The Buying Process
After you found your dream property and all terms are agreed the property will normally be secured, through a option to purchase contract or short option contract which is a private contract between the two parties. The Option Contract secures both the seller and the buyer, as the seller will now be prevented from selling to others without compensating the contracted buyer. Similarly, the buyer will forfeit his deposit in the event of his non-completion of the purchase. It is customary that 10% of the purchase price is paid on signing of the option contract within the agreed payment period into a trusted accound where the option money will be hold until the notary appointment where the purchase/sale will be finalized.
The public deeds 'Escritura publica' as official document of the purchase/sale must be signed by both parties under notarial supervision in Spain. If you are not able to attend this appointment of course it is possible to issue your lawyer or another person of confidence with a power of attorney so you do not have to be present at the signing of the deed. We suggest you sign the power of attorney whilst you are in Spain, in front of a notary. Of course it is also possible to issue a power of Attorney abroad through the Spanish consulate but be aware that this is very costly and time consuming.
Once you bought your dream property the deed of conveyance must be registered in the property registry and the change of ownership needs to be notified to the town hall. Either you can do this yourself, pay the notary office to do it, or pay your lawyer to do it for you. We also will assist you at any necessary to do's please do not hesitate to contact us.
A Spanish notary always has to be appointed for any property or other legal transaction taking place. The notary's fees are usually paid by the buyer - unless agreed otherwise - and are fixed by law on the basis of a scale. It is advisable to appoint a local lawyer who can advise you on all aspects of the investment.
Lawyer's fees are between 1-2% of the purchase price of the property. As a rule with larger value properties the fee can be negotiated.
It is not necessary for EEC citizens or citizens coming from the Swiss confederation to have a Spanish residence permit. For non-EEC citizens, if you want to reside permanently in Spain, you would need to obtain a special visa at the Spanish consulate in your country of origin, which then allows you to apply for a residence permit.
NIE numbers (Spanish identification number for foreigners)
When you buy property in Spain in your own name, you must apply for a NIE number. This number must exist before the public deed can be signed and the transaction finalized. So, it should be in place as early as possible in the process and takes 3-4 weeks to receive. Normally this can be taken care of by your lawyer or your Spanish bank.
As a guide, it is suggested that you add 11% to the agreed purchase price, which will cover most of the expenses involved in the purchase - even though generally it is less than that. If a mortgage is required, there will be additional opening fees etc. from the bank.
Company or private ownership
Apart from individual ownership, a property may be owned by more than one individual or a company. The 'owning' company can be:
Spanish in origin
From countries with double taxation agreements with Spain
A combination of the above
Each of the above options has its pros and cons, just as each buyer and property have their particular characteristics. Therefore, we strongly suggest that a lawyer and or tax adviser is consulted regarding the existing legislation as and when your purchase is agreed.