Buying procedure for a property in Spain
Buying property in Spain, and the process of purchasing a property in Spain has the following steps that we will explain in more detail further below in the corresponding chapters:
1) Pre-approval to know your possible level of finance / mortgage (only in case of wanting to use finance)
2) Property Search with Real Time Realty – What do we do differently?
3) Offer and reservation document, payment of reservation deposit
4) N.I.E. Number
5) Open your Spanish bank account
6) Due diligence of the property and Private Purchase Contract
7) Option to give Power of Attorney to your lawyer
8) Notary appointment
9) Payment of taxes, registration of title deed, changeover of service contracts
In this section we would like to give you a brief overview of each different stage of a property purchase in Spain, yet we will be very happy to attend you with any question you may have. Please never hesitate to contact us.
1) PRE-APPROVAL TO KNOW YOUR POSSIBLE LEVEL OF FINANCE / MORTGAGE IN SPAIN (only in case of wanting to use finance)
In case you may want to use finance to purchase a property we would kindly like to recommend you to verify the possibility of obtaining such in advance, meaning prior to coming to search and to visit properties on the Coast.
This is possible by requesting a “pre-approval status” from a bank. It will give you the security of up to which amount you could obtain a mortgage, which results in knowing exactly the maximum budget you will be able to invest into your property, and therefore also up to which price you can carry out the search.
As explained under the section about Initial One-Off purchase costs in case of buying with a mortgage, we are very happy to introduce you to an independent mortgage broker and finance adviser, offering this service for more than 18 years, with a great variety of banks.
Therefore, we kindly offer you to contact us in order to request such FREE pre-approval, to obtain this security about the level of possible finance options and thus the maximum purchase price of a property for the search we can then carry out for you on the basis of a more secured budget.
It makes little sense to start searching our whole database with many thousands of properties for hours, possibly taking videos (as explained under About Us) and you even travelling and viewing properties here on the coast, if we depend on partial finance and do not know yet whether you could really obtain it here in Spain. Yours and our time would be wasted. Therefore, we very much would like to recommend you to use this facility to pre-qualify for free for a mortgage, before starting the search or viewing process.
2) PROPERTY SEARCH with REAL TIME REALTY – What do we do differently?
Since 1994 it has always been and will always be our utmost aim to find the best possible property that suits your wishes, requirements and needs best.
It is therefore of utmost importance to us that you explain us as detailed as possible what you are looking for and what your requirements and wishes are regarding the property.
We listen and ask very carefully, then apply our vast product knowledge and experience to find your new dream home, based upon your information.
In addition we will apply our special expertise as Experts in Town Planning, to make sure your property is legal, has no Town Planning issues, future developments around it, that could disturb you, etc., as you can read about in our sections about Town Planning Advice and Is Your Property Legal.
It is of utmost importance for us that your property acquisition will be trouble free and that you will be very happy in your new home for many, many years.
Yet we need you to help us:
The more details you tell us about what you need and what you are exactly looking for, the better our search results and offers of suitable properties for you will be.
In our search, we DO NOT only look at our own listings and then try to “push you to buy”. This is NOT our philosophy and way of working. We search for the right property everywhere possible, then send you pre-selections by email and work with you on downsizing the lists to the most interesting properties for viewings.
We are members of the biggest and most established Multiple Listing Systems (MLS) and databases for agents on the Costa del Sol, where agents share the information about all their available properties.
We also send circular emails to each other about what we are searching for and receive emails with especially interesting properties on a daily basis. This enables us to offer you not only our own directly listed properties, but to also search for the right property within the wide range of thousands of properties listed by approximately 1.500 colleagues we collaborate with.
There is no need to worry about your property purchase becoming more expensive because of us using other agents’ listings – this is not the case. In Spain, the pre-established agents’ commission is paid by the vendor and if we find the right property for you in collaboration with another colleague, we simply split that commission the vendor pays 50/50.
This way of collaboration will not make the property a single Euro more expensive. It only increases our chances to find the best suitable property for your requirements. Yet, if you have contacted other agents through information requests on their website, by phone or email before, requesting information about properties they advertise, which will most likely be of the same database we use, they will consider you as “their client” who “is registered” with them “as their client”. If you wanted to work with us and we would then want to show you one of their directly listed properties, they would not allow us to do so anymore and try to contact you directly.
