewage: The buyer should be responsible only for payments of the installation of water and electric meters, and for the current gas cylinders, if mains gas supply is not available.
The “cuota de participación” (share of the total costs) in the “comunidad de propietarios” (Community of Owners): Even if this has not been formed yet, and no subscription has been calculated yet, your share will be determined by the size and facilities of your property and this will be known. If the “comunidad” has already been formed, the contract should specify either the current fees or the generally expected level of fees for next year.
The Builder or Developer is responsible to pay off all debts of the land, specially the IBI, until the “escritura” is signed.
The Buyer will only be responsible for the payment of the costs of the escritura de compraventa, not for the division horizontal and the declaración de obra nueva . Both of these documents must also be done in a public Notary in order to make them legal. And, before signing the escritura de compraventa, you should ask for proof of evidence that the previous legal steps have been registered.
Seguro decenal (Ten Years Insurance): Spanish´s building law (called the L.O.E. Ley de Ordenación de Edificación) makes Builders (and architects) legally responsible for 10 years for any damage resulting from the foundations, load-bearing walls and other structural elements. Builders must have insurance cover for this. Policy details must be given to the notary and they must be included in the escritura. Without this done previously, the sale transaction cannot be Notarized. Furthermore the Builder is responsible for 3 years for damages causes by construction material defects, and for 1 year for the state of finishing elements (snagging list). In the last two cases insurance cover is not required, but obviously if the Builder can offer this as an additional guarantee, prefect.
Once you have bought the property and you have the “escritura” (Title Deed) notarized, you need to register the sale in the land registry office. Also, the same day of completion, you must be provided with a “copia simple” (or “official copy”) in order to register the property at the Council Tax Office for the payment of the IBI (Council Tax). You will need also this copia simple in order to be able to contract the individual water and electricity supplies.
VERY IMPORTANT: The date of completion of the sale, do not forget to bring with you, your original Passport, or Identity Card, and original NIE at the Notary, to sign the escritura, and get the keys.
Licencia de Obra (Building Permit ): This is the administrative permission from the Town Hall to build as per the project initially presented by the builder. The buildere, then, must complete, or execute, the works strictly fulfilling the project, and the permit or building license.
Garantía o Aval Bancario (Bank Guarantee): The purpose of a B. Guarantee is to secure the full amount of deposits paid by off-plan purchasers. The aforementioned guarantee is issued on the Developer’s bank account, which means that all payments made on account of the purchase price remain blocked in the account until completion. In case that the Developer fails to finish the construction for whatever reasons, the Bank will reimburse all amounts paid on account plus an annual interest as compensation.
* Declaración de Obra Nueva y Division Horizontal (Declaration of new work and Horizontal Division). This is the certification which confirms that, in the Land Registry, the construction is duly inscribed with the different units (apartments) which will form part of the final building. In this act, legally, the land leaves to be “an empty plot”, and passes to be a plot where determinate constructions, apartments, blocks, etc will be developed. Constructions must be perfectly identified in this act, considering all the aspects as size, borders, exact location, participation of the community areas, etc.
This act, processed in a notarial document, is done before the ends of the works. So, when this act is done, the construction will be registered in the land registry as “on construction”. It means that the building is not completed yet.
Later, once the works are complete, and in order to change the consideration of “on construction” to “construction complete”, the developer/builder, must provide the following documents:
The Certificado Final de Obra (issued by the Architect).
The Licencia de Obra – Building permit (issued by the Town Hall).
The licencia de primera ocupacion-Licence for First Occupation (issued by the Town Hall).
The 10 year insurance policy.
* Seguro Decenal (Ten Years Insurance): The building law called L.O.E. Ley de Ordenación de Edificación makes Builders legally responsible for 10 years for any damage resulting from the foundations, load-bearing walls and other structural elements. Furthermore the Builder is responsible for 3 years for damages causes by construction material defects and for 1 year for the state of finishing elements. In the last two cases insurance cover is not required, but obviously if the Builder can offer this as an additional guarantee.
Without this the sale transaction cannot be Notarized.
*Certificado o Acta Final de Obra (Construction completion Certificate ): This is the document issued by the Builder´s Architect where conforms that the development is complete and finished, and that works have been executed following the project, by virtue of which they obtained the Building License.
*Licencia de Primera Ocupación (“Licence for first occupation”): This is widely known also as “Certificate of Habitation”, and it is a certification that the Town Hall issues after an inspection of the finished work. They check that the CONSTRUCTION is made according to the building project, and following the building license, and that the property has all the necessary security and health items to be occupied.
Obtaining the certificate of habitation is compulsory to complete sales of New buildings. New properties cannot be sold by the builder without providing the Certificate of Habitation. But, as we are going to detail in further parts of this guide, this obligation is not extended to RESALES. So, the legal obligation to supply this document from the vendor is when the property is NEW built
*NIE : Non-residents in Spain need to apply the foreigner´s tax identification number NIE, which allows you to pay taxes and is used to track your activities in Spain. When you are in the process of buying a property the application for this number must be done previous to the signing of the title deeds.
Process to obtain NIE is now easy and rapid when obtained in any of the Spanish Consulates in UK, instead to ask for it in person in the Immigration office in Spain.
ON COMPLETION OF THE SALE YOU HAVE TO BRING YOUR ORIGINAL N.I.E. TOGETHER WITH YOUR ORIGINAL PASSPORT TO THE NOTARY OFFICE.
*Contrato de Compraventa (Purchase Contract) : This is Is a legal agreement between two or more parties with legal capacity to purchase / sale a property .This contract is based on legal and commercial agreement from the parties, and contains all the general and specific conditions which regulates de purchase/sale.
*Escritura: This is the “public” Sales the contract. In Spanish “Contrato de Compraventa” formalized by the Notary in a legal document. In other words, it is the Title Deeds of the property. Once this document is signed, the Land Registry is able to authorize the change of the owners name over the property.
In order to formalize the “escritura”, both parties, builder and buyer, directly or legally represented (by power of attorney), assist to a meeting at the notary office, where the notary formalize the initial agreement of the sale in a public document which is the “escritura”. In this act, the builder confirms that all the payments on the price are received, and the buyer receives the legal possession and ownership of the property with the handing over of the keys.
After this meeting, the “escritura” must be registered in the land registry office, after the payment of the rest of taxes, and expenses derived from the sale.
While the registration process is complete (1-4 months), the buyer is provided with an official copy of the deeds to be used as proof of the ownership for other purposes, like, for example, contracting the individual contracts of water and electric supply.
4.- EXPENSES FOR THE BUYER
Notary Fees: For the formalization of the title deeds.
Land Registry Fees: For the inscription of the deeds, obtaining the change of owners from the property.
V.A.T. (I.V.A. in Spanish): Currently, this is the 10% over the total price of the property.
Stamp Duty: Usually is the 1,5 % over the total price of the building, in Murcia, Valencia Region, and Andalucía. This tax can be reduced substantially if the purchasers are buying with the intention to use the property AS MAIN RESIDENCE.
