BUY, LIVE IN SPAIN

What's important about the HOW?  Below is a terrific outline of what it's like to buy a property in Spain.  Based on our experiences, the following recommendations will make your buying experience much easier.

THREE RECOMMENDATIONS!

1.  Get a Foreign Identity Number (NIE) ahead of time!  "The NIE is a personal, unique and exclusive number that is assigned to foreigners who, for economic, professional, or social reasons, are engaged in activities related to Spain and require identification in this country." 

 You need an NIE for the various transactions outlined below as well as for your utilities hookup,  Internet, local bank account, etc.  If you get it ahead of time, you avoid many hours standing in line and days (or weeks) waiting for the NIE to come through to you.  I have provided a link below to the Spanish government website that has all the information you need to know about the process.  The cost is $10-11 depending on exchange rate.  If you have it ahead of time, you can really speed up everything!

https://www.exteriores.gob.es/Consulados/washington/en/ServiciosConsulares/Paginas/Consular/NIE.aspx

 

2.  Realtors!  There are literally tens of realty firms along the Costa del Sol.  Spain does not have any licensing requirements to become a real estate agent so the business is filled with all sorts of people.  We used a firm that we consider to be one of the best.  Simply Costa Homes is an extraordinary real estate firm with outstanding service, and for us greatly reduced the apprehension of buying a property overseas.  You need to be able to trust your real estate agent--Simply Costa Homes gives you that trust.  Check out their website for all the superb new developments available for sale!

https://simplycostahomes.com

 

3.  Use a lawyer!   A good real estate attorney is worth every dollar, euro or pound.  We had one of the best in Fuengirola.  He did all the land registry checks, the community association status, helped us set up a local bank account, and walked us through the final sale agreement signatures.  Our attorney also gave us a great degree of trust in the Spanish system and the security of our purchase.  

 

THE PROCESS

Once you have found your property, the buying process begins with a Reservation Agreement. This is a contract that freezes the purchase price and takes the property off the market for usually 30 days on payment of a fee between €3,000 and €12,000. The deposit is usually held by your lawyer or your agent in a client escrow account.

 

Within an agreed time of signing the reservation agreement, the private purchase contract (PPC) (contrato de arras) is signed between the buyer and the seller. Within this time your lawyer should complete all the searches on the property , confirming that the seller owns the property being sold, there are no loans or charges and that everything pertaining to the property is in order.

 

Once both parties sign the PPC, it becomes legally binding. The PPC will usually require a 10% deposit to be paid. The buyer is then committed to pay the balance of the agreed selling price and the seller (once the money has been paid in full) must transfer ownership to the buyer.  If the seller pulls out of the transaction, he must return double the amount of the deposit received by way of compensation. If the buyer pulls out he will lose the deposit paid.

 

The property sale is formally completed when the title deed (“Escritura de Compraventa”) is signed before a public official called a Public Notary, or Notario. This will happen at their office and be accompanied by the agreed final payment and all the relevant purchase taxes. The Escritura is then presented by the Notary to the Land Registry for registration and the property is passed to the new owner.

 

With a new-build property, obviously completion can take a lot longer and the payments are split over clearly defined stages of the build process and the developer should provide bank guarantees in lieu of each payment.

 

 SPAIN BUYING COSTS

Allow for between 10% and 12% of the purchase price to cover the costs of buying your property in Spain but this figure varies according to the region. If you have a Spanish mortgage you need to add an additional cost of between 2% and 4%.

 

The above includes the Property Transfer Tax. It is calculated on the agreed property purchase price and runs between 6.5% and 10%, depending on the region. It also includes the Notary fee of around 0.5 per cent of the purchase price and tends to range from €300 and €1200. Land Registry fees in Spain are normally between €400 and €600, or 0.4% of the purchase price.

 

Legal fees are usually a percentage of the purchase price – generally 1% but with a minimum fee. VAT on new-build properties in Spain is 10%.

 

Finally, you will need to budget for utility connections.

 

You’ll also need to find the most cost-effective, safe and easy way to move your money abroad when you purchase.  Bank charges and fluctuating exchange rates can both have an impact on your overall cost of purchase but if you’re well prepared, you can save up to 4% of the cost.  Working with a specialist currency firm will help you achieve currency exchange rates better than the banks, and reduce the risk of your international payments increasing.  

 

(Personal Experience:  U.S. banks, credit unions, and brokerage firms are very cautious when it comes to foreign wire transfers.  The 2001 Patriot Act dramatically increased monitoring of such transactions and caused these financial institutions to take  rigorous precautions.)

 

In Spain, it is not automatically part of the buying process to use your own lawyer or a have a home inspection done. We recommend using an independent lawyer in every type of purchase but a home inspection is obviously recommended if you are buying an older re-sale property. Using a Gestor (accountant) once a year to ensure you file all the correct tax returns on your property at the right time is also recommended.

 

If you are buying in a community or urbanization, make sure you ask your lawyer to carry out due diligence on the Community Administrator to make sure that the accounts are in good order and the upkeep of the communal areas is ongoing and efficient.