Buying guide

BUYING GUIDE

Before you view a property
Before arriving in Spain you should make sure that you have at your disposal sufficient funds to cover the Reservation Deposit on a property. If you do not have the means to lodge a Reservation Deposit immediately, you risk losing the property to another party who does have the reservation sum available. The minimum required is normally 3,000 euros, but may be up to 12,000 euros for higher priced properties. Our experiences have shown that the usual amount is 3,000 euros which may be paid with a credit card or bank transfer. A cheque, if drawn on a foreign bank account, may take up to ten days to clear by Spanish banks. Most reservation deposits to Vendors are non-refundable so it’s important to be sure of your financing for purchase before reserving a property.
The Reservation Deposit can be kept in the Legal Representative’s client account or with the Developer. When a Reservation Deposit is lodged against the property, the Sales Price is fixed and the Vendor knows that the buyer is serious about purchasing the property and the unit is taken off the market and reserved in the buyer’s name.
Choosing a property
It’s best to choose an agent and stick with them throughout the property search. Using multiple agents will simply cause confusion and will become a chore for you as you constantly will need to educate each additional agent as to your requirements and what you’ve already seen. A The Spanish Connection Property Consultant can show you exactly what you are looking for and will carefully plan your viewing according to your personal requirements. Consider the frequency with which you will use the property, think about the distances from airports, rental potential and long term investment – establish a budget and remember to add ten point five percent (10.5%) to the purchase price to cover fees associated with the buying process. Acquiring the home of your dreams shouldn’t cause a headache providing the research is thorough. If unobstructed views are a priority, consider homes which are beachfront, frontline golf or in elevated positions.
The Costa Calida & Costa Blanca offers world class golf courses, superb build quality and much improved infrastructure – not to mention the best climate in Europe.
The Costa Calida is up & coming areas with an excellent climate and huge governmental infrastructure improvements ongoing. Property is cheaper and the potential return on your investment may be higher.
Negotiating the purchase
Once you’ve chosen a suitable property, the price and conditions will need to be agreed. For properties that are still being built, you’ll want to agree a schedule of stage payments rather than pay the whole amount up front. In this case, our experiences have shown that the usual amount is 50% before completion. The Spanish Connection has some arrangement with some developers in Costa Calida reducing this advance payment up to 30%. If you haven’t already appointed a Legal Representative, you must do this now or run the risk of entering into an agreement that cannot be enforced under Spanish law. The Spanish Connection will introduce you to our associated Legal & Financial Company: Iberbrit Legal & Financial services.
Appointing a Legal Representative
The Spanish Connection will introduce you to our associated Legal & Financial Company: Iberbrit Legal & Financial services, who are fluent in your language. A Legal Representative will provide the legal guarantees for the purchase of the property ensuring that Spanish legal requirements are met and that the property is bought free of encumbrances, charges, liens or debt and is up to date in all its payments of local contributions and community charges etc. The Legal Representative may also assist the estate agent in difficult and complex negotiations with the developers. The Legal Representative will tell you in advance what their fee will be – in almost all cases, 1% of the purchase price. Using a Legal Representative from your home country will substantially increase your legal costs and most certainly delay the sales process.
Formalizing the offer: The Reservation Deposit
Once there is a verbal agreement between parties, the next step will be to formalize the terms of the offer in writing. It is normal practice in Spain to include with the offer a reservation or holding deposit until the exchange of private contracts. Paying the Reservation Deposit guarantees that the property is taken off the market and is reserved for you at the agreed, fixed price. This initial reservation deposit will be held in your appointed Legal Representative’s client account or directly with the developer. It is important to realize the Reservation Deposit is usually non-refundable, unless it is specifically agreed to be conditional upon certain factors happening e.g. raising finance or even actually viewing the property, if reserved unseen.
Bank Accounts
One of the first things you need to do when you have decided to buy in Spain is to open a Spanish bank account. Developers will usually require stage payments to be made through a Spanish bank account and, on completion, the utility companies will require payment of their bills by direct debit.
You should be aware that some Spanish banks charge a commission to receive funds from overseas, sometimes up to 0.5% of the money being transferred. We’re happy to assist you in setting up bank accounts and can recommend the better banks in the area.
It’s also imperative to obtain an N.I.E. (Spanish tax identity number) when purchasing property. A Legal Representative from Iberbrit will assist you going to the police station to help you obtaining this identification number.
Exchange of Private Contracts
Upon acceptance of the offer by the owner the next step in the process is to exchange private contracts of sale or to sign an option to purchase. This normally takes place within two weeks following formal acceptance of the offer. Your Legal Representative will have completed his searches and investigations of the property and will have arranged with the owner the procedure for the cancellation of any outstanding debts. The private contract of sale or option will reflect all the agreed terms of the offer and sale and set out the date for final completion at the notary. At this stage it is usual for the buyer to pay a fifteen – thirty percent deposit of the purchase price. The amount of the Reservation Deposit is subtracted from this first instalment payment on the purchase price.
Completion of sale at the Notary
A sale is formally completed in Spain when the public title deeds of purchase are signed before a notary, the final payment made, and possession given to the buyer. On the assigned day, the buyer and the seller (or their authorized representatives) will attend the notary’s office to sign the title deed ‘Escritura de Compraventa’. At this point the payment of the remaining balance is made and possession passes to the buyer with the handing over of the keys.
Registration
Once signed, the notary will fax a note of the title deeds to the local land registry. Your lawyer will also arrange payment of all the relevant transfer taxes associated with the purchase and will handle the formalities of registration of your title deeds. Final registration of the deed may take up to two months. Similarly, your lawyer will arrange for the transfer of accounts with local suppliers of utility services, such as water and electricity, and organize their payment through a local bank.