BUYING A PROPERTY IN SPAIN – THE PROCESS

Buying in Spain can be very quick indeed, if you have found the property that you want and you have agreed upon the terms with the seller.  It is possible (and frequently done by the Spanish, when no mortgage is involved) to see a property, pay a small initial deposit then go to the Notary to complete the Escritura (deeds) within a couple of days.  The property will then be yours and you will be able to take possession. 

However, in practise, this is not a good way of proceeding for a foreigner buying property in Spain for the first time.  It is better to operate on a slower ‘escalator’ of risk and commitment that allows you to operate a measured purchase process that carefully ensures that the property you want is fully legal and has no potential liabilities.

 On the whole a cautious and sensible person will buy property in Spain as follows:

1.         Remove the Property from the Marketplace

Obviously, if possible, it is well worth getting a seller to remove his property from the market - whilst your lawyer does all the necessary legal checks and you prepare your funds.  Unless this is done, you may find that the dream property in Spain that you have spent so long looking for is bought by someone else!

To remove the property from the marketplace, it is normal for you to give to the seller a small deposit.  This can be from 500E to perhaps 3,000 - 4,000E (or even more, dependent upon circumstances and the price of the property).  The payment of this initial deposit is made as a sign of your seriousness about buying the property and should always be accompanied by a contract in writing drawn up by your lawyer and signed in his presence.  Preferably, you should allow your lawyer some time before the signing of the reserve deposit contract - so that he can undertake a cursory look at the initial legalities of the property. 

The reserve deposit contract should state the basic terms of the agreement to buy (price of the property, timings for completion and possibly a date for handing over a 10% deposit, what stays with the property etc.)  It will also normally have a penalty clause stating that if the seller reneges on the deal then he has to pay you back double your deposit – whilst you will lose your deposit if you do not go ahead with the sale.  This contract will be subject, of course, to the seller having good title to the property.  If this is not found to be the case - he has to return your deposit to you.

2.         10% Deposit

Generally (but not always), the reserve deposit contract will state a time in which to give to the seller a 10% deposit to secure your Spanish property.  Often this will be a defined date some 14 – 21 days after the reserve deposit contract.  Certainly, it must be long enough for your lawyer to conduct all the necessary legalities and searches to ensure that the property is legal and has no liabilities that are unknown.

So, between the reserve deposit contract and any payment of 10%, your lawyer will do all the searches and enquiries that you would expect of a lawyer in the UK.  His primary function will be to ensure that you obtain clean title to exactly the Spanish property that you believe you are buying - and that you know about any existing liabilities.  Your lawyer will draw up a private contract (rather like Exchange in the UK), which will provide details of the purchase price, amount of deposit, date of payment, final date by which the Escritura (the deeds) is to be signed and any furniture to be included etc. etc.  This contract will be signed by both you and the seller or the respective lawyers (dependent upon any Power of Attorneys) and the seller will receive 10% of the purchase price.  This is normally done in a lawyers office.

3.         The Escritura (Completion)

The Escritura will be signed on or before (depending upon the consent of the parties) the date agreed in the private contract.  At this stage, you will pay to the seller all the remaining monies outstanding for your property in Spain – i.e. the purchase price less the initial deposit and the 10% paid on the private contract.  You will then receive the keys to the property and have immediate possession.

The signing of the Escritura is always conducted in a Notaire’s office.  The Notaire will read through the Escritura and check the details of all the parties and that all the state requirements of Spain (such as payment of  the purchase tax) have been fulfilled.  Normally, the Escritura will be translated orally into your language, if you do not understand Spanish.  It is important to note that the duty of the Notaire is to the Spanish state and he is expressly not there to assess, one way or another, the wisdom of the deal that you have made.

There are, of course, almost infinite variations on the above, depending upon the agreement of the specific parties at the time.  Much depends upon the state of the market and the sellers need to sell.  So, for example, it is not uncommon for a buyer in Spain to place a larger initial deposit down - should he wish to have more time (say 1 or 2 months) to put down the 10% deposit and sign the private contract.  This may the case should a mortgage be involved.

Overall, the system works well and the opportunity to take a property in Spain off the market immediately, should you so desire (and agree with the seller), is helpful.  Certainly, unless you do this, any oral agreement is simply meaningless and a seller will sell to the first person who indicates (by handing over an initial deposit payment) that he really does want the property.  Generally, the Spanish, when they are looking at properties, invariably carry 500 E – 1,000 E on them should they find what they want.  The following day they can always get out more money should the seller so require, but that initial payment will secure the property straightaway – at least for a few days! 

Generally, if you do find a property in Spain that you definitely want then it is also a good idea to sign a Power of Attorney with your Spanish lawyer.  This is a safety measure of some value.  You may, for example, have unexpected problems (family/business/illness etc.) preventing you returning to sign the Escritura or private contract on the agreed date.  Should this be the case, then your lawyer can act for you – subject to your consent and prior authorisation.

As always, the purchase process is something of a balancing act between speed, so as not to lose your Spanish property and sufficient time to ensure that all necessary legalities are carefully undertaken.  If you follow the purchase process of 1 – 3 above then, undoubtedly, this is a wise way to proceed.  Without doubt, you must never allow yourself to be rushed!

Copyright Nick Snelling (www.nicholassnelling.com) author of three books on Spain including ‘How to Move Safely to Spain’ (www.movesafelytospain.com)

ENDS