Others: Solicitors Fees, mortgage expenses, contracts of water, electric, and gas, etc.
As you can see, there are innumerable points to control and to consider at time to buy off plan Spanish properties. These are matters that can be out of your knowledge, and that, in the majority of the cases, cannot be understood by you. So, we strongly recommend you to use the services of serious and reputable Spanish lawyers (see the proper section on this report on how choosing the right lawyer), who can guaranty you the success of the conveyance process, assuring and protecting your investment.
II.- Buying a Spanish Resale
Our team of Spanish Lawyers experts in Spanish properties will guide you in the process to buy a Spanish property either in Alicante, Costa Blanca, Almería, Murcia, Cosat del Sol, Málaga, or Catalonia.
The Spanish Legal system of purchasing Spanish properties is not difficult it is just different from other countries. This means that it is important that you have a very approximate idea, and understanding of what to expect, and that you always deposit your trust in conveyance Spanish Lawyers, who will take good care from the whole conveyance process.
Our team has concluded some important aspects to consider, in the process to buy a Spanish property resale:
1.- Legal and Administrative situation of the construction:
Buyers must be provided with exact situation of the construction of the property. It must be checked that the property is already finished, and legally completed, and also is very important to know how was built, and how it has been used, and improved (if the case). And, the most important, if the property is subjected to any construcción fine or orders of demolition. This last is essential.
2.- Electricity, Water, Gas and other installations:
Buyer must check the situation of the utilities in the property, what is the current position of the supply with the companies, contract s, debts etc. Ask also to see the latest paid-up receipts included the Community of Property Owners.
3.- Legal possession from the Vendor:
Sometimes the Vendor is selling a property without the necessary capability, or with enough conditions and to do it. For example, because there is a process of divorce, or there is a process of inheritance that has not been completed yet, a mortgage debt an embargo, etc..
4.- Negotiations and conditions with the vendor:
Negotiations like the way of payment, private agreements like the furniture, white goods, if they are included in the sale price, and therefore prepare an inventory list if the case, etc.
5.- Expenses, taxes, and other costs :
Although is very difficult to get an exact amount to pay on the expenses and taxes to be paid on top of the price, it is necessary to provide the buyer with an approximate liquidation, including these concepts, from the first steps of the process, in order to confirm its position on the price in the transaction.
IF YOU ARE IN THE PROCESS OF BUYING A RE-SALE, WE RECOMMEND YOU THE FOLLOWING:
I.A).- POINTS TO CHECK:
Be particular alert to the terms, buying from a particular it is even more important to carry out with a relevant pre-contract checks in particular you need to:
Confirmation that the vendor has enough legal capability to sell the property. This is usually checked seeing the escritura, and consulting the land registry (nota simple).
Checking the legal situation of the property like its description, its borders, eventual limitations, debt, etc. This is done consulting the land registry office and the Catastro.
Ensure that the property is properly registered in the Council Tax, or Impuesto sobre Bienes Inmuebles (IBI): If this the property is not duly registered for the payment of this tax, or simply, it is unpaid, this tax is connected to the property so the new owner will become liable.
Obtain a certification from the Catastro office or certificación catastral to ensure that the property is duly registered and check that the size and conditions are the same ones as described on to you.
Check that there is not any fine or limitation affecting the property due to its construction, like eventual fines or, even demolition orders.
Check Fiscal value or Declared Value. The price agreed with the vendor is called REAL PRICE or COMMERCIAL VALUE, and is the value used to calculate the taxes derived from the purchase and sale, to both taxes: the ones for buyer, and the ones for the seller. Considering the buyer, the purchase tax (Transfer Tax) must be paid, on completion.
However, the Spanish administration has 4-5 years to inspect, and to reconsider, the price used as base of the tax (REAL VALUE). And, then, the tax office may consider that the Real Value is too low, or under the value they have on their records to these kind of properties, and then they may refuse the liquidation and declaration of taxes already presented on completion. In this way, they may propose a price to be used as base of the transfer tax, which is called TAX VALUE.
If this was the case, the Spanish administration might require you to pay the difference between both values, the REAL VALUE and the FISCAL or TAX VALUE (the one calculated by the administration).
Tax value can be calculated before completion when searches done, so, in order to prevent these consequences, ask your solicitor to check this point, and, if the Tax Value on the property is lower than the REAL, then, to take the necessary actions to prevent it, for example, asking for an architect valuation of the property to be joined to the purchase deeds.
If every point indicated above is right, you can proceed to the Contrato de
Compraventa, you should ensure that this states with the following provisions:
1. The total selling price of the property, completed and ready for occupation, including an inventory list for furniture and white goods in the case that you arrange for it.
Arrangement for payments of the initial deposit and following payments. The contract should provide the advance payments, with the exact time to make them.
Time of signing the deeds = completion date: The time in which the property must be handed over to you should be specified. If the vendor does not put the property at your disposal in the time agreed in the contract it becomes null and void, and any rights or obligations provided by the contract will lapse.
A detailed description of the property with dimensions, specifications, location, etc.
Checking of the installation of gas, electricity, water , tv and sewage. Check if the property is connected to mains sewage system, or if has installed the proper septic tank as per the Town requirements.
In the case the property is in a Community of Owners, check the “cuota de participación” (share of participation as co-owner in the total costs of the community areas maintenance) in the “Comunidad de propietarios” (Community of Owners): Your share will be determined by the size and facilities of your property and this will be known. And, also, and really important, check if the Community of Owners has decided, or in project to, to do some kind reform, or to build, etc, (out of the normal and common maintenance works) which may derive in special payments to the co-owners.
The Vendor is responsible for the payment of all debts on the land, especially the IBI, until the escritura is signed.
The Buyer will only be responsible for the payment of the cost of the escritura de compraventa = title deed, and not for the ones derived from the “division horizontal”and the “declaracion de obra nueva” or any additional other expenses which could be eventually needed to update the description of the property in the legal registries.
As explained above for New properties, in order to formalize the “escritura”, both parties, vendor and buyer, directly or legally represented (by power of attorney), assist to a meeting at the notary office, where the notary formalize the initial agreement of the sale in a public document which is the “escritura”. In this act, the builder confirms that all the payments on the price are received, and the buyer receives the legal possession and ownership of the property with the handing over of the keys.
After this meeting, the “escritura” must be registered in the land registry office, after the payment of the rest of taxes, and expenses derived from the sale.
While the registration process is complete (1-4 months), the buyer is provided with an official copy of the deeds to be used as proof of the ownership for other purposes, like, for example, changing the individual contracts of water and electric supply.
