Solicitors In Spain

When selecting a solicitor to represent you on the purchase of a property be careful about taking on a recommendation from the builder. The builder may offer special incentives to use somebody he knows, like a discount on the charges, or that the deal can go through quicker etc.

Solicitors like a retaining fee of approximately 150 euros per annum and about 500 euros for the handling of a purchase or sale of a property. They also handle other jobs such as getting an NIC number (similar to our National Insurance number). The fee for this is approximately 100 euros. You need this number to buy a car, and property. Your solicitor can also get you a Residencia, but the necessity for this (benefits) are not as great now. In the past you paid a lower tax on the sale of property and got a higher interest rate at Banks. The solicitor will set the level declared as the purchase price of your villa as extras are not vatable. The amount declared is currently vat rated at 7%. On the selling of your villa the taxation is based on the profit made between the buying and selling price, if you are moving back to the UK. If you sell and buy in Spain then there is no taxation.

Council Tax

Local Municipal Authorities set their equivalent of the UK’s council tax.

There is a council tax which comes into effect with new property when the builder hands over the responsibility to the council. Prior to this a minimal charge of roughly 100 euros per year is made and when the council takes full charge then they ask for around 250 euros per year. There is a collecting agency for the council tax and you can go into their office and pay it or pay it through the bank. You are reminded of this, well in advance.

One thing to note with the council is that they are not responsible for anyone hurting themselves (by falling) outside your property. To cover yourself you need to take out an insurance which is normally part of your fees when a community is formed. I will not go into this too much, but a community is a legal requirement and presidents, vice presidents etc are required to be elected to sort out pool maintenance fees, who can and cannot build in that area (extensions etc) this fee is roughly 1000 euros per year.

So then, you should expect the basic legal costs to be a very minimum of 9,000 euros on the purchase of a property valued at 100,000 euros. This covers solicitor`s costs, VAT on purchase, first year’s council tax and first year’s insurance – all based on current rates.

Property and Wills

One important point for expats now living in Spain. Don`t assume that your will which you made in the UK is good for Spain. Laws vary from one country to the next, and it`s vital that your money and property go to whom you intend it to go upon your death.

This is why you should seek legal advice in Spain so that you save any unnecessary expensive legal procedures due to wrangles because your will isn`t accepted under Spanish law, or more likely has loopholes. All expats should ensure they have a will, and update it from time to time to take account of additional assets owned.

In many instances, foreign nationals are buying real estate in Spain that they can utilize for their own travel and holiday purposes during part of the year and which they can rent to other individuals seeking a vacation spot at other times during the course of a given year. Thus, these men and women are buying property in Spain for a dual purpose: holiday travel and income generation.

The tax and related laws in Spain make this kind of dual property ownership a profitable enterprise for most overseas buyers. Indeed, it is expected that more and more foreign nationals will invest in vacation real estate for this dual purpose well into the coming decade. They suggest that the growth of the European Union will spur on this type of real estate investment in Spain and in some other countries that comprise the EU at this time.

Specific steps to buying real estate property in Spain

At the present time, there are no significant restrictions to a foreign national purchasing and owning real estate in Spain. Indeed, foreign nationals are able to purchase and invest in nearly any type of property to be found for sale within that country — commercial, residential or other types of investment real estate.

When it comes to making the purchase of property in Spain, many experts maintain that a person is well served is he or she takes the time (and spends the money) to hire a lawyer to assist in managing and overseeing the legal affairs associated with the successful purchase of real estate in Spain.

Once a person identifies a piece of real estate that he or she is interested in purchasing, the first step in the purchase process (after an oral offer to purchase has been made by the buyer and accepted by the seller) is the creation of a preliminary or initial contract for sale. In Spain, it is highly recommended that a person makes absolutely certain that the ownership of the property and any encumbrances on the property are clearly identified before this agreement is signed.

In most instances, a preliminary contract is a fairly substantial and a firm legal agreement. Along with the agreement itself, a buyer will need to put down a deposit of at least 10% of the total purchase price. Under the real estate laws of Spain, the buyer has a more significant burden than is found in some other countries to ensure that the title to the real estate has a title that can be conveyed to the buyer at the conclusion of the sale (clean title). Thus, there are instances in which a title proves to be imperfect, in which the ultimate transfer of ownership cannot occur, and in which the buyer may lose out on the deposit he or she paid because they simply did not carry out the correct checks at the outset.

Many people who have experience in dealing with the buying and selling of property in Spain suggest that foreign nationals should retain the assistance of a capable lawyer at this juncture. While Spanish real estate laws are not particular confusing or difficult to understand, a person seeking to buy a property in Spain bears a greater due diligence responsibility early on in the real estate buying and selling process than do buyers in some other nations.

During the period following the signing of the preliminary or initial contract, the buyer has the opportunity to obtain financing and a mortgage loan to consummate the sale and actually purchase the real estate.

Again, as referenced earlier, the buyer of real estate in Spain has a bit of a stiffer burden to make certain that the title to real estate in Spain is clear before he or she makes a purchase. Additionally, a buyer bears a greater burden than buyers do in other countries when it comes to making certain that there are no mortgages or liens from other lenders on a particular piece of property. While in most other countries the world over, the burden for “clearing title” generally rests nearly exclusively with the seller, such is not the absolute case in Spain.

Unlike in some other countries the world over, the laws governing the buying and selling real estate in Spain generally are uniform across the country. There really are no regional or local differences.

First of all, it’s worth noting that you can find your property through agencies or private owners, known as “particulares”. An agency often has exclusive rights to a property, and will charge commission on the sale to fund their publicity of their properties. Prices in Spain are almost always set by the owners of the property, meaning some prices are over-valued, which can lead to problems when asking for a loan or mortgage to fund your dream. Haggling a price is often useless, especially in sought-after locations such as Barcelona and Madrid as well as some of the coastal towns or beach resorts.

Once you have found a property that you wish to buys, a deposit is paid – often a small percentage of the overall price, for this property to be taken off the market. This is known as giving “arras” which typically stipulates a time frame for the sale to go through. This can be anywhere between 3 months to a longer period, decided between the seller and buyer and a contract is signed by both buyer and seller. If the seller does not complete their side of the contract – i.e. if they fail to provide a date to sign over the property from their financial entity, the down payment given in the arras is lost.

Some new properties come with a package of a mortgage from a bank which has brokered a deal for the whole apartment block or urbansisation, for example. Otherwise, it’s up to the buyer to shop around and find the best conditions of interest and repayments over a period of time – often between 30 and up to 50 years, due to the high price of property in relation to minimum wage in Spain. Most banks will send round a “tasador” or an agent to value the property and give the current, correct market value of the property – a service which you will usually always pay for. Assuming the value is correct, or close to the estimate of the agency/asking price, the bank will give a percentage of this amount – rarely as high as 100%. Once the bank or other financial entity such as a building society gives a date of signing over the property, this date must be within the initial date stipulated in the arras contract. The day of signing of the deeds is done before a notary, often in the bank’s office, but occasionally in a notary’s office or the estate agents. Once a date is set, you can usually gain entrance to the property to take measurements, check anything that hasn’t been decided upon and start to build your new dream home in Spain!