Reals Abogados

 

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INVESTMENTS.

FINDING THE PROPERTY

First of all, you will need to be assisted by a real estate agent with the appropriate knowledge and experience, who can provide you a wide offer of properties in the Costa del Sol. The real estate agent will help you to choose through all the properties available on the market, selecting those that would adapt to your needs and budget.

 

RESERVATION AGREEMENT

Before you arrive in Spain, you should ensure that you have funds available to cover any reservation sum, which takes the property off the market. The minimum required is usually between € 3,000.00 - € 6,000.00, although it may be higher for more expensive properties. The reservation sum may be paid by banker’s draft, cash or by credit card. If you cannot come up with a reservation sum immediately, you may risk loosing the property to another buyer who can.

 

CHOOSING THE LAWYER

Before taking the next step, you will need to be assisted by a local Lawyer, who will negotiate the purchase price and terms with the seller on your behalf and ensure that any offer meets the legal criteria required.

REAL´S ABOGADOS offers its services to the highest professional standards and provides legal guarantees for the purchase of property. We ensure that the Spanish legal requirements are met, that the property is bought free of any charges, encumbrances or debts and that all payments related to the property are up to date. In property transactions with strict completion dates, we realize speed is often of the essence. Processing paperwork quickly and solving potential problems fast ensures a smooth uncomplicated purchase. One of the ways we make sure this happens is by endeavouring to be contactable and available seven days a week.
My professional intervention in this case consisted in the following proceedings:

- Meetings, telephone conversations and negotiations with the vendor.
- Signing of the private contract of purchase and sale on your behalf.
- Verification that the property is inscribed in favour of the vendor and free of charges and encumbrances at the Land Registry.
- Verification that the Municipal Rates and Community Fees are paid up to date of completion.
- Obtention of the Bank Currency Certificate.
- Prepare the draft Power of Attorney to be granted by you in my favour in case that you do not come to Spain on the completion date.
- Prepare the Title Deed and assistance at the Notary office when the completion takes place.
- Change the titularity of Municipal Rates receipts and Community Fees receipts.
- Payment of taxes, notary fees, registry fees, etc.
- Inscription of the Title Deed to the property in your favour at the Land Registry.
- Report any progress to you by fax or telephone.
- General assistance and legal advise until the matter is finalized.

All individuals owners of property, whether or not residents in Spain, must have a personal Identification Number, called Número de Identificación de Extranjeros (N.I.E. number), for all their dealings with the Local Authorities, Central Government and Regional Authorities. Such number will in due course appear on all forms and notifications that may at any time be addressed to the individual owner (such as Wealth Tax, Local Rates, Income Tax, or Capital Gain Tax as the case may be).

An application must be made to the Directorate of Police for the obtention of such number, before purchasing the property.  The legal fees and expenses involved in the obtention of the N.I.E. is € 150.00.

 

PRIVATE CONTRACT OF PURCHASE AND SALE

The next step is to exchange private contracts of purchase and sale or to sign an option to purchase. This will usually take place within one or two weeks after signing of the reservation agreement. Your Lawyer will have conducted during this time, searches and investigations of the property and will have arranged with the seller for any outstanding debts to be cancelled. The private contract of purchase and sale, or option to purchase, will state all the agreed terms of the transactions and will reflect the date for final completion at the notary. At this stage, it is customary to pay between 10% and 30% of the purchase price.

 

BANK BONDS / INSURANCE CERTIFICATE

It is compulsory by law in Spain that when the property is under construction, the vendor is obliged to give a bank bond or insurance certificate to all the purchasers as guarantee of the sums paid during the construction period. In case that the property is not finalized or something happens during the construction, the bank or insurance company will refund the moneys paid by the purchasers up to date plus 6% interest. By this way the purchasers are absolutely guaranteed by a bank or insurance company. Your Lawyer will also confirm that the developer is giving you these bank bonds or insurance certificates duly formalized in accordance with the Spanish law.