I.B).- STEPS TO BUY A RE-SALE IN SPAIN
The buying process in Spain is a bit different of any country. It is always a very important point to ensure that you are fully aware of the terms and conditions of the contract before you sign any kind of documents related to the sale. Once the contract is signed, it enters in force, and then you need to proceed with the payment of the deposit agreed with the vendor. But, in order to prevent you in the best manner, we strongly recommend you use always reputable Property or Estate Agent, and the service-advice of a Spanish Solicitor.
When is the right moment to contract a Solicitor? It is really simple, in the moment in which you have taken the decision to buy a determinate property. You must not sign anything, neither pay anything, without the previous consent of your lawyer. So, once your decision to buy is solid and confirmed, and once you have already negotiated the price, then, just pass the details of the agent, or of the vendor, to your Solicitor. He/she will then enter in contact with the agent to ask for the necessary documentation to formalize the agreement of the sale in the proper contract. Contract made by your Solicitor will be the best guaranty that it has been made in the high defense of your interests.
Once you have taken the decision of buying your desired property, the first you will be asked for is to pay an initial deposit to hold the property booked for you for a determinate time, in order to ensure the price and conditions of the contract. This deposit will be an amount that you pay to have the property at your disposal.
The aim of the deposit is to take out of the market and booked exclusively for you while you are studying the legal situation of the property and other matters, like mortgages, financial status, etc.
During the time established in the deposit contract if the Vendor does not fulfill his obligation and he backs out of the contract he will refund you the double of the mounts received as a penalty for breaching of contract but If the Buyer fails to complete the sale, he loses the amount of his deposit . If the Vendor finds another Buyer in the meantime, willing to pay more , and sells the property to him, the first Buyer can claim twice the amount of the deposit back.
2.- THE PURCHASE CONTRACT (“Contrato de Compraventa”).
Once the deposit is paid, and you have made the searches over the property, in the majority of the cases it is established to sign the definitive purchase contract in which another partial payment is required.
This contract is now a definitive one in which the obligations of the vendors are more than to have simply the property out of the market. As you will see below, wafter signing the sale contract, the vendor cannot sale to a third party without legal responsibilities.
In this purchase/sale contract all the terms and conditions for the purchase are included, as the price, way of payment, date of completion, and others circumstances obtained after the searches obtained from the property. For example, it can be agreed that the vendor has to fulfill determinate obligations, like updating the size of the property in the land registry, or paying determinate bills which were unpaid so far; etc. Also, in this contract, the expenses to pay by each parts are agreed, like who pays the notary and land registry fees, etc.
A VERY IMPORTANT POINT: WHAT IS THE DIFFERENCE BETWEEN A PURCHASE-SALE CONTRACT vs DEPOSIT/RESERVATION CONTRACT:
I:- The main difference with a reservation contract and a normal purchase-sale contract is the position of the buyer. In a normal purchase-sale contract, the buyer may decide not continue with the contract, and not to buy desisting on the sale. But, in this case, the vendor may have the right to “force” the buyer to continue with the transaction. In other terms, the buyer, if after signing the contract, decides not to buy, depending on the terms agreed in that contract, the vendor may opt to accept to cancel the contract, with compensation of damages, or, to not accept that cancelation, and then, ask to force the buyer to continue till the sale is complete.
The reason of this eventual possibility to force the buyer to complete is because the buyer, when signing the sale contract, gets a higher and more consolidated position in the ownership of the property than in a reservation contract. We can say that, in a normal sale contract, the buyer is almost the owner. Once the sale contract is signed, legally, it can be considered that the property is “sold”, and just waiting to the date of completion to be passed to the buyer.
In a reservation contract, as difference with the normal sale contracts, if the buyer opts to not to continue with the contract, or the time of reservation is over passed, then, the payment of the reservation fee will be for the vendor, but, the contract will be cancelled, and there will not be any rights from the vendor against the buyer to complete.
So, as difference of the normal sale contract, the buyer, in a reservation contract, does not adopt a so advanced position of the ownership of the property. The reservation only gets a “right to get the property reserved”. The vendor, then, does not consider the property as “sold” , but as “booked”. Only when the buyer confirms its decision to buy, then it will passed as “buyer”, and the reservation will turn then in a normal sale contract.
II.- Another important difference is the position of the vendor. In a reservation contract, the vendor can desist from the contract paying a penalty, which usually is the double fo the deposit received from the buyer. So, although the buyer may be interested to continue with the sale, nothing can be done more than to ask for the double of deposit back from the vendor.
In instance, in normal sales contract, the vendor cannot desist of the sale, and he buyer may have rights to force him to complete the transaction.
III.- Another difference between these 2 contracts is the time to complete the sale (or “completion”). Usually, in a normal purchase contract, the time to complete, or to fulfill the obligations from both parties, vendor and buyer, can be “flexible”. It means that there can be accepted certain delays in the fulfillment in the obligations to pay, from the part of the buyer, or to complete and handing over the property, from the vendor. These kind of delays may be sorted out establishing compensations, etc.
But, in the reservation contract, the time to execute the payment, and the right to complete is fixed. So, arrived the time agreed in the contract to confirm the option to sale, with the property ready to be handed over, if the buyer does not confirm its position, then, the contract may be automatically breached by this fault, and cancelled.
3.- PURCHASE DEEDS-TITLE DEEDS ( “Escritura de Compra venta”).
In Spain Title Deeds are known as “Escritura de Compraventa”. This document is considered as “public contract”. “Public” because in the moment of it is signed, it makes effects universally. The escritura is signed in presence of a “public notary” du toe this fact. So, the escrituras formalize the “private” contract agreed between buyer and vendor, once the transaction is complete. So, in order to get “universal” effects, deeds must be registered in the Property Register, or land registry office.
All parties involved in the contract must be present to sign the escritura at the Notary’s office, including a Bank´s representative if the buyer needs a mortgage. Buyers may appoint a representative to be present on that act through a “poder de representación” or “power of attorney”, allowing another person (usually, your Solicitor) to sing on your behalf if you cannot be present.
The “Copia Simple” is, as its name suggests, a “simple copy” of the escritura. This is the document that the Buyer needs in order to pay taxes and other like registering for Council Tax, and others like electricity, water, telephone or other services.
Your Solicitor, or your Bank (in case of a mortgage), will send the original deeds to the land registry office “Registro de la propiedad”, together with the receipts of the taxes paid. The Registro will then process this registration immediately into the internal daily agenda of the day, in order to prevent, and to block, the entry of any other charges in the name of the vendor which may affect the property. Process of registration may take months, so, please, be patient.
Then, after registration process is complete, your Solicitor, or your Bank, will have the originals back, and they must offer them at your disposal.
4.- HOW TO MAKE THE PAYMENTS
The best way to get the money ready for the different payments is by SWIFT transfer direct to his clients account from your bank in the UK.
To go ahead with this option is that you have to open a Spanish bank account while you are in Spain.
