Frequently asked questions

Answers to frequently asked questions

What are the stages in the completion process?

The property is selected and the terms agreed on. The property must then be secured. This can be done initially through a reservation deposit. It is normally paid directly to the vendor, but trough the selling agent or lawyer representing you in the purchase. The normally required is in the region of 3.000 to 6.000 Euros but may be greater for higher-priced properties. This reservation deposit is paid by cash or credit card, and will reserve the property until private contracts between the two parties can be exchanged. If you purchase a higher-priced-property some times you can reach a verbal agreement with the vendor to take the property off the market until the sales contract has been signed.

When are the contracts exchanged?

Upon acceptance of the offer by the vendor and payment of the reservation deposit, the next step is to exchange private contracts. This normally takes place within about 14 days. Your legal representative would have made steps to make sure the property is free of debt or problems as above, and the private contract will set out the agreed selling price and the date of completion at the notary. It is normal practice at this stage to pay 10% of the purchase price.

What if I change my mind?

You are committed by the signing of the private purchase contract, and if you choose not to complete the transaction you will lose your 10%. If you have not reached this stage of the purchase all you will lose is your deposit.

How do I choose a lawyer to represent me?

It is advisable to appoint a local lawyer, who speaks the purchaser's language who will carry out a title search, and advise the purchaser on all aspects of the investment to ensure that your purchase is as trouble-free as possible. We can recommend a number of different lawyers who can represent you in your purchase. A lawyer will provide legal guarantees that the purchase of your property is free from any debts or charges, and that all fees - including electricity, water and community fees - are paid up to the day of completion.

What is a notary?

A notary formalizes the sale of a property; they check that the title deeds and purchase are in order before the final payment is made, and the purchase document signed. The notary will then fax a copy of the purchase document to the local land registry office, and the final registration of the documentation normally takes around 2 months.

Who pays the legal fees?

In theory, notary's fees are paid by the seller, unless agreed otherwise. The fees are fixed by law on the basis of a sliding scale. It is advisable to appoint a local lawyer, who speaks the purchaser's language who will carry out a title search, and advise the purchaser on all aspects of the investment. Lawyer's fees are between 1-2% of the purchase price of the property. Estate Agents' fees vary depending on the state or region and also on the type of property. On the Costa del Sol, it is customary for the commission to be paid by the seller. The commission is usually a percentage of the selling price (although a fixed fee may be agreed between the seller and the agent) and this may vary depending on the price of the property.

Is there a transfer tax?

On new residential buildings there is VAT (IVA) charged at 7% of the value, plus 1% stamp duty, and these are paid by the purchaser. However, on urban plots, commercial premises and some garages (not annexed to a home) purchased from developing or trading companies, VAT is 16%. On re-sales there is a property transfer tax set at 7%. In all cases there is also a municipal tax, "plusvalia", which should not be confused with capital gains tax. In theory, this "plusvalia" is paid by the seller. It is a municipal tax on the increase in value on the land only. However, it may be subject of negotiation between buyer and seller.

Is it necessary to register the new ownership?

Yes, this is done by inscribing the deed of conveyance, "escritura p?lica" at the land register office. This inscription is the final step in assuring your legal title to the property.

Are there different methods of ownership?

The properties in Spain are freehold. Apart from individual ownership, a property can be owned by one or more companies. Owning companies can be Spanish companies, companies from countries with double taxation agreements with Spain or offshore companies, or a combination of these.

Is it necessary to have a residence permit?

No, it's not necessary for European Union citizens or citizens coming from the Swiss Confederation. Non-European Union citizens who want to reside permanently in Spain must first obtain a special residence visa from the Spanish Consulate in their home country. With this visa, they can apply for a residence permit.

Professional advice

The laws and people's personal circumstances continuously change. These questions and answers are only general, and we strongly recommend that you contact a professional lawyer or financial advisor. Our office would be delighted to recommend reputable professionals in both fields.