1. The PROPERTY search
Probably the most difficult thing in the property buying process is choosing the perfect house. The search for housing can be done personally or go to a real estate agency to carry out your search.
When you have the property you want to buy, you must review the legal and urban situation of the house, the existence of debts that the property may have and study all the documentation. For example, when you buy a house on rustic land, in many cases, they are properties built without a municipal license, which requires an indepth analysis of their legality or possible legalization. To know the house you are going to buy, it is not only necessary to visit it, but it is also important to know what the legal status of the house is.
YOU will need to know:
• Who is the owner/s.
• A Simple Note from the Land Registry.
• Cadastral Information (General Directorate of Cadastre).
• If there are debts on the house (mortgages,…).
• If there are tenants.
• If the Local House Tax (IBI) has been paid
• If the Garbage Local Tax has been paid.
• If you have the Energy Efficiency Certificate.
• In an apartment, if the community fees are paid.
• If the property has a Tourist Rental License or not
In the purchase of houses by foreigners, you must review the legislation for National Defense. The restrictions only apply to NON-COMMUNITY foreigners (outside the EU), whether or not they are residents in Spain, and you must be careful when you buy in the municipal areas located in Cartagena, Strait of Gibraltar, Bay of Cadiz, Galicia, areas close to Portugal or France, the Islands and Ceuta and Melilla. In strategic areas, prior military authorization is required for foreigners to buy a house.
In addition, the registration of the purchase in the Land Registry is necessary. It is recommended to open a Bank Account in Spain. Being the holder of a bank account in Spain is essential not only in order to more quickly make payments for the price of the property and other expenses that arise in the purchase process, but also to pay the normal expenses of the property: electricity, water, gas or local taxes that often cannot be charged to foreign accounts.
2. Obtaining your NIE
The NIE It is a personal and exclusive number that ALL foreigners must have if they buy a house in Spain. Spain gives it, at the request of the interested party, by the General Directorate of the Police in Spain, provided that the foreigner is not in Spain in an irregular situation and communicates the reasons why he requests the assignment of said number (for example, for the purchase of a property).
The NIE can also be requested at Spanish Embassies and Consular Offices abroad. To have the N.I.E., in any case, it will be necessary to request a prior appointment. This process may take a few weeks, depending on the office in question.
The necessary documents to request the N.I.E.:
• Document EX15 (LO 4/2000 and RD 557/2011)
• Valid passport (copy and original)
• Payment of the administrative FEE (9.84.-€)
If you live abroad, you do not have a N.I.E. and you are going to buy a property in Spain but you do not have a Spanish Embassy or Consulate nearby, the simplest and most convenient thing is to give a Power of Attorney to your representative in Spain (be it your real estate agent, lawyer or tax advisor) so that he or she apply for
you well in advance. When you have the N.I.E. it is necessary to register it at the Tax Agency with DOCUMENT 030. The census gives the NIE the character of a NIF (Tax Identification Number), an exclusive identification number of a person in their relations with the Spanish tax authorities.
If you are a Company that buys the property, you must also request a company NIF, after having the NIE of your representative(s).
3. The CONTRACT signature
The signing of the purchase contract is an important moment because the seller gives his consent, gives the keys to the house and receives payment of the price. It is the most important moment because we cannot back down.
YOU must know:
• That the contract can be formalized in a private document, without going to a Notary and only between buyer and seller. This will only be possible when the sale is not financed with a mortgage.
• That after signing a private purchase contract, either party may require the other to have it elevated to a Public Deed by a Notary Public and if one
party refuses, request the intervention of a Judge.
• To register the purchase in the Land Registry, it will always be necessary
to make a Public Deed in a Notary.
• It is recommended that the house purchase contract be formalized in a
Public Deed in a Notary for legal certainty.
The most used contracts are:
Reservation Contract. – The buyer may have viewed a property but still wants to review the property’s documentation and perhaps negotiate the price before purchasing. In these cases, the Real Estate Agency often offers the buyer the signing of a property reservation contract to “take it off the market” for a time until the deposit contract is signed or the purchase contract is signed directly.
“Arras penitenciales” Contract. – This is the most used type of contract. It is a
contract by which the buyer, who has already seen the property and has decided to buy it at a price, gives the seller an amount but gives the possibility to any of the parties to cancel the operation, that is, not to sell or do not buy, without cause. If the one who cancels is the buyer, he loses the deposit and if the seller cancels, he must return them in duplicate. This penalty is expressly regulated in art. 1454 of the Spanish Civil Code.
4. Public Deed Sale.
The Notary will advise on everything necessary to buy a property in Spain with the maximum legal guarantees.
It is normal for the buyer to choose the Notary because he will pay the notary fees. In the notary, the seller and buyer and/or their legal representatives will meet, that is, you must decide if you will participate directly in the Notary or you prefer that a representative do it for you.
If you go to the Notary with a representative, the Power of Attorney must be
“apostilled” (Hague Convention of October 5, 1961. The Hague apostille or
“apostille” is a simplified method of legalizing documents to verify their authenticity in the field of private international law) with a legible photocopy of the identity document or passport of all principals and be accompanied by a sworn translation into Spanish. It is also possible to grant these Powers of Attorney directly at the Spanish Embassies and consular offices. The Notary will review ALL the documentation and will read the public deed aloud so that the parties give their consent by signing it. When one of the parties does not know enough Spanish and the notary does not know the language of the participants, the intervention of a Translator will be necessary. In Spain it is normal for payment to be made with a nominative bank check issued by a Spanish bank. It is also possible to use OMF transfers (Fund Movement Orders) or urgent transfers that have the peculiarity of being deposited in the recipient’s bank account the same day they are ordered.
The notarial costs will depend on the price of the property and the number of pages of the deed (between €600 and €1,000 approximately).
5. The COST of buying property in Spain.
• In used homes, the Property Transfer Tax (ITP). In the Valencia Community 10% of the purchase price.
• In new homes, the Value Added Tax (VAT) is 10% of the price and the Tax
on Documented Legal Acts (AJD), in the Valencian Community, 1.5%.
• When the seller is NON-RESIDENT in Spain, the law says that the buyer
withholds 3% of the purchase price and makes the payment (MODEL 211)
of this amount to the State Tax Administration Agency within one month
from the signature in the Notary. This means that the buyer will pay the
corresponding amount of the purchase price, subtracting 3% of the total
Land Registry. – After signing the Public Deed of sale at the Notary and having paid the taxes, it is highly recommended to register the property in the Land Registry. To register the Public Deed in the Land Registry:
• Original Public Deed
• The receipt of the corresponding taxes paid (ITP, MODELO 211, IIVTNU,).
• The cost depends on the price of the property (between 300.-€ and 500.-€
Water, Electricity, Gas, ….- It is necessary to communicate the change of
ownership to the electricity, water, gas and other services companies that the property has, as well as the new direct debit account.
Local Taxes (IBI, Garbage,…).– In Spain, the property pays the IBI and Garbage Collection (ask at your Town Hall), local taxes that are paid annually and that it is recommended to pay them with a Spanish bank account of the owner.
In short, these are all the processes necessary to acquire a home in Spain. At Carlosferien we can help you in each of the steps you have to take towards your new home, since in addition to Real Estate we are a Social Collaborator Accredited by the Tax Agency.