Opening a bank account in Spain is necessary to complete the purchase process, and to pay the normal expenses to run the property like water, electric, council tax, etc. . It is not necessary opening a bank account in the same moment of the reservation contract, neither in the following steps of the process. So, although recommendable, it is not necessary to get your bank account open at the time signing the reservation contract. Usually, partial payments on account of the price are done by bank transfer directly from your bank accounting UK, to the bank account of your solicitor, or the agent, or the vendor, depending on the case. So, partial payments can be done out of your Spanish bank account.
But, at the end of the process, it will be necessary, before completion, to get it sorted. The reason to get one in Spain is also for practical reason on completion. Although partial payments can be done by bank transfer, the most widely used way of payment of the last payment of the price is “banker’s draft”. And, vendors may refuse to accept a banker’s draft from a foreign bank, or charge in a foreign bank account. The reason of this is because vendors will feel more secure if the Bank is a Spanish one, and also, expenses to release the funds from the check will be cheaper from a Spanish bank than from a foreign one.
Taking this into account, and knowing about this necessity from buyers, recently, Spanish banks have increased their commissions in actions like receiving international transfers, or preparing banker’s draft. So, please, check with your bank the expenses and commissions they will charge on this service before you open the bank account.
Following this concept, UK buyers may avoid these requirements, and expenses, if the vendor is also UK national. UK vendor may accept UK banker’s drafts, even in GBP. This will reduce its expenses to release its funds if turning back to UK after the sale.
Also, please, be informed that Spanish banks require you sign in person the application form for the bank account, so, take this into consideration when visiting Spain before completion to leave this deal done.
Coming back to the payments, although in UK all the payments are done through the Lawyer’s bank account, in Spain you have to do it directly to the vendor´s account. So, by law, the payment may not be complete if the funds have not arrived to the vendor’s bank account, or the one accepted by the vendor to receiving the funds (for example, vendor’s solicitor, agent, or event your lawyer if the vendors accepts to).
For these purposes, you must be provided with SWIFT code, IBAN account number, Beneficiary name, etc of the entitled person (vendor, agent or lawyers), in order to make the transfers safely.
As explained before, it is really common, and one of the most secure, and practical way of payment, to pay the final balance of the price through Bankers Draft issued in the name of the vendor from your Spanish bank account. So, make sure that you have enough provision of funds in the Spanish bank account to attend this payment at least one week before the day agreed for completion.
Other expenses, as the Transfer Tax, Notary and Land Registry fees, etc., can be agreed separately with your Lawyer, or with the mortgage bank, if is the case, being paid directly by bank transfer (usually to your solicitor’s bank acc.).
Please bear in mind that if the Vendor is non-resident, you have to deduct the 3% from the purchase price, and pay this amount to your Solicitor instead to the vendor. Your solicitor will then pay this amount to the Spanish tax office “Hacienda”, as on account of the vendor’s capital gains tax liability. This is done using Model 211. It will usually be arranged by the Solicitor, or the mortgage´s Bank.
5. COSTS OF THE PURCHASE AND TRANSACTION TAXES:
You need to reckon that in total your costs of buying the property will be around 12-13% of the purchase price – this can only be a rough guide as some of the costs – such as the plusvalía (see below) – are not related to the value of the property and so could vary widely. If you are obtaining a mortgage, you can of course include these costs in the mortgage amount you request, providing this remains within the maximum percentage available against the property value and on your income. This estimate of 12-13% includes:
The transfer tax, Impuesto sobre Transmisiones Patrimoniales (ITP) is 8-10% of the purchase price, depending on the area where the property is placed. For example, in Valencia and Catalonia Region is the 10 %. Murcia is the 8 %, and Andalucía is 8-10% depending on the value.
If you purchase a new property from a Developer then you will pay VAT (IVA) at 10% (instead of the ITP) because the sale is a business transaction, as one of the parties is a company or professional. In addition, where VAT is involved, you need to pay also the Impuesto sobre Actos Jurídicos Documentados (AJD – stamp duty) which is currently the 1,5%.
Your lawyer’s fees, which are likely to be around 1% of the purchase price, plus VAT.
Searches: These are expenses paid to obtain the necessary information to complete the legal study of the property like certificates from the Town Hall, or others like the Nota Simple, Certificación Catastral, and others..
The notary, registration and handling (gestoría) fees, which may be around 1% of the purchase price (depending on the areas and the value of the transaction). Notaries charge according to a complex scale depending on the size of the property, its price and the number of pages in the escritura documents. The fee for the registration will be around half- 2/3 of the notary’s fee, and the handling fees are around €100-200. On a property valued at €144,928 (around £100,000) the notary’s fee would be around €700, the registration fee around €500, and the handling fee around €150.
If you were obtaining a mortgage, there would also be notary and registry fees to pay for registering the mortgage deeds, and Stamp Duty (1,5%), this last calculated on the amount of the mortgage. In mortgages, there may be other expenses like valuation fees, insurances, commissions, etc.
6.- EXPENSES FOR THE BUYER
Notary Fees: For the formalization of the title deeds
Land Registry Fees: For the inscription of the property deeds in your name in the official Registro de la Propiedad.
Transfer Tax: (ITP) Currently, this is the 8% -10 % over the total price of the property.
Others: Solicitor Fees, Mortgage expenses, searches, contracts of water, electric, and gas, etc.
ORIGINAL NIE NUMBER
Please, pay attention that it is absolutely essential obtaining the Spanish NIE number for the acquisition of a property in Spain.
This is necessary for the payment of the taxes and the proper legal identification of buyers and parts involved in the sale. As the case with the bank account, it is not necessary (but is recommendable) to get the NIE on the first steps of the process. But, it must be obtained for completion.
So, on completion buyers must bring to the notary:
ORIGINAL NIE NUMBERS.
III.- Selling properties in Spain – Taxes, expenses, and process
If you have decided to sell your property, please pay attention to the following information:
1.- DOCUMENTS TO PRESENT BEFORE THE SALE:
Title deeds from the property (Escritura)
Water and electric bills.- the most recent ones.
Council Tax Bill (IBI – SUMA) .- It is absolutely necessary to present the latest receipt from this tax. Bu, also, it would be recommendable to have the receipts of the previous years.
If the property is not in the registered in the Council Tax office, or not properly, then, the vendor must complete its registration before completion. For this registration, an architect must go to the property to make the necessary plans and measurements and, together with a copy of the rest of the documents (deeds, padron, plan of location of the plot, photos, etc.), must be presented in the CT offices. Once this process is finished, the CT office will withdraw the bills for the last 4-5 years, this time calculated with the proper size of the constructions. Usually the bills will be delivered to the property one or two years after completion, and they must be paid by you although you were not the owner on that time. So, in these cases, is common practice that your lawyer calculate these “retrospective bills” before completion, retaining them form the price to pay to the vendors, and providing the new owners with enough provision of funds to pay them once processed.
The IBI receipt also confirms that the house exists and is registered for taxes.
Finally the IBI must be presented when you sign the deeds at the Notary office because it also displays the number of the referencia catrastral, which, since 1997, is a required part of the documentation in property transfers.
