Spanish Legal Info

Once you have decided on the property that you want to buy, the process of buying a property in Spain is as follows:

 

Reservation deposit

A small deposit is normally used to reserve the property. In most cases this is between 3 - 6,000 euros and can be held with an appointed lawyer.

 

Nota simple informativa

This document is supplied by the Property Registry (Registro de la Propiedad), you'll find out if the property is free of debt, if it really belongs to the seller, and if the description of the property matches what the buyer has been told (to avoid surprises about missing square meters).

 

 

The pre-agreement

Between the seller and the buyer there has to be a contract in place until the public deed of purchase is ready. It's usually a simple document in which the seller expresses their intent to transfer the property to the buyer and the buyer expresses their intent to buy at the price and conditions agreed upon. At this time, the buyer also gives to the seller a percentage of the agreed-upon price. The typical agreement in Spain (called arras) is if the buyer backs out of the contract, they lose the deposit; if the seller backs out, they have to pay double. Of course, the buyer and seller may choose another type of agreement if they prefer.

The property transfer must be certified by a notary. The deed of purchase will be given to the buyer after the notary reads it and the parties present agree to the contents of the deed. The following must then be presented:

• proof of identity (or power of attorney) of both parties
• the seller's title of property (a form that reports the investment to the Central Register)
• the buyer's payment

The buyer and seller then each sign the contract and beneath their signatures the notary signs using his firma protocolizada and the deed is ready for taxes.

 

 

Taxes

Transfer tax (impuesto de transmisiones patrimoniales) and stamp tax (impuesto de actos jurídicos documentados). If the seller is an individual the buyer pays a tax of 6% (7% in some regions) of the price specified in the deed. If the seller is a real estate developer and the building or land to be built on represents a first-time transfer then the buyer pays VAT tax instead, meaning 7% for housing, 16% otherwise. If for housing you have to add a stamp tax, in this case it is reduced to 0.5% depending on the region (for Madrid it's 1.5%). Some special conditions apply for the Canary Islands.

 

 

Property Registry

If you want to be sure that your rights to the property are fully protected, you must register your title at the local office. (Some small towns don't have such an office and some of the bigger cities have many -- check the original deed of the seller to find out which office corresponds to you). You will be charged a standard fee (about .4% of the first 6010 euros, going down to .02% for over 6,010,121 euros).