Therefore, in case you like our professional way and expertise and if you would like to take advantage of our services, please do not hesitate to send us the links to properties you may have found in property portals or on other web sites (without requesting information from them) and we will be more than happy to check whether the property is really suitable for your requirements, and only then contact our colleagues and arrange viewings for those properties for you.
We will also give you our open and full advice whether such options seen on the internet really fulfil what you are looking for, which positive points they have and what you may not like so much, as pictures and descriptions unfortunately often do not tell you the whole truth.
Regarding this problem of the internet not always presenting the reality of a property and how we deal with this, please have a look at our PowerPoint presentation: Visual Impressions versus Reality.
Please remember: you can visit properties online with us without moving from home, to make sure they are maybe worth to be reserved and/or that you take a flight to visit them, as explained under About Us. We can produce such a Commented, guided video Tour for the most interesting property, or visit it with you in REAL TIME, via Skype video and voice transmission. See an example under this link http://bit.ly/1Fo81Dc. This second option, in real time, enables you to talk to Mrs Katja Range on site and to ask her all your questions directly whilst she is in the property “with you”, review certain areas again and again, until you are satisfied to have seen it completely.
We understand our work as helping you with our vast experience, product knowledge and online viewings to come to a short list of ONLY SUITABLE properties for your personal requirements, before you make the effort of coming to Spain and have a personal look at those properties, to avoid wasting any of your precious time.
3) OFFER AND RESERVATION DOCUMENT, PAYMENT OF RESERVATION DEPOSIT
Once we have found your dream property, we will elaborate an offer document with the terms and conditions under which you would like to purchase the property. It will definitely state that you will take over the property FREE of any debts, charges and encumbrances.
Apart from the offered price this document has to include the maximum date on which you will be able to sign the private purchase contract and pay the corresponding amount (normally 10 %, in 2-3 weeks) and also the maximum date for completion of the property purchase at the Notary (with payment of the 90 % balance, normally in 4-6 weeks, see further below).
This offer and reservation document will be passed over to the owner and if he accepts the offer and conditions, he will counter sign the document as proof of reservation. At this point you will have to pay a reservation deposit (depending on the value of the property it could be for example 3.000 to 6.000 € for apartments or 15.000 to 25.000 € in case of villas).
4) N.I.E. NUMBER
For any property purchase in Spain it is necessary for foreigners to apply for the N.I.E. number = “Número de Identificación de Extranjeros”. It is a simple identification number for foreigners, needed in the purchase process. You cannot sign a property purchase deed at the Notary without having this number.
To have such number does not mean at all that you are now a “tax resident” or anything similar in Spain. The Spanish tax system simply needs a unified form of identification number for foreigners, as the passport numbers are different in all countries and do not fit into their computer programs when it comes to paying the taxes on the property purchase, for example.
Our Legal Department can help you obtain this N.I.E. number at the local National Police Station. The easiest way is to apply for it whilst you are personally here on the coast, as the Police want to be able to verify that the passport picture coincides with you. Yet you can also leave a power of attorney to your Lawyer to apply for such N.I.E. number for you.
5) OPEN YOUR SPANISH BANK ACCOUNT
It is also important that you open your own Spanish bank account in order to be able to transfer the funds for the purchase from an account in your name in your country to your own Spanish bank account, with the same name as title holder, to carry out all stage payments here in Spain. The concordance of the titleholder name of the sending and receiving bank account is very important later at the Notary appointment. You should also always include the address of the property in any transfer you make related to its purchase, as the bank will need to issue a certificate for the Notary that you have sent the money for the purpose of buying that exact property.
Alternatively, to already opening your bank account in Spain, you can also transfer the funds to your lawyer’s clients’ account, but by experience our clients do so for the first deposit and maybe the 10 % payments, yet often prefer to send the final 90 % balance payment for the Notary appointment to their own new Spanish account. You will anyhow need the account later for the payment of the yearly running costs of the property through standing orders your lawyer will set up for this account.
6) DUE DILIGENCE OF THE PROPERTY and PRIVATE PURCHASE CONTRACT
In the offer document we will have already included that the next stage payment, after the deposit payment, will take place together with the signature of the private purchase contract. At this point, in case of buying a resale property, normally 10 % of the purchase price (minus the already paid deposit) will be handed over to the seller. In case of purchasing from a developer the amount can vary between 20 and 35 % (also minus the already paid deposit).