– Certificate of No Infraction.- This is called “Certificado de No Infracción Urbanística”. This is a certification obtained from the local Town Hall, establishing that the property is free from any fines or penalties derived from its construction. This document shows, for example, if there is a order of demolition affecting the property. Not necessary to say that this is one of the most important documents to be obtained in the purchase process.
Is the Certificate of Non Infraction necessary to sell my property?.
It is not obligatory, but recommendable. There are cases in which this document is nto necessary, like apartments or bungalows in urbanizations and urban consolidated areas in which there are not possibilities of “building extenstions”. In instance, in properties with enough space to extend the construction like solariums, big terraces, gardens, patios, or just land, this document becomes essential in purchase transactions. Lawyers say that, in properties, “space is sugar” for owners. And, it is a common practice to extending constructions on properties after acquisition (closing a porch, o making a room at the solarium, or a pool, etc), and sometimes not respecting the normative. These kind of extensions sometimes are not allowed, and then the Town sanction them with the proper fine, or even an order to demolished that extension. Getting a certificate confirming that this is not the case will help the buyer to be better protected on its investment.
From now on, this certification is ESSENTIAL to sale the property, and must be obtained from the owner before completion.
How do you get the Certificado de No Infracción Urbanística?: The way to obtain it
is to go in person, or through your lawyer (with an authorization signed by you, or the vendor) to the Construction Dept. from the Town Hall (“Departamento de Urbanismo”), and asking for it.
To proceed with this you will need the following:
Copy of the escritura (deeds of the property)
Copy of the SUMA (Council Tax)
Water and Electricity bills sometimes can help
Authorization signed (as we said if you have instructed a lawyer).
Please, make sure that you or your entitled person, bring these documents with you when you make the application of this certification in the Town Hall. Or you may have to return with them.
– Original NIE numbers: In the past, sales may be processed without NIE numbers, or just with a copy of them. Right now ORIGINAL are needed. So vendors need to provide this document on completion, otherwise the Notary and the Land Registry could refuse it.
If you do not have the NIE numbers or if they are lost or you only have a copy, you must apply for the original ones in the NIE offices in the nearest area, or more simple, in any of the Spanish Consulates in the UK. The process will be exactly the same that to apply for a new one. If your original one is lost they will give you a copy with the same number.
– EPC – Energy Performance Certificate: Vendors must provide to buyers on completion a certificate confirming the use and energetic performance on the property.
– SEPTIC TANK and SEWAGE system: Vendors must provide the buyer detailed information about evacuation and treatment of residual water. Laws recently approved are really exigent with treatment of residual water on properties.
– CERTIFICATE OF HABITATION, also called “LICENCIA DE PRIMERA O SEGUNDA OCUPACIÓN”: This is a document which resumes the confirmation from the Town Hall that the property is ready for habitation, and it is applied once the property is finished with the Construction Completion Certificate (Certificado Final de Obra) and inscribed in the land registry with the Declaration of New Building – DON (Declaración de Obra Nueva).
This document will be necessary to obtain the individual supply of the utilities on your name, and with “house” use.
This document is then extremely important to get the electric and water contracts on individuals name for NEW PROPERTIES. Before the Builder provides the certificate of habitation to the utility companies, at the property, there could be water and electric supply, because, is normal that the builder obtains this supply to make the works (for the tolls, machinery, etc.). But the supply obtained from the builder is a supply for “works”, but not for “house”.
Sometimes, Buyers are left in their properties with electric and water supply for works use for years, because the builder did not obtain the proper CH (Certificate of Habitation) on the property. So, buyers have water and electricity supply, but in a very poor conditions, and more expensive than the normal supply for a house.
In order to guarantee you, as buyer or promoter, that the builder will obtain the proper CH, it will be highly recommendable to leave to pay the builder a part of the payment of the price when the CH is obtained. It will force the builder to do its job right, and to get this document asap.
QUESTION : “I have a property in Spain and I don´t have the Certificate of Habitation, How I could get it?”.
In order to answer to this question, you have to clarify if the property is in Urban or Rustic Land:
Urban Land Properties: The Town Hall should give the CH always that the property, when built, fulfilled with the legalities of construction, mainly the Ten Years Guarantee and the Final Works License.
Rustic Land Properties: It depends on the area, the region and, even, each local Town Hall, and, overall, the age of the construction. Our experience on this is that each Municipality has different requirements to process CH applications.
Usually if both, the land and the house, fulfill with the general rules for construction, the Town Hall should give the CH.
But, for example, in rustic land properties, if the land or the house do not fulfill with the general rules for construction (less than the 10.000 or 20.000 sqm, or in a protected area, or not license, etc.), then the Town Hall will approve the CH or not studying every individual case. You should get a proper legal advice in these cases.
Recent normative approved recently in Valencia, and in Andalucia, has progressed facilitating the process of getting CH in properties in rustic land, even in less than the minimum plot size.
– ELECTRICITY.- We have listed below typical problems of electric supply on Spanish properties:
A) The contract of supply for my house does not show “vivienda”. Sometimes we find that the contract of supply in some houses are not asigned House Supply (Vivienda), and they are in other uses like Agricultural Warehouse (Almacén Agrícola).
It means that, for the supplying company, your house is not a house, is an agricultural warehouse. This is very common, but consequently the supply given to your house will be for farm purposes, because in theory in less than 10.000 sqm., in rustic land only farm sheds must be built but not houses.
Also, it seems that if for any reason, the supplying company inspects the connection in your property, and they detect that you are using it for domestic use and habitation purposes, instead to the agricultural one as contracted, they can fine the property.
This may be sorted obtaining and supplying the electric company with the certificate of habitation, as well as an electrician certificate confirming the installation is ok (electric bulletin).
B) Your property has electricity connection as “Construction Contract”.
This means that the Builders, when they were building your property, they contracted water and electric for building the house. One of the reasons of this problem is that, once the builder completed the building, CH was not obtained. So, in order to change the supply into “residential use”, electric companies request the CH. If this is not provided, then contracts are “on building supply” for years.
In these cases, the problem is worse than in the previous case, because, legally, the electric company (Iberdrola for example) is not allowed to supply connection for construction purposes for more than 2 years. Passed this time through, they can cut the supply at any time, and fine the owners who are using the supply in this way.
If your property is in this condition, please ask a specialist. Usually these type of contracts are in the Builders name.
If your property has electricity but you have not any contract and you have not paid, nor received any bills during your stay in the house. In this case, please consult your solicitor urgently.
If your property has supply for habitation purposes. It occurs in old houses with less than 10.000 sqm or in houses with more than this surface. In these cases, there are not any problems.
If your property has supply for habitation purposes, but the contract is older than 20 years. Normally it happens in old houses. In these cases, to transfer the contracts to the new buyers, you as the vendor must to provide a certification from an official electrician in order to guarantee that the old installation is in a perfect condition.
This document is called “Boletín Eléctrico”.
