Purchasing property in Spain as a foreign citizen involves navigating various legal requirements and procedures to ensure a smooth and legally compliant transaction. Below, we outline the essential legal requirements for buying property in Spain.
A Spanish bank account is necessary in order to handle the financial aspects of the property purchase, including payment of deposits, fees, and taxes. Because of procedures to prevent money laundering, the banking process is not always straightforward because they require confirmation of identity and also conformation of the origin of funds into