6 Steps to owning your Dream Home

Stage One: Searching For Your Spanish Home
Your adventure will commence with your property search. This is the fun part where you get to look around a selection of properties and envisage yourself lounging on the terrace with a glass of vino in hand. It is best not to rush things at this stage, as you need to be sure that the area and property type that you are focusing on are right for you, as well as determine whether your budget will stretch to it. Once you are sure that you have found the property that ticks all the right boxes, you will need to obtain a copy of the “Nota Simple”, an official document which specifies exactly what you are buying and what is registered according to Land Registry. It will also be beneficial to look into the annual IBI (Council tax costs) and rate of community charges required where applicable, to give you a clearer picture of the potential ongoing costs of your purchase. If you have appointed a Spanish Lawyer to assist you through the purchase process then they will be able to advise you on this matter. They should also perform checks to verify that the seller is the legal owner of the property, along with various other basic legal issues before you part with any cash.

Stage 2: Reserving a Property
Signing a reservation contract and paying a deposit to secure the purchase is not a mandatory stage in the purchase process. However, if you wish to make sure that the property is not sold to anyone else whilst you are sorting out your legal matters and finances then it is advisable that you include this stage, removing the property from the active market. In doing this your chosen property will be considered “Sold subject to contract” as is the case in the UK. If you are buying the property through an agent, you will usually find that the company has its own reservation contract and procedure in place. You should always seek legal advice before signing anything or paying any monies as it will be difficult to reverse your decision once made. A good Spanish Lawyer will usually offer free advice at these early stages, and will be able to help you to protect your reservation fee in the event of you wishing to abandon the purchase. They will also be able to structure the purchase process allowing sufficient time to undertake initial legal searches, provide a cooling off period, and where required provide time for financial arrangements like a Spanish mortgage to be put in place.

Stage 3: Legal Implications
If the buying process, which you are entering into, requires you to sign a Private Purchase Contract, then this is equivalent to an exchange of contract in other countries and holds the same legal implications. At this point you will usually be expected to pay a deposit of around 10% to the seller. Once you have signed the contract you are legally obliged to complete within the agreed timescale, or risk losing your deposit or incur late payment penalties. The contract works to protect both parties, as at this stage the seller is legally required to sell the property at the price agreed at the point of signing. The purchase contract will also stipulate what expenses will be met by the buyer, and what fixtures and fittings will be included in the sale.

Your Spanish Lawyer may wish to include a series of “get out” clauses in order to protect you from legal action should things not go according to plan, such as “subject to Spanish mortgage”, “legal searches” and other matters. However, if one of the clauses needs to be actioned the buyer will need to prove that it was necessary and this will usually result in a lengthy and costly legal battle, before any monies are returned. Therefore, it is best to ensure that certain requirements can be, or have already been met, before you agree to sign. For example, if the buyer requires a Spanish mortgage, this should have been offered and meet all of the financial requirements. A valuation should have been undertaken and all related legal searches completed to ensure that there are no infractions or possible debts outstanding. This stage is particularly important in Spain, as any outstanding debts or fines remain attached to the property rather than its owner, so are passed on to become the responsibility of the new owner if not cleared before completion. It is also important to ensure that the full asking price which you are expected to pay is documented, and that you will not be expected to hand over any additional cash sum to avoid payment of taxes as was often the case in the past. Before signing the purchase agreement it is important to be clear of who is buying the property (i.e. what name(s) should be included in the purchase agreement) as it is difficult to add or remove names later on once the paperwork is in place.

Vendors, Agents and their legal representatives are likely to push for the purchase contract to be signed quickly, without allowing sufficient time for all of the necessary checks to be completed. However, no matter how much pressure you feel that you are under you must safeguard yourself, as it is you who could end up in trouble if things go wrong, so they will simply have to wait. Likewise, the timescale allowed between offering to buy and the contract being exchanged has to be carefully managed by the buyer’s legal adviser to avoid the risk of another buyer getting in first and essentially “stealing” the sale. A good Lawyer will be able to work quickly and effectively to ensure the right level of due diligence has been undertaken so that the buyer can complete the purchase in a secure manner as soon as possible. As a buyer, you might be quite anxious whilst these checks are being undertaken, but try to remember that it is better to miss out on a property than to lose large sums of money and end up in court because you rushed into something without doing enough research during the early stages.

Stage 4: Completion Process
Completion of a property purchase in Spain takes place within the official offices of the “Notaria Publica”. It is imperative at this stage that all parties connected to the sale or purchase of the property are present, including any bank personnel for redemption or subrogation of an existing loan, the bank providing a new mortgage; and the seller or their legal representative, who can either sign or bear witness to the signing of the contract. Please note that if you choose to attend without the presence of a legal representative the Notary will insist that you can either speak fluent Spanish or arrive accompanied by a competent Translator. Before signing the contract you should take the time to understand all related costs and ensure that you have sufficient funds to cover these as well as all additional taxes. Any relevant cheques or banker’s drafts should be written and available to hand over at the Notary’s request. Please note that the Spanish Notary Office can be a very busy place, and due to people arriving late, paperwork not being correct and other problems, proceedings will quite often run significantly behind schedule. In certain circumstances one of the required parties, usually the representative from the bank, may cancel, so the appointment will have to be rearranged for a later date, therefore it is important to allow for such incidences when you book your visit if you do not reside permanently in Spain. The Notary will read through all of the paperwork carefully, and often ask questions which need clarification or possibly require additional pieces of evidence which have not been submitted, which will result in the appointment being suspended until the issues are addressed. Either you if attending in person, or your Lawyer if they have been granted Power of Attorney, will be required to have a certified passport or original passport and original NIE certificates available. The Notary will also request to see evidence of the full payment required for completion and be able to verify their source before the contract is signed.

Stage 5: Registration of Ownership
Once monies have been exchanged and the contract is signed, the Notary will present you or your legal representative with a photocopy of the deeds. The original document is sent to land registry to record the change of circumstances. The registration process can take up to three months, and once completed the original deeds and all invoices relating to the transaction become available for collection by you, the buyer. It is important to check for yourself that registration has taken place and the property transferred into your name, and that you or your Lawyer has received the original copies of all documents and invoices. Should you wish to sell the property in the future you will need all of this evidence to complete the sale and avoid paying Spanish capital gains tax on costs incurred at purchase through lack of evidence of these costs.

Stage Six: Celebrate!
Now that all of the i’s are dotted and t’s crossed, you are the proud owner of your Spanish dream home. So all that is left to do is pop open a refreshing bottle of cava and raise a toast to your future in sunny Spain! Salud!