The Spanish property buying process is a simple enough procedure and you should generally expect to take the following steps:
• Sign a reservation agreement. This involves a deposit to ensure the seller removes the property from the market and will normally cost between €6,000 and 1%, depending on the purchase price. The funds are held by your lawyer or agent in an escrow or client account.
• Sign the full private purchase agreement after about ten days. It is signed by both you and the seller, and you pay a deposit of 10 to 20 per cent of the purchase price. During this time, your lawyer completes all searches on the property to confirm that the seller is indeed the current owner and that all payments and debts are up to date. Should there be a legal problem preventing the sale, you will be repaid your deposit at this stage. If the seller pulls out of the sale, he/she must pay you double the amount of the deposit received. However, if you pull out, you will lose your deposit.
• Sign the contract of sale. Once the searches are complete, both parties sign the main contract of sale at a Public Notary office and you pay the agreed final payment plus purchase taxes.
• Land Registry documents are presented by the Notary to the Land Registry in order that your property as being transferred to your name. Bear in mind that final registration of the title deed can take several months.
Note: If you are purchasing an off-plan property in Spain, payments are normally made at various stages of the building process. The developer must provide you with bank guarantees to protect each payment.
Allow between 10 and 14 per cent of the purchase price, depending on where you are buying, for transfer tax (stamp duty), notary fees and land registry fees. If you are taking out a Spanish mortgage, you will need to add an additional 2 to 4 per cent.
Legal fees are usually charged at approximately 1 per cent plus VAT (VAT for new build properties is 10 per cent).