Buying Guide

Our free guide to buying a home in Marbella




Purchasing a property in Spain

Purchasing a property in a foreign country can be daunting, but with our easy to understand Buyers Guide we aim to make this as easy as possible for you to understand. It’s true that the Internet has become by far the most useful tool for those looking to buy properties and a net-based property search is usually the first step taken by any potential buyer, however keep in mind that it is still over the internet and there are some fraudulent websites. Some websites do not even identify themselves correctly, have no office address and not even a landline telephone number (in this region these start with either 951 or 952).

Choosing an agent

Google is a great tool for finding properties, but it is the second step you take, once you see a few desirable properties on several sites, which is probably the most important decision made in the whole buying process. Establishing a relationship with an established, reputable agent, who has an in-depth knowledge of the area(s) you are looking in is essential. The right agent will help you through the process of looking for your property and they can share their market knowledge and give you great advice on the area. If what you are looking for is not in their inventory, they will go out and find the property for you through colleagues in other agencies on a commission-sharing basis. A reputable agent will not charge you a commission or “Finder’s Fee” as they receive their remuneration from the seller.

Choosing a Lawyer

Marbella For Life always recommend that purchasers of property in Spain hire a qualified, registered lawyer, based in Spain to handle all of the paperwork that will be entailed when purchasing your property. It is always beneficial when you are in Spain to meet with a lawyer, even if you have not found your ideal property yet, as it is clearly more difficult to choose a lawyer long distance. Also please bear in mind that in some cases you will have to give your lawyer power of attorney to avoid travelling to and from Spain to sign at each stage of the purchase process.

Also, getting the basics into place, before you find a property is also a good idea. Having a lawyer, NIE number (a number issued to foreigners in Spain) in place, and bank account opened strengthens a buyer’s position when negotiating as he or she can put down an immediate deposit if an offer is accepted, since all the other details will have been taken care of already.

Negotiating a purchase

A good agent will also be immensely helpful to you in negotiating the purchase of a property you are interested in buying. It is important to remember that if your offer is too low it will not engage the interest of the seller, and might actually prove counter-productive. An articulate offer will generally capture the attention of a vendor. We recommend getting all your points together, rather than negotiating “piece meal.” Make your offer in writing if possible (of course, subject to contract). Points to include are not only the price, but also the deposit amount and when you are prepared to pay it, when you are prepared to complete the transaction, what you understand to be included in the price (for example furniture and fittings if applicable), Also, if you have a second choice property you should certainly advise the vendor of this fact.

Your lawyer can also be consulted during the negotiation to ensure that the terms of the offer meets his or her legal criteria, and on occasion will also become actively involved in more complex negotiations.

The Buying Process

Reservation or Holding Agreement

Once you have found your ideal property and you have come to an agreed price with the vendor, then the next step is to reserve and remove it off the market. This is achieved by making a reservation or holding agreement along with a fee of normally €6000. This reservation agreement will hold the property, removing it off the market while you and your lawyer start the due diligence process. This fee is fully refundable pending due diligence checks.

Private Purchase Contract

Around 30 days after the reservation agreement a private purchase contract will have to be signed and a 10% payment made to the lawyer. The private purchase agreement would provide details such as legal description of the property, purchase price, form of payment, date of completion, date of possession etc. Of course this 10% is only payable upon the full satisfaction from your lawyer that the full due diligence has been completed and that there are no liens and encumbrances. New properties from developers are paid over the construction period, and all payments on account before finishing must be guaranteed by a bank or insurance company. If the property is not finished by a certain date, a purchaser has the right to reclaim the monies paid plus legal interests. There is also a law in place that the property developer has to arrange a 10-year insurance policy with respect to any basic building defects.

Documentation and Banking

Once the purchase process has started you will be required to get a NIE (an identity number issued to foreigners) which your solicitor will help get by making an application to the local police station with a copy of your passport and reservation agreement. The NIE will be used by the notary when completing the sale and by the bank when opening an account. As mentioned above if you are intending to buy a resale property it is always a good idea to sort all of this out as soon as possible in order to strengthen your negotiation power.

Completion

Once the remaining balance has been paid the seller will issue the public deed of conveyance (escritura) to the purchaser, free of liens and encumbrances. The deed is issued before a Spanish notary and then passed from the notary to the tax office to be assessed for Transfer Tax to see if the property is a resale (second hand property) or assessed for Stamp Duty if the property is sold directly by the developer. It’s then presented to the property registry for inscription (there is a provisional inscription made immediately upon the issuance of the deeds).

Property purchasing costs in Spain

Summary

The total official costs involved in purchasing a constructed residential property should be around 10-11% for resale properties or around 12% – 13.5% for new properties (if VAT and stamp duty is paid on the purchase price) plus lawyers’ fees.

Ongoing annual costs after purchasing your property

The fees below will vary on a case to case basis depending on the property size.