Offer and Acceptance
Once you have found your ideal property you will need to make an offer and once accepted you must secure it through an agreement that is legally binding between buyer and seller.
The first step is to give an offer of purchase through your agent. This written offer states the conditions you are willing to offer for the purchase, the sales price, when you plan to complete, any special conditions required (for example: inclusion of furniture, subject to you getting a mortgage, etc).
On written acceptance of the offer, the property is taken off the market. It is advisable that this offer is in writing and will also require a small deposit normally set between €3,000 and €6,000 to demonstrate to the owner your intent to purchase is serious. This deposit is normally held by your lawyer until the private contract is signed.
Anti Money Laundering
In order to comply with strict anti money laundering laws you will be required to provide to your lawyer and estate agent the following information:
• Passport copy for all purchasers
• Full main residencial address
• Utility bill dated within last 3 months
• Description of source of wealth for the purchase
Searches and Private Contract
With your offer now accepted, your lawyer will check the land registry to make sure the property is properly registered and that there are no liens or encumbrances. The lawyer will arrange the payment structure with the vendors representative prior to going to notary and prepare a private contract that will bind both parties.
Upon signing the private contract, a payment on account of the purchase price will be required according to the terms of the sale and the date of completion. The payment would be approx 10% of the agreed purchase (less the orginal deposit already paid) price which would be set against the agreed sales price.
The private contract will state the date by which the sale must be completed. It is very important that the purchaser be fully aware of the implications of failing to meet this completion date. Invariably the result will be the total loss of the deposit. If, on the other hand, the seller fails to meet his obligations under the contract by the given date, then the deposit will be refunded and damages may be sought in relation to losses incurred.
Eventually the lawyer will prepare the public deeds for signature in front of a Spanish Notary, when the balance of the purchase price is paid and vacant possession of the unencumbered property is granted, thereby completing the sale.
A purchaser will also be required to apply for an NIE (Numero de Identificacion de Extranjeros) which is simply an official identification number for non Spanish nationals. The application must be made prior to signing and taking position of a property. Your lawyer can arrange this for you.
It is also important to open a Spanish bank account prior to purchase in order that your lawyer can set up standing orders for future payments of the property utilities and taxes.
If the buyer requires a mortgage to purchase a property, an official valuation must been conducted. Most property assessors charge around 280€ to perform an official valuation.
As part of the Spanish mortgage application process the lender will require copy of a Nota Simple that confirms that the property is free of any other unexpected debts which your solicitor will request from the Land Registry as part of the purchase process.
The mortgage must be registered with the land registry. This slightly increases the land registry fees when buying a property. The fee for registering a Spanish mortgage is approximately the same as the fee for registering the property.
If you are considering taking a mortgage its wise to shop around and speak to an independent mortgage consultant before making a decision. We can recommend a suitable professional to help you.
Overall lending will depend on your income levels, age and residency. Spanish residents are generally granted a higher loan percentage.
The actual level of financed granted by the bank will be based on the lower of the purchase value or the valuation.
Completion - Preparing for signing
Whichever type of property you decide to purchase, the Escritura (title deed) should only be signed once your lawyer has carried out all relevant checks to confirm ownership of the property, that’s its free of debts, etc.
Your lawyer will have agreed a payment method and structure with the vendor before completing at the notary. Bank-guaranteed cheques issued by a branch on the Costa del Sol are the preferred method, though it should also be possible to transfer funds to the notary's escrow account.
You will require certain necessary documents with you when you go to the signing including an N.I.E number, your lawyer will inform you of everything you will need to take to the Notary.
Though it is always best to attend the signing in person, a power of attorney can be granted to your lawyer to represent yourself. The easiest way to grant power of attorney is to sign one before a notary in Spain, though at greater expense one can also be arranged through the Spanish consulates in the UK or through a British notary. All involved parties, the vendors, buyers and mortgage lenders, have to be present represented by powers of attorney at the signing of the escritura.
When can you sign the title deeds?
When buying a resale property you or your representing party will sign the deeds before notary at the pre agreed date as discussed with the vendor. The time period between acceptance of the offer and signing of the title deeds varies. As a rule of thumb, it is between 1 and 3 months after signing a private contract.
When buying a newly built property from a developer you are not obliged to sign the escritura (title deeds) until the developer is able to produce the ‘Certificado de Final de Obras’ signed by the architect.
In Spain you cannot inscribe your title in property, unless a Spanish notary witnesses the deeds of sale. According to Spanish law a notary's signature is required to raise a private contract into public deeds that can be inscribed in the land register. Until signed by a notary, you are not the owner of the property according to property register.
In theory a private contract between buyer and seller is fully binding on both parties however, it is crucial to inscribe the title in the property register, as it is the only truly secure form of property ownership in Spain.
The notary will confirm the identity and other personal details of all buyers and sellers present or represented, and then read the deeds out loud. The title deeds will be in Spanish so you need to be sure the deeds are correct before you sign them by having a translator present or relying on your lawyer. Some notaries will refuse to sign the deeds unless it is proven that the buyer understands what he or she is signing.
If there are no objections to the content of the deeds the notary will commence the signing stage, followed by outstanding payments by the buyer prior to the keys being handed over.
After signing the deeds you will now be the proud owner of a property in Spain.
You will be given a Copia Simple (copy of the deeds) to take away after the signing. The Copia Simple allows you to set up utility contracts and pay taxes. A few weeks later your lawyer will be able to collect the original deeds signed by the notary (Copia Autorizada), which are needed to inscribe your title in the property register.