Buyers Guide

Choosing the Property
Serious thought may be required to first identify clearly in your own mind the type of property you need and the area where you would like to buy. Once you have this information you would well be advised to contact an agent in the area of your choice to establish what is available and the price you are likely to pay.

Using an Agent
Agents can be very helpful to a buyer. They will provide a wide selection of properties, and local information and may also help you to seek out the perfect property even though it may not be listed with them. Care should be taken in selecting an agent who will provide the experience to answer all your questions and guide you through the negotiations and sometimes complex procedures to the completion of your purchase.

Agents do not normally make a charge to buyers and therefore it makes sense for a buyer to use the very helpful services of an agent.

Make an Offer
When you have decided on the property the first step is to discuss the matter with a legal representative with a view to making an offer directly to the owner or though an agent. The legal representative will then negotiate a formal agreement and arrange to transfer a deposit to secure the property.

Choosing a Legal Representative
We recommend selecting a legal representative, who is experienced and qualified and should be fluent in your language.

Reservation or Holding Deposit
Many estate agents or developers will request that you pay over a holding deposit to secure the property. We suggest that you discuss the proposed terms with your legal representative before signing or paying over any money, because it is often difficult to make changes to terms which you have already accepted.

The Private Contract
It is customary for both sides to agree on the terms of a private contracts or an option to purchase, which would normally happen shortly after the formal acceptance of an offer, by which time your legal representative would have completed his searches. The deposit, normally 10% of the agreed price (less any prepaid holding deposit), is normally handed over on the signing of the contract.

Initial searches by your legal representative
Obtaining a "Nota Simple" which will identify the registered owner and provide details of mortgages or embargos attached to the property. For new property they will check the "Declaracion de Obra Nueva" and the "Declaracion de Alteracion de Bienes Naturaleza Urbana".

Checking with the Town Hall that the municipal rates (I.B.I.) are up to date. At the same time they will find out the rateable value or "Valor Catastral" of the property.

Obtaining confirmation of the community charges and statutes to identify any rules, which may adversely affect the enjoyment and use of your property. (In the case of new development you will participate in the acceptance or modification of the statues and the appointment of president and administrator.)

Developers must also pass over bank guarantees for monies held on account.

Completion at the Notary
The Notary will prepare the title deed (Escritura de Compraventa) and at a preagreed time all parties will attend to complete the transaction and take possession of the property. If a mortgage is involved that there will be a Mortgage Deed to sign called an "Escritura de Hipoteca" so the bank will release the appropriate funds. Your legal representative or that of the bank, will arrange payment of taxes (ITP) in the case of second hand property and Notary Fees and other expenses and register your title deed at the Land Registry.

Cost of Buying
In order to complete the purchase you must pay certain professional fees as well as taxes.

Legal Fees:Your legal representative will charge between 1 and 1.5%, plus VAT on their fees at the current rate of 16%.

Notary Fees: These are based on the value of the property, but represent a very small part of the total cost.

Notary fees on a purchase price of 300,000 Euros will cost approximately 500 Euros. The actual distribution of costs will depend on the terms of the private contract. Usually the buyer pays all the notary fees but according to Spanish Law, the seller will pay 80%.

Land Registry Fees: These are approximately 40% of the Notary fees.

Capital Transfer Tax (Second Hand properties) In Andalucia it is 7% of the purchase price, and must be paid within 30 days of completion. Other regions may vary. When buying from a developer, there is a Value Added Tax (IVA) at 7%, which is paid with each instalment as well as on completion.

Municipal Capital Gains Tax This is a local tax (Plus Valia) which is based on the increase in the rateable value of the land since the last time the property changed hands. With new property there is little or no Plus Valia. Your legal representative will establish the amount of the tax to be paid, which is a real tax and falls on the property. It is the vendor's obligation to pay the tax but often the buyer agrees to pay it.