Please find a few notes below about the matters that are involved when buying property in Spain.

Before travelling off
Usually a buyer has to pay a deposit to the vendor (normally 10%), when buying a property in Spain, or at least to pay a small amount in combination with a reservation. Therefore it is recommendable to make sure that you can pay such a deposit in short notice, once you actually want to buy. If you can’t arrange such a deposit on short notice, there is a chance to loose the property to someone else, who can.

Checking the property
Before actually buying a property, we recommend you to have a technical inspection carried out by an expert, or else to check it very good yourself. Also check the local Town Planning regulations  if necessary and – in case you are buying a building plot – make sure that you can really build on it (suelo urbana).  You can check these matters at the local Town Office.
Now, the following recommendable step is to do a legal search on the property – to ensure that it is free of liens and debts. This would also show if there are any mortgages on the property. You are advised therefore to ask the vendor to hand over a “Nota Simple” (excerpt) from the Property Registry. This document identifies the registered owner and details of mortgages or embargos on the property. The vendor should also supply the latest receipts for IBI (Impuestos sobre Bienes Inmuebles – annual property tax), utility supplies (water, electricity, telephone e.g.) and community fees where applicable.

Making an offer
As in many other countries, you can make one or more offers below the asking price and try to reach an agreement about the final purchase price. It should be understood that it is not unusual to be asked for some payment of the purchase price to be made in cash. This is common practice and few sales are completed without this taking place, however you should fully understand all the possible tax consequences of such a transaction.

A reservation contract
Sometimes you are given the opportunity to reserve an object for a short time by having you pay a small amount of money, in combination with signing a reservation contract. This gives you the opportunity you arrange your matters, to actually be able to buy.

A private contract<
When there is reached an agreement about the purchase price, a private contract is made up. In the contract the agreed price is mentioned, both parties' details, the details of the property (including any liens, debts or mortgages) and a date at which time the public registration (Escritura) must be completed. Both parties (or their representatives) have to sign this document and at this point it is binding. At this stage the purchaser usually also pays a deposit to the vendor (normally 10%). Normally, if the purchaser does not complete this signed contract, he looses the deposit. If the vendor does not complete this contract, normally he must pay back double the deposit amount.

Mortgages
If a mortgage exists on a property, it may be beneficial for the purchaser to take it over, as the costs involved to obtain a new mortgage normally will be higher.

The “Escritura”
The Escritura is the public document of the sale transaction – in effect the title deed. The signing of this document takes place at an agreed date and time at the office of a public notary. Both the purchaser and the vendor must be present here, or be legally represented. The notary will complete a legal search on the property to ascertain ownership, liens, mortgages etc. Also checks are made and certificates presented to confirm that all local taxes (IBI) and community fees have been paid up to date. If there still is an existing mortgage, which is not being taken over by the purchaser, than the mortgage will be cancelled by the notary at this time (costs to the vendor). If there is a new mortgage, this will also be completed in front of the notary (costs to the purchaser). The details of the property, both parties, payment details, tax retentions etc. are read out and finally checked by the notary. Both parties have to sign the Escritura and at this stage the keys are handed over and the remaining balance has to be paid to the vendor.

The Land Registry
The new Escritura is now sent to the land registry (Registro de la Propiedad) to preserve that the property has been sold. Usually this registration takes about 2-4 months.

NIE
If you want to buy real estate in Spain you must have a Spanish ‘National Insurance Number’, a NIE. For this you must hand in your passport and fill in some forms.