Everyone is looking for some lawyer’s advice sometimes, right? Well, I can’t help you with that, BUT, I am working with the best lawyer’s office in Malaga. But for real. I asked him to share some information and frequently asked questions that can help you to learn more about the Spanish Real Estate market.
GVA Gómez-Villares & Atencia abogados website: https://www.gva-abogados.com/en/
My contact person & all-time favorite lawyer in Real Estate: Ramón Gómez-Villares Perez-Muños.
FREQUENTLY ASKED QUESTIONS – CONVEYANCING
1. What advice should I ask the Estate Agent?
Once you have chosen the right Estate Agent, with experience and knowledge of the property market, he/she will help you to find a suitable property. The agent will show you various properties advising as to the suitable areas to invest in, and also comparing prices and qualities.
You should ask for details of the outgoings payable every year to maintain the property, namely the Annual Real Estate Tax (IBI), the community fees, the charges for rubbish collection, the water rates, the electricity charges, and the Property Income and Wealth Tax in respect of the property you wish to buy. If you are purchasing a re-sale property do not forget to ask how old the property is.
2. Do I need a surveyor?
It is customary in the UK, for instance, to use a surveyor. However, in Spain, this is not the case and is a personal preference. The property will be valued by a bank surveyor should you choose to have a mortgage but this is different from surveying the property as to its market value and condition. Obviously, if the area is prone to subsidence or there appears to be some structural damage, then it would be advisable to use a surveyor.
3. Do I really need a lawyer to purchase a property?
You should always seek legal advice when buying or selling property in Spain, as prevention is always better than cure. From now on until and after completion of the purchase, the lawyer will take care of and assist you in all the different steps involved in the transaction. There are many excellent English-speaking Spanish lawyers in Spain. Choosing the right lawyer is your guarantee that Spanish legal requirements are met, that the property is registered in the vendor’s name and that it is free of any mortgages, charges, encumbrances, debts, or other liabilities. Your lawyer will negotiate and discuss the purchase terms with the seller’s lawyer. The terms should not be limited solely to price but should cover in detail all your requirements like the completion date, the form of payment, etc…
4. Once I have chosen a property, what happens next?
Once you have appointed your chosen law firm they will explain the procedure involved in buying in Spain and the associated costs.
When you have made a decision as to the property you want to acquire you will be asked to make a payment of a Reservation Deposit, thereby ensuring that the property is not sold to another purchaser and fixing the price. You will then have a period of between 10 to 15 days to exchange contracts but before doing so, you should seek proper legal advice.
The next step after paying the reservation deposit is to evidence the terms of purchase in writing. At this stage, the lawyers will draw up the private contract. It is customary to pay a deposit of ten percent of the price on exchange of contracts, which is not normally refundable if the purchaser defaults. Conversely, if the vendor fails to perform his obligations, you will be entitled to the resolution of the contract and claim damages or either demand the obligatory fulfillment of the contract. Before your lawyer exchanges contracts, he will have completed his searches and investigations in the Land Registry in respect of the property.
Finally, on the day fixed for completion, your lawyer will assist you in attending completion at the Public Notary.
5.- What does completion involve?
Completion means the culmination of the due diligence process, searches, and negotiation of the purchase terms. It means the signature of the Title Deed, making the final payment to the vendor who will simultaneously pass over possession of the property to you, handing you the keys.
At this stage, the sale is completed. Immediately after completion, the notary will fax details of the title deed to the local Land Register to inform them of the identity of the new owner so as to prevent the property from being sold twice. In this way, the Notary and the Land Register act together to protect and guarantee your interests. You will then have to pay the relevant taxes and have the original title deed submitted to the Land Register for registration of your title. Your Lawyer can also arrange for the transfer into
your name of utilities and services such as water and electricity and organize their payment through a local bank.
Read here: 7 PRACTICAL SAVINGS RECOMMENDATIONS FOR FIRST TIME HOMEBUYERS
6.- What should I budget for in the way of extra expenses on top of the purchase price I have agreed with the Seller?
As a rule of thumb, a purchaser may expect to pay 12-13% on top of the purchase price. A purchaser of a property in Spain will incur the following expenses:
The Fees :
Notary Fees. A Notary will charge according to a fixed scale, his/her charges may range from 600 € for a property price of 120,000 € to 1,000 € for a property price of 600,000 €.
Land Registry Fees, the registrar will charge approximately 70% of what the Notary charges.
The Taxes ( in Andalucia Region):
If you are buying a re-sale property you are obliged to pay Transfer Tax (ITP) currently at 7%
If you are buying a new property or a property in the course of construction from a promoter, developer or habitual trader, then you should pay VAT (IVA) currently at 10% plus Stamp Duty at 1.2%. Note that the VAT is normally payable on every amount paid to the promoter, developer or habitual trader. The Stamp Duty is only paid after completion has taken place, on registering the purchase deed.
Finally bear in mind that your lawyer will charge fees for his/her professional services, that normally will range from 1-2 % of the price plus VAT (currently at 21%).
Bear in mind that purchasing a property with a mortgage will incur extra fees and taxes.
Finally, please note that this information is in general and each particular case will have to be viewed independently.-
7. What is a NIE number? (Foreign Identification Number)
Every person in Spain is assigned a Fiscal Identification Number which is used for all tax returns and correspondence with the Tax Administration. In the case of Spanish nationals, this number is the same as the National Identity Number, “DNI”, while in the case of foreign individuals, the number is the Foreign Individual Identity Number, “NIE”, which is obtained at the General Directorate of Police.
It is important to have your NIE number ready for completion and avoid any problems at completion or any delay on the registration of your title deed.-
My personal advice is to let the lawyer or a gestor help you with this process.
8. INSURANCE Advice
It is important to take out home insurance. If you have a mortgage, you will be required to arrange for the insurance directly with the Bank; otherwise, you can do so through us by filling out a form. We will advise you of the annual premium before you sign the policy, and the premium will be directly debited to your account. The home insurance policy will be renewed automatically every year unless you cancel it by phoning the Customer Service number shown on the policy.
I hope you all are well informed with this advice from my lawyer. If you have more questions and doubts, please let me know and I can put you in contact with them.