 

FINANCING YOUR PURCHASE / MORTGAGE LOAN

Whether you are a resident or not in Spain, you can obtain a loan or a mortgage against your property in any currency and from any bank in the world. Spanish banks are willing to lend to non-resident purchasers of real estate.

You will need:

If employed applicants:

    1. A bank reference letter.
    2. Last six months bank statements.
    3. Latest income tax return.
    4. Last six months salary slips.

 

If self-employed applicants:

    1. A bank reference letter.
    2. Last six months bank statements.
    3. Latest Annual Accounts (Profit and Loss Report).
    4. Certificate issued by your Chartered Accountant confirming your annual incomes.

 

If retired Applicants:
    1. A bank reference letter.
    2. Last six months bank statements.
    3. Benefit Statement.

 

However, each particular case, depending of the property and the incomes of the purchaser, should be studied and treated individually.

 

FINAL COMPLETION

The purchase of the property is formally completed in Spain when the Title Deed (“Escritura”) is signed by the vendor and purchaser before a Public Notary. The final payment is made at this stage and possession passes to the buyer. If the purchase is financed with a mortgage loan, the Mortgage Loan Deed is also signed by the purchaser and the bank before a Public Notary at the same time as the Title Deed.

The Title Deed to an apartment will transfer not only the freehold of the apartment but also the freehold to a prefixed percentage on the common elements of the complex such as staircase, gardens, swimming-pools, etc., which also governs your duties towards the general maintenance of the property.

Your Lawyer is responsible for the preparation of all the deeds to be signed on the completion date and providing all the documentation to the Public Notary required by Spanish law.

 

After completion of the property, it is needed to change the titularity of the electricity and water contracts / contract the electricity and water supplies, and instruct the water and electricity companies to debit the corresponding bills directly from your bank account. The


connection of the water and the electricity use to take approximately fifteen days. The professional fees, in case that you wish that we contract these supplies on your behalf, are as follows:

- WATER CONTRACT (approx.) .................................................................   150.00 €
- OUR PROFESSIONAL FEES (€ 200.00 + 16% V.A.T.) ...........................  232.00 €

........................................................................................................................... 382.00 €

The amount of the electricity contract is debited directly from your bank account.

 

REGISTRATION

Once the Title Deed is signed, your Lawyer will pay all the relevant transfer taxes and expenses on your behalf and will deal with the formalities of registration of the Title Deed to the property in your favour at the Land Registry. Your Lawyer will also arrange for the payment of accounts with utility services, such as water and electricity, through your local bank account.

 

COSTS INVOLVED

Our priority is to avoid surprises by letting you know clearly all the costs related to the purchase at the beginning of the transaction. We appreciate that the proper budgeting of funds is critical to a happy hassle-free purchase, especially when you are making transfers from abroad.

Should you not require a mortgage loan, the taxes, fees and expenses involved in the purchase of the property are as follows:

  1. Notary fees

The scale is fixed by law and may range from € 550.00 for lower-priced properties to € 900.00 for higher-priced properties.

  1. Land Registry fees

Generally it is 60% of what the notary charges.

  1. Lawyer fees

1% of the total purchase price, plus 16% V.A.T., according to the Rules of the Law Society of Málaga.

  1. Stamp Duties

Transfer tax on residential property is 7% or, when buying a property under construction from a promoter, V.A.T. is 7% plus Stamp Duties at 1%.

 

  1. Plusvalía Municipal Tax

Plusvalía is normally payable by the seller but it may be stipulated that the buyer pays it. The negotiations and advice of your Lawyer will determine who pays this. Basically it depends on the property’s tax value and how long the property has been owned by the seller, it usually is between € 300.00 and € 1,800.00.

Like the majority of our clients, you will probably be returning to your home country fairly soon following your purchase in Spain. At this point you need to know that your interests are going to be looked after professionally and efficiently, backed up by a personal service with clear communication in your language.

REAL´S ABOGADOS hopes that this brief information has provided you with a general idea of the legal aspects for purchasing a property in Spain.

We are looking forward to being of service to you in the future and remain at your entire disposal for any queries you may have.

For further information, please contact REAL´S ABOGADOS at info@realsabogados.es