THE BUYING PROCESS IN STEPS
1) When the ideal property is found we start negotiating the best price & conditions with the local seller which could be a real estate agent, private vendor, bank, project developer, administration or lawyer office etc.
2) If the client agrees on the price & conditions and want to move forward with the purchase the next step is that the lawyer contacts the seller and draws up a RESERVATION CONTRACT. This contract is used in Spain as a standard procedure to reserve the property for a specified period of time whilst the lawyer conducts the "due diligence". The reservation contract would set out the basic terms and conditions agreed between buyer and seller, approved and signed. This is a temporary reservation document only.
Such a document would include:
Full name of buyer and vendor
Price of the property
Date to sign a “private purchase contract” ( contrato de arras)
Other special conditions (subject to finance)Deposit amount placed to reserve the property
Normally a 3000 Euro deposit will secure the property while the “due diligence” is being conducted.
This deposit can be paid by credit card, bank transfer or in cash. The 3000 Euros serves to reserve the property whilst the lawyer conducts the due diligence. This reservation deposit is fully refundable in the event that our lawyer should discover any legal impediments pertaining to the said property. Should you continue with your purchase after the due diligence the 3000 Euros will be used towards the purchase price. In the case the seller pulls out the buyer gets his 3000 euro deposit back plus a compensation of another 3000 euro. ( minus legal fees )
3) Once the lawyer has conducted a full and thorough *due diligence, she will inform you of her findings and discuss moving to a private purchase contract (contrato de arras). A private purchase contract is a contract between the buyer and the vendor. Again typically setting out the terms and conditions of the contract.
The buyer pays 10 % of the purchase price ex VAT to secure the property. In the case the seller wants to pull out after signing the private purchase contract the seller is obliged to pay the 10 % back plus a penalty of another 10 %. ( 20 % in total minus costs of lawyer)
It is important that the private purchase contract is signed as soon as possible to secure the property.
The contract will be prepared by the lawyer and will contain:
A legal declaration from the vendor that he/she is legally positioned to sell the property respectively
The exact address and dimensions of the property and its features as set out in the “referencia Catastral” Government registration of the property.
The completion date and hand over of the keys etc
The agreed terms and conditions as agreed buy the consumer and the vendor
4) Change of title deeds at the Spanish notary.
The buying costs in Spain vary from 10% to 13.5% of the purchase price, broken down as follows:
10% IVA (VAT) on NEW properties, 8% to 10% IVA (VAT) on re-sales depending on price category
1% Notary fee ( Notarization of property cost)
1% Legal fees
1.5% Stamp Duty Tax ( A tax charged to make all documents legally effective)
If you should require a mortgage, you should calculate an average of 1- 1.5% cost for the set up fee of a mortgage with a Spanish bank.
For further assistance on buying a property in Spain please contact us.
* All transactions will be guided by our specialized real estate lawyer ( www.eurolawfirm.info ) to make sure that our clients get the best possible service & proteccion.