Purchase Contract ( contrato de compraventa ).
The first stage in buying a property in Spain is the signing of the contract ( contrato de compraventa ).
Buying " Off Plan ".
When buying an uncompleted property " off plan ", a reservation deposit usually secures a property with the balance to paid in stages. The contract includes details such as the purchase price, the payment of a deposit, the schedule for payment of the balance or stage payments, any extras that you have agreed to purchase, and the intended date of completion. The normal stage payments are 10 per cent on signing the contract, 30 per cent within 30 days, 30 percent on the completion of the roof and the final 30 per cent on completion, although this can vary according to the constructor and development.
Buying a Finished or Second-Hand Property.
When you sign the contract ( contrato privado de compraventa ) for a new or a second hand property ( or a plot of land ) you must pay a deposit. If you are buying a property privately, you must usually pay a deposit of 10 per cent when signing the initial contract, although this can ocasionally be negotiable. Once you have paid the deposit there is a legal binding agreement between you and the vendor. Note that if you fail to complete the sale within the specified time limit, you can be liable to losing your deposi and property sales in Spain, are not subject to contract.
From then till the completion of the purchase, your lawyer will take care and assist you in all the different steps involved in the transaction, ensuring that all Spanish Legal requirements are met, that the property is registered in the vendor's name and that it is free of any outstanding mortgages, charges, encumbrances, debts or other liabilities.
Finally on the day fixed for the completion, your lawyer will go to the Notary Public to sign The Title Deed, making the final payment to the vendor, who will simultaneously pass over possession of the property to you. At this stage the sale is completed. Immediately after completion, the notary will fax details of the title deed to the local land registry to inform them of the identity of the new owner so as to prevent the property being sold twice. In this way the Notary and the Land Registry act together to protect and guarantee your interests.
Escritura Publica.
The most basic paper of all is your title deed. This shows the registered owner on record with an incontestable title. The original title deed is always filed at the Notary, so you will receive an authorised copy. Unlike some systems of property registration, in Spain it is not the piece of paper itself which counts but it is the inscription in the Registro de la Propiedad, the property registry office. If you lose your deed, you can always get another copy from the Notary. Listed on the inscription in the property registry are any liens, charges or mortgages against the property. Back taxes however are not listed. A prospective purchaser will need to get a Nota Simple from the registry, which is an extract showing the basic information and any charges against the property. However, it would be wise to see a copy of the full title deeds as well.
Signing the Deed of Sale.
The final act of the sale is the signing of the deed of sale ( escritura de compraventa ) and the payment of the balance due, usually paid by bankers draft unless otherwise arranged. Non-resident purchasers must obtain a certificate from a Spanish bank stating that the amount to be paid has been exchanged or converted from a foreign currency, a copy of which is attached to the title deed. It is normal for both parties to be present when the deed is read, signed by both the buyer and the seller, and witnessed by the Notario. If you don't understand Spanish, you should have an interpreter present. In practise, a copy of the escritura will usually be available for scrutiny before signing and if you don't understand it, you should obtain an official translation. You can give a representative in Spain general power of attorney ( poder general ) to sign a contract on your behalf - this is a common procedure for foreign buyers.
Registration.
When the contract is signed the, Notary will give you a certified copy ( primera copia ) of the deeds. A notarised copy is lodged at the property registry office ( registro de la propiedad ) and the new owners name is entered on the registry deed. As noted above, you should ensure that the escritura is registered immediately after signing it, if necessary by registering it yourself. Registering ownership of a property is the most important act of buying property in Spain. Only when the escritura de compraventa is registered and becomes an escritura publica are you the legal owner of the property.
IBI Receipt.
Your receipt for the paid-up Impuesto sobre Bienes Inmuebles, the Real Estate Tax, is an important item. The IBI receipt shows first that the estate tax is paid for the current year. Also it shows the amount of the Valor Catastral, the official assessed value of the property for tax purposes. This value is usually less than the real market value. The IBI receipt also confirms the existence of the house and as such is therefore registered for taxes, which can be an important point when no Escritura Publica exists and the owner holds the property only by virtue of a private contract. Finally, the IBI must be presented when you sign the contract at the notary as it also displays the number of the Referencia Catastral, which, since 1997, is a required part of the documentation in property transfers.
Referencia Catastral ( Catastral Reference ).
The Catastral Reference is the file number of the properties registration in the land registry, which in Spain is called the Catastral, a word that exists but is rarely used in English, and which means the land registry. Property is registered here by its measurements and boundaries and physical characteristics, unlike the Property Registry which is more concerned with ownership and mortgages. Land descriptions on the title deeds can be sometimes be quite vague. The Catastro is usually more accurate, because they are constantly updating their information, with regular inspections using aerial photographs to check the physical reality of land and houses. |