F) Whatever the type of contract is and bills are coming on the previous owners name, but you are paying them.- It happens when the electricity company did not authorized to make the changing of the names in the supplying contracts. In these cases, a specialist must be consulted to clarify which was the problem.
2.- TAXES ON THE SALE:
A) IF THE VENDORS ARE NON-RESIDENTS:
Non resident vendors are forced to be retained with the 3 % of the price of the sale. This is a part of the price which is not received by the vendors. Buyers have the obligation to retain this amount from the price to pay to the vendors, and pay it to the Spanish Tax office.
Usually, this retention is made in the last payment of the price on completion, and use to be calculated, and processed by your lawyer, or by the bank (in the case of a mortgage).
Vendors pays Capital Gains Tax on the sale of their properties. And, as the declaration for this tax is done after completion, the Spanish system requires the buyers to make this retention as a payment “on account” of the final tax that vendors have to pay.
B) IF THE VENDOR IS A SPANISH RESIDENT:
If vendor is fiscal resident in Spain, then, this retention is not made.
In order to avoid this retention, vendors must proof evidences of their resident status, usually with a “Certificate of Tax Residency” ( “Certificado de Residencia Fiscal”), or with the prevous years declaration of taxes.
OTHER TAXES FOR VENDORS-PLUSVALÍA
The PLUSVALÍA or Impuesto el Incremento del Valor de los Terrenos is a tax charged by the Town Hall in an official set of values for the property, and it is paid only once, when selling the property. The Plusvalia varies widely, depending on the amount of time that has passed between the acquisition and the sale. This is a tax that, by law, must be paid always by the vendor.
Rustic land (Suelo Rústico)
Rustic land is a type of “Suelo No Urbanizable”
Non-Urbanizable (Suelo no urbanizable): This is a land considered no-urbanized. It means that the land classified in this way cannot be urbanized. So no urbanizations, cities, or plans can be developed in the area.
There is a lot of type of land included in this classification, like green areas, protected areas, mountains, lakes, public areas, etc.
Inside these classifications there is the “normal rustic land”. This is a land which must be used to grow for farmers. So the only use allowed in this land is to “grow”, or to be used by farmers to develop an agricultural activity.
But, in this land, it is authorized to build new constructions, eventually. These constructions must be in a very low density of construction. So, is very common to find that only when the land has a minimum size (5.000 m2 in Murcia, passing to the 10.000 m2 in the Spanish Land Law (Ley del Suelo), or 20.000 m2 in over protected areas), you can build there an individual farm construction, also called “cortijo”, “villa”, “masía”, chalé”, “chalet”, “hacienda”, etc.
Of course, there can be houses in rustic land over plots smaller than the minimumsrequired in the different areas. This is because these buildings were built before the new regulations entered in to force, or simply that they were built “with no license”. In these cases, these houses, if they are old, they are respected by the public institutions and can be reformed, but not extended.
Urban land (Urban land) Suelo Urbano
This is a land or plot located in an “urban area” in which it is authorized to build, with derteminate specificactions contained in the “Development Plans” of the city or area (Plan General de Ordenación Urbana), or in specific zones of urbanization called “Partial Plans” (Plances Parciales), etc.
This land use to have all the facilities and requirements to live there high density of population, like the proper water and electric supply for the properties and constructions, and public electric and water. And other supply connections,
like sewage, gas, telecommunications, etc.
Urban Land or “Suelo Urbano” is the land of cities, village, or urbanizations, and use to have the proper access by roads, with pavement, streets, commercial areas, health assistance, schools, colleges, sports, etc.
The “Catastro” is the institution which considers the properties for maps, drawings, plans, and is the source of the valor cadastral, the assessed value of property for Tax purposes.
Whilst the Registro de la Propiedad and the escritura may well confirm the ownership of a property and its conditions like eventual charges or , debts (like mortgage, public auctions, Tribunal disputes,etc), the Catastro will give you a better understanding of the boundaries, the exact location of the property (usually in a visual form), size and description of the property.
But, when initial building on a house is complete (or an extension like a new room), or when other constructions are built at the property, like a pools, garages, etc, then owners must inform the Catastro about this new buildings, and registering these new buildings or extensions. If you do not do so, you can have future problems because the Catastro will never know about the existence of those new constructions.
There are areas in Spain (like Andalucía and Murcia) in which the Notary, when declare a new house over a pre-existing land, they send the deeds to the Catastro to inform about the modification. Thus, Notary and Catastro are connected, so once you have the deeds of the D.O.N. in the land registry, the job is finished in this way.
But, in other areas, like Valencia region, once you present the deeds of the property with the D.O.N. to the land registry you must bring a copy of the C.F.O. and the Building license to the Catastro, in order to inform them that, over the land, there is now a house. If you do not do so they will contact you in the near future to provide them with these documents.
Once the construction is duly inscribed in the Catastro, the job is finished, and soon (sometimes it takes around 1 or 2 years) you will start receiving the bills from the Council Tax. SUMA BILLS.
The catastral records for many properties are out of date and inaccurate. The Catastral system has been used to formulate the value of properties and therefore to fix the taxable level on each property. For many Spaniards the avoidance of tax is a national past-time and many of them failed to update their Catastral details for fear of paying an increased level of tax.
This updating of the Catastro was always a voluntary system so anyone who failed to update their property in the Catastro (and therefore saved on the tax due) was doing nothing wrong. In many cases nowadays, you will find Spanish owners very reluctant to
updating their property in the Catastro and it is very difficult to persuade them otherwise.
So, as well to consult the land registry records of the property, it is always highly recommendable to consult the catastro to check how the property is inscribed and recorded.
Catastro, Registro de la Propiedad (land registry) and the escritura (title deeds):
The Catastro is a secondary system set up within Spain to deal with the ownership, description and boundaries of all property in the country. mainly in the Catastro the information recorded about the property where is located in the maps, which is the size of the construction, which are the boundaries and the coordinates, etc.
The other system which many people have heard of is the Registro de la Propiedad which is an extremely important office for the property purchaser and where concentrates on the legal ownership of a property and whether there are any charges and liens on the property. For a small fee the Registro = Land Registry will give you a Nota Simple and you will find the following information:
Who is the owner of the property: How many people, in which percentage, and the way in which the property is owned.
A description of the property: Area, region, and zone.
Where is the property placed.
What is the “history” of the property: How the land was created, when, who were the previous owners, historically, etc.
Which elements are considered in the property: How many rooms, toilette, size of the buildings, etc.
Limitations, Liens and charges: If the property is public auction, or embargo, or seizure, or expropriated, or with a mortgage, or debt, or a right of access by a neighbor, etc.
So the main difference between the English Land Registry system is pretty obvious
immediately – there are two separate arms in Spain (which are not linked to any helpful level) so the information on one hand may be correct but the other isn’t.
