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 than 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 propeties, 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 projected, and the works are not started yet.
It creates insecurity in the investor, specially 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 building. And, the most important, who gives 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 of the construction.
This is a task which must be done ny the Spansih solicitors. And this must be done in all the steps of the construction till the end. So, in every estep, there are documents which must be studied by the purchasers, or by their lawyers, in order to guaranty that all the legal and administrative requirements are fulfilled properly.
– Expenses, taxes and other costs: Although, in general, the process is nearly the same than buying a Resale, there are determinate costs, taxes and expenses which have a different concept and treatment.
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 projected, and the works are almost not started yet.
It creates insecurity in the investor, since they are invited to deposit some money, and to assume obligations, towards a property which is only a “project”. Buyers do not know, in a high number of cases, esssential infromation as: who is the builder, what is the reputation and the economic situation of the construction company, and, the most important, how many guaranties the investor has to protect the payments required.
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:
- Prove that the Developers own the land: you need to see his escritura de compra.
- Check that there are no loans otstanding: you need to obtain a nota simple from the LAND REGISTRY.
- Ensure that the Developer has paid his Impuesto sobre Bienes Inmuebles (IBI): If it is unpaid, this tax is attached to the property so the new owner will become liable.
- Obtain a certificación catastral and check the plan parcial to ensure that the urbanización itself is registered and to check that the property is as presented to you.
- Check with the urbanismo, the Town Planning Department, to ensure that the development is in an area zoned for building, and that the planning permission has been granted. Is also very important to 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 essential, as without them you will not be able to obtain and escritura or register for utilities. The Builder or Developer should be responsible for obtaining these and for 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 are covered by an equivalent bank guarantee or insurance bond in the event of non- completion. The buyers are entitled to the return of all moneies paid during construction + legal Interest .
- Completion date for the building: Completion should be specified as 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 void, 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 any 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 segregación or 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 these have been registered. The fees should be paid from the Builder or Developer.
- Ten Years Insurance or “Seguro decenal”: Spanish laws make Builders legally responsible for 10 years for any damage on foundations, and other structural elements of the building. The builder must supply a proper insurance to cover for these risks. This is an essential requirement to complete the legalities of the construction. policy details must be given to the notary as must be included in the escritura. Without this the sale transaction can not be Notarised.
- Certificado Final de Obra (or Final Works License): This document isprovided by the architect where confirms that the construction is now complete following the building project. This is an essential requirement to complete the legalities of the construction. policy details must be given to the notary as must be included in the escritura. Without this the sale transaction can not be Notarised.
- Certificate of Habitation or Licencia de Primera Ocupación (Licence for first occupation: This is a document provided by Town Hall once works are complete .They check that the property is been built to the building project and licenses and that the property has all the necessary security and health items to be occupied. Again, this is an essential requirement to complete the legalities of the construction. policy details must be given to the notary as must be included in the escritura. Without this the sale transaction can not be Notarised.
3.- EXPENSES FOR THE BUYER
- Notary Fees: For the formalization of the title deeds.
- Land Registry Fees: For the inscription of the deeds, making the change of owner’s 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: Spanish Solicitor´s Fee, mortgage expenses, contracts of water, electric, and gas, Plusvalía, etc
*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 activites 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.ON COMPLETION YOU HAVE TO BRING YOUR ORIGINAL N.I.E. TOGETHER WITH YOUR ORIGINAL PASSPORT.