As we have previously mentioned, historically, the property market in Spain was slow. We did not have the tradition of moving house often and trading up to a bigger property, which meant that property inflation was very low. Our inheritance laws meant that property would always be left to the children and it was common for several generations to be born and to die in the same house. When we did want to sell we would probably sell the property ourselves and with the purchaser, go to the Notary and to register the documents. Because everyone probably knew each other or were related, this process worked. If an estate agent (inmobiliaria) was used, they performed the conveyance duties and ensure the transfer of the deeds. A Lawyer was not usually needed.
Nowadays, it is totally different. Property inflation is high; we have seen prices doubling in this area. The buyer and seller do not know each other and very often as the buyer is from another country, they cannot speak Spanish. As in any boom situation there are people who will take advantage of the current situation, so it is essential that legal advice is sought.
The majority of property purchasers in Spain do so through a real-estate agent. Registered, real-estate agents are obliged to check the situation of the properties they sell, but normally they don’t. In Spain any person or company can open an office and sell properties as no license is required. This does not mean that there are no Estate Agents inscribed in the API (Association of Estate Agents) and many of them are very professional. Keep in mind that the estate agent is interested in the sale and because of the lack of properties for sale in some areas and the large number of estate agents; they are keen to sell the properties that they have before one of their competitors does it for them. There are not normally exclusive contracts for the sale of properties, so various estate agents can have the same property for sale, and surprisingly, at different prices.
At Velasco Lawyers we 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 debts and up-to-date in all its payments of local contributions and community charges. We will take charge of the whole buying process from the moment that you decide to make an offer to buy a property. Our team will make contact with the estate agent to request documentation that will accredit the ownership of the property (sales/purchase deeds), and other relevant documentation like the utility receipts and the latest receipt for the local rates. It is normal practice in Spain to include with the offer, a sum of money to reserve the property prior to the exchange of the private purchase contract, in order to show the vendor that there is a real intention to go ahead with the purchase. This deposit is not usually refundable, but this point can be negotiated with the estate agent.
Once the deposit agreement has been signed Velasco Lawyers will prepare the private sales purchase contract in both English and Spanish, you should be aware of the following:
- The English version is a translation from the Spanish version. However, under the Law it is the Spanish version that will be used in any court action
- The vendor will normally hold the 10% deposit paid at the signing of the private sales purchase contract; not the lawyers of either the vendor or the buyer. Therefore, it is not recommendable to leave a long period of time between the signing of the contract and the signing of the deeds.
- The information that should appear in the contract is as follows:
- Name, address, passport number, and Spanish identification number of the buyer, vendor and the lawyers who sign the contract in representation of their clients
- Description of the property and the details of the inscription in the Land Registry
- Any debt or charge attached to the property
- If the property is sold furnished, then an inventory should be attached
- Price and form of payment
- Place and time of the signing of the public sales purchase deeds
Keep in Mind:
- The vendor will hand over to the buyers, the possession of the property at the time of signing the public deed at the Notary Office. (To save our clients flying to Spain to physically sign we can arrange a Power of Attorney to sign on their behalf. This can save clients time and expense as completion dates often change!)
- Under article 1504 of the Civil Code and 59 of the Regulations of the Mortgage Law, if the sale is not completed by the purchasers, the contract will be cancelled. Once the vendor has served a notarial summons on the buyer, the vendor can then retain the full amount of the deposit as compensation.
- Conversely, under article 1454 of the Civil Code, if the vendor does not complete, then a full refund of the deposit must be made to the purchaser, together with an identical amount as compensation.
- Both parties expressly renounce any other law which may apply to them, expressly submitting themselves to the Courts or Tribunal of the town or city where the property is situated.
- The purchase is completed at the Notary where the public deeds are signed before the Notary Public, the purchase price is paid to the vendor and the keys to the property are handed over to the buyer.
Our office can arrange for the payment of the taxes (i.e. VAT, transfer tax or stamp duty, which must be made within thirty days from the signing of the deeds at the Notary) as well as direct debits, for annual taxes, such as the local rates or IBI.
We can also apply for the connection of utilities. This can be a tedious bureaucratic process, as we have to present all the correct documentation to each of the respective companies and can take up to 2 weeks to get the electricity, water, gas or telephone connected.
Once the deeds are included in the data bank at the Notary Office, they have to be inscribed at the Land Registry. The registration can take anything from two weeks to three months depending on the Registry. The Land Registry fees are paid on collection of the deeds.