So, what are the main differences between the two systems? Well, the main one has already been answered because the Registro de la Propiedad confirms the legal ownership of a property as well as (with the production of a Nota Simple) confirming the charges etc.
Many buyers in the past have considered the escritura (title deeds) as the most important document to check before buying a property (and this is certainly one of the documents to see before committing to a purchase) but the Registro de la Propiedad will tell you is what is known public about the property – it is fair to say that if a property is not registered at the Registro then there ought to be a lot of caution shown before committing to buy it.
So, in theory both, the Spanish Catastro and the Spanish Land Registry, should be joined and connected, and the information contained in one should be the same as contained in the other. In fact the Spanish system is doing big efforts to connect both organisms, and it is already done in urban areas like cities or big urbanizations.
The problem usually comes from rustic and country areas in which is very difficult to
“coordinate” the information recorded in both cases.
Ideally, the system should be perfect if the information contained in both institutions could be condensed in only one, as in other countries.
Cedula de habitabilidad-Certificate of habitation-License of Occupation
Certificate of Habitation – C.H. (Cédula de Habitabilidad or Licencia de Primera o Segunda Ocupación).
On New properties, this is a document which resumes the confirmation from the Town Hall that the property is ready for habitation, and it is applied once the property is finished with the Final Works License (Certificado Final de Obra) and inscribed in the land registry with the New Buildings Declaration (Declaración de Obra Nueva).D.O.N.
You need this document to obtain the permission of the Town Hall to live in the house.
This document will be necessary to obtain the individual supply of the MAIN utilities on your name and with ”consumption” use.
On new properties, this document is then extremely important to get the electric and water contracts on individuals name. Before the builder obtains the certificate of habitation, there could be water and electricity supply in the construction, as is normal that the builder obtains this supply to make the works (for the tolls, machinery, etc.). But the supply obtained from the builder is a supply for “works”, but not for “house consumption”.
Sometimes, buyers or promoters are left in their properties with electric and water supply for works use for years, because the builder did not obtain the proper CH (Certificate of Habitation). They have water and electricity but in a very poor condition and expensive than the normal supply for a house.
In order to guarantee you as buyer or promoter, that the builder will obtain the proper CH, it will be highly advice to leave a part of the payment of the price when the CH is obtained. It will force the builder to work right and to do his best to get this document asap.
Special considerations about Certificate of Habitation
Is this document needed to complete a sale?. In other words, if I want to buy a house, is this document required to be presented?-
Before July 2008, it was not necessary to obtain a Certificate of Habitation to complete a sale. Sellers were not requested to present the CH to new owners. So, notaries, land registry officers, banks, lawyers, etc were not requesting the CH to complete the sales. Thus, this document was not obligatory before July 2008.
Why this document was not obligatory to complete sales? – Because, the aim of this document, as explained above, is to “connect” the property to water and electric ON NEW PROPERTIES for the first time, and, once connected, to “change” the existing contracts into the new owners name.
In fact, for RESALES, during decades, Spanish buyers and sellers have been connecting their properties to water and electric, and changing the supplying contracts, without this document. Specially in rustic land areas, electric and water companies were not asking for this document to change the supplying contracts.
So, NEW properties, and RESALES were bought and sold, and sales were completed at the notary office, and registered in the land registry office, without CH. Thus, builders were selling their new built houses to buyers without this document. Also, vendors (in resales) were selling their properties to buyers without.
In some areas, even supplying companies were not demanding this document to contract. In the majority of the cases, buyers could contract the water and electric by a phone call, or changing the name of the contracts into their names, and the CH was never been requested. Even today this is possible in determinate areas.
The problem arrived with NEW properties, like new apartments, urbanizations, etc, and for the explosion of the Spanish crisis. As explained, before July 2008 was not necessary for builders to provide to their buyers the CH to complete their sales. So, it was really common to sale properties “on construction”. For example, in an urbanization with 500 houses, the builder could sale by blocks of, for example, 100 houses, once they were completed, without to wait to complete ALL the urbanization infrastructure.
The CH is the last document obtained after the finalization of the construction works of the building. So, as before 2008 it was not necessary to present CH on completion, builders were building and selling their properties before they were “completely finished”. With this scenario, buyers were buying their new properties ready to be used, but, sometimes without to “complete” other phases or blocks from the urbanization, or some urbanization infrastructure. Buyers were connected to supplies with “building supply” eventually, with the hope that the builder, once completed the rest of the urbanization, or the rest of the urbanization works, would then provide them with “mains” supply.
This was the scenario before the crisis.
But, with the crisis, it was repeated in the market that builders entered in bankruptcy suddenly, and their companies were in big financial troubles because banks were closing . Also, the market stopped, and big urbanizations were suddenly unsold. So, builders were blocked with a dramatic position in which they could not finish the urbanizations or construction already started, because they could not find enough credit to do it from banks. In addition to this, they could not get private finance from their sales because the market was stopped, and they could not sale their properties.
As result of this scenario, buyers who previously had completed their sales and bought units from the builder from urbanizations not completed, they found theirselves on “building supply” utility contracts, and they saw how the builder simply disappeared, leaving the urbanization complex unfinished. As the global works of the urbanization were not complete, the CH was impossible to be obtain it, and buyers, and families, were left with “building supply” for long time.
This problem did not happen in RESALES where, with very few exceptions, sellers and buyers of OLD properties, which were really connected to water and electric, could obtain the change of the contracts into the new owners name, after the sale, without any kind of problems. Thus, it was really common in the market NOT to apply to the CH on resales (urban and rustic), if the properties were already connected to water and electric, and when the CH was not needed to change the utility into the new owner’s name.
But, in July 2008, a new law came into force for all the Spanish territory. One of the intentions of this law was to avoid situation of buyers of New properties in urbanziations, complex, buildings, etc. This law said that builders cannot complete the sales of NEW properties without the CH. And ordered to notaries, land registry offices, etc, to request the CH to complete the sales of new properties. But this law, was forcing the notaries and the land registry officers to ask for the CH to complete purchases ONLY FOR NEW PROPERTIES.
In instance, this law did not say anything regarding RESALES. So, as consequence, to complete a sale of a resale, it was not necessary to provide this document.
This law helped to avoid future problems with buyers buying NEW properties, but, as they did not mention anything in relation to RESALES, creating a big confusion in the market.
As explained above, buyers and sellers were selling, and reselling their properties, without the CH. Resale buyers were changing their water and electric bills without any kind of problems, and the notary never asked for the CH in their transactions.
The confusion was created when, after the approval of this law, durign the years 2009-2010, buyers started to ask to vendors to provide this document. Sellers were requested to provide the CH, but, when they consulted the notary office to confirm if this document was obligatory to be supplied, they were confirmed that it was not requested by the law. So, notaries, land registry offices, etc, only required the CH for NEW sales, and not for RESALES.
A big confusion started on that period between buyers who were requesting this document in RESALES, and sellers who did not want to provide it as they were not forced to.