Before the signature of the private purchase contract your legal representative or lawyer will have double checked that all legal documents of the property are in place and correct and that there are no outstanding debts on the property. In case there would be outstanding bills or debts, these will either be paid and cancelled before the Notary appointment takes place, or they will be retained from the balance payment to the vendor at the Notary appointment, in such way that your lawyer will use the retained money to pay the debts off immediately.
You can either be present to sign the private purchase document yourself or it can be sent to you by email or Courier Service, you sign it, send it back to your lawyer and then the vendor counter signs it in your lawyer’s office and receives the correspondent payment.
7) OPTION TO GIVE A POWER OF ATTORNEY TO YOUR LAWYER
During your stay in Spain you can also already give a power of attorney to your lawyer in front of a Spanish Notary (as mentioned above under chapter 3 regarding the N.I.E. Number). You can include into the faculties that he/she can carry out the whole paperwork, or only part of it, or also finish the purchase process for you, even in case you could not appear at the final Notary appointment yourself.
The easiest, quickest and cheapest way to set up such power of attorney is by going to a Notary here in Spain, during your visit, as it only takes 30-40 minutes to sign it, it costs between 90-120 € and you do not need a pre-arranged appointment to do so. Notary offices are very flexible in Spain and are able to prepare such power of attorney for you even in the course of one morning. We are very happy to accompany and help you with this easy step.
Yet, if you do not have the chance to issue such power of attorney here in Spain, or need another family member to issue one from abroad, for example, you could also sign it in front of a Notary of your country, or at the Spanish Consulate or Embassy, if they offer this service in your home country (in Germany this is not possible anymore and it has to be carried out by a Notary).
It is important to know that the document you sign in your country needs to be translated into Spanish by an officially authorized translator, and it also needs to be stamped with the official “Apostille of Den Haag”, a stamp that proofs a qualified authority of your country has signed this power of attorney with you.
Please take into consideration that this procedure can take 3-4 weeks and will cost more, due to the expenses for the sworn translation and for the Apostille stamp, for example. Therefore, it is always advisable to think about issuing such power of attorney already during your stay here in Spain, if possible, as it is far quicker, cheaper and involves less paperwork, time and hassle.
8) NOTARY APPOINTMENT
Before the day foreseen for the signature of the final purchase title deed (“Escritura de Compraventa”) at Notary, you will have to transfer the balance of the purchase price, plus the one-off initial purchase costs, to your own new Spanish bank account, in case it has been opened, or to your lawyer’s clients’ account.
At the Notary everything will be prepared for both parties to sign the public title deed of the property purchase and at the same time the balance of the purchase price will be handed over to the vendor and he/she will hand over the keys of the property to you. Everything is done at the same time. This is different to how you may know such Notary appointments from your country. You will be able to go directly from the Notary to your new property and to enjoy it straight away.
The Notary will immediately inform the Land Registry that this property has just been sold to you. The Land Registry takes notice in its books of that sale and this way it is avoided that the property could be sold twice.
Over the past years the Spanish customer protection laws have improved extremely and provide utmost security to the purchaser. If you have any question regarding this procedure, please do not hesitate to contact us.
9) PAYMENT OF TAXES, REGISTRATION OF TITLE DEED, CHANGE OVER OF SERVICE CONTRACTS
After having signed the Public Purchase Deed at the Notary, and whilst you already enjoy your new home under the sun, the Notary fees, property acquisition tax and land registry fees will be paid by your lawyer in your name and the title deed will be registered at the Land Registry. Approximately 4 to 6 weeks later you will be able to receive the original title deed from your lawyer, fully registered in the correspondent Land Registry.
In the meantime, your lawyer will have given your details to the Town Hall to change the bills for the local rates (IBI) and rubbish collection fee (Basura) into your name and standing orders will be organized by your lawyer for your personal Spanish bank account, also for the payment of the community fees.
The same changeover of contract title holder and new standing orders will be carried out for the water, electricity and telephone contracts, so that all services related to the property will be in your name and where payments can be done by standing order, your new Spanish bank account will be used for that. You will be able to control your bank account from abroad, for example by internet banking.
Please be aware that the only tax payments of the yearly running costs you cannot pay by standing order are the Income-Tax and Wealth-Tax for Non-Residents (Renta and Patrimonio). These are tax declarations you need to present yourself. There is no way to issue a standing order. Please do not hesitate to contact us, if you need help regarding the payment and presentation of these tax declarations.
In case you are already a property owner and have not paid this tax in some or all of the past 5 years, please feel free to contact us as well. We can explain you the consequences and help you carry out pending declarations, if you wish so.