This confusion was even worse in RESALES in RUSTIC Land properties built in less than 10.000 m2.During a long time Town Halls in rustic areas did not know how to react when sellers, or buyers, where asking for the CH to complete their sales.
Several Town Halls (TH) decided to give the CH with no restrictions. They considered the CH as an “administrative” document to get, or to change, the electric and water contracts. As these Town Halls did not consider this document as a “legal” document, there were cases in which a property could have a perfect CH, and a fine to be built illegally.
In other cases, TH decided to give CH to all properties (built in more or in less than the minimum plot), always that no fines for construction were affecting that property. This was the most logic position.
In instance, some others decided not to give the CH to rustic land properties, if they were not respecting the minimum size of land (mainly 10.000 m2). The position of these Town Halls created the unfair and illogic situation in which quite old properties, even built 20-40 years ago, were refused to get the CH because they were built in plots smaller than the minimum.
Also, the confusion was even worse because, in the majority of the cases, buyers were asking to vendors the CH to buy their properties, even knowing that, in the area in which that property was located, the CH was not being requested by the supplying companies to change the utility contracts in their names.
In the meantime, the country of Spain has been supported financially by EU institutions. One of the requirements from the EU to Spain to receive financial help was to improve the Environmental Protection, and reduce Environmental Impact. The reason of this requirement is that, during decades, Spain has not followed the EU directives on this way. Translated into the construction market, it means that constructions and buildings were built in Spain without considering or respect the EU laws on this way (mainly, reduction of the energy consumption, and reduction of the residual water)
During 2012-2013 and 2014, this confusion now seems to arrive to an end. It seems now that the majority of the Town Halls and Regional Governments (including complicate areas like Catral, Elche, Denia, Javea, etc) have created a base of what it should be required to obtain the CH, which is, more or less the following for RUSTIC LAND properties:
Independently of the size of the plot, the property must be FREE of fines for construction.
That the property and its constructions are declared and pay the proper council tax
Is widely requested to supply an architect report of the construction.
The property must fulfill with the environmental normative of the area (energy consumption, and residual water).
With this, the eventual confusions created about to give, or to refuse, CH on rustic land properties in less than 10.000 m2 without CH were finished. So, is general the POSITIVE position from the maority of the Town Halls in respect of the legal situation of the thousands of OLD properties BUILT in rustic land (and legally consolidated properties), in a plot smaller than the minimum standard. So, after all these confusions and disputes, the Town Halls are widely giving CH if the above conditions are provided. We have to say that there are only few Town Halls (like Crevillente) with a very unreasonable position to refuse to give CH in an open way.
I am a seller (not a builder), DO I NEED TO PROVIDE THIS DOCUMENT TO THE BUYER?.
The answer is easy: From a , LEGAL POINT OF VIEW: NO. There is not any law in Spain which forces the seller (in a resale) to provide the CH in order to complete.
But, in instance, from a COMMERCIAL POINT OF VIEW, it will be MORE RECOMMENDABLE if you provide it, because it will confirm the buyer that, whatever is the interpretation of laws in the area, or whatever are the requirements from the utility companies, the changes of the utility contracts are guaranteed. In other words, your property will be easy to market it if the CH is provided.
The same if the CH is expired. CH uses to have a validity of 5 years (or 10 years for recent ones). So, even if you obtained one when you bought, and even in the case that the Spanish laws do not force you to provide it, from a “commercial” point of view, it would be better for the buyer, if you offer the property with the CH renovated.
QUESTION . – I already have a CH, but expired, It is obligatory for vendors providing CH renovated on completion?
“Renovation of the CH” – Purely, Spanish laws request the buyer to get the CH renewed after completion, in order to obtain the change of the utility contracts into their names. So, time ago, it was a common practice not request vendors to renovate the CH to the buyers. Then, the buyers were renovating it after completion. But, this system created a lot of problems and conflicts with the Town Hall, which is the institution in charge to proceed with this renovation, due to the fact that renovation of the CH implicates that architects from the Town Hall inspections the house before the approval of the document . It happened that, after the inspection, the Town Hall refused to renovated the CH because they found some construction problem in the property for example. So, it created high insecurity on buyers that, after completion, they could not know with certainty if the CH could be renovated or not. So, in order to avoid these kind of problems, it was established as common practice asking the vendors to present the CH before completion. In this way, the inspection from the Town Hall was made before completing the sale, arising whatever problems to renovate it before, and not after completion. Then buyers, could get their properties, and ask for renovation on their names with the security that they could get the document.
This is the system now in some places, but, not in others. Although law does not force to vendors to get the CH renovated before complete, it is a common, and secure practice, asking them to renovate it before completion. And the majority of the vendors accept. But, in instance, we find some cases in which they do not, because their lawyers inform them the law is not forcing them to do it.
As this is a matter that we can know only in the proper advanced step of the process, and in order to avoid unexpected surprises to our clients, we inform about this “possible” scenario from the very beginning. We do not think you may find the case in which you need to pay for CH renovation, and, as your lawyers, we will try the vendor pays for it, but, as we have experienced some of these cases, our obligation is informing you in the duly way.
What is NIE?
Recent Spanish legislation makes it compulsory for anyone selling or buying property in Spain to have a NIE – Numero de Identidad de Extranjeros which, translated, means
“Identity Number for Foreigners”.
Until recently, foreign non-residents in Spain could buy or sell property without a NIE. Then, once it became necessary to have one, their legal representative could get one for them. But recent legislation passed in Spain has made it necessary for anyone paying money to the Spanish Inland Revenue (Hacienda) to have a Spanish identity number, and to obtain it in person.
How do I get a NIE?
In theory it’s easy. All you have to do is to go to the Extranjeros department of your nearest Policia Nacional station, fill in and sign an application form, and hand it in together with a recent passport sized photo. (N.B. When you get your photo done and if you wear glasses or earrings, take them off beforehand), a photocopy of your passport and your original passport.
In practice, and depending on where you live, this should be quite straightforward. However, the Spanish Foreign Office still makes no distinction between EU-member state citizens and other foreigners applying for the all-important NIE, so in certain places you will have to join a very long queue of immigrants in Spain seeking the same paper as you. In Alicante, for example, people are advised to start queuing at 5.00 a.m. to get their NIE, because each morning the office opens at 8.30 a.m. and gives out numbers to the first 70 people in the queue. The rest have to return and queue again the next day.
In the recent years obtaining NIE in one of the Spanish Consulates in UK is very easy and cheap. So, recommend all our clients to obtaining in this way rather than expend their short time in Spain on this process.
Special thanks from TLACORP for your patient when reading in our basic English language. We have made our best to try to explain in a brief resume the complicate process of buying-selling a property in Spain.
For more legal information about Spain, or Spanish conveyance system, all our staff will be at your disposal in:
Tlf.- +34 965 48 81 68
This guide is, of necessity, both brief and general, and is therefore no substitute for proper professional advice,
which we will be happy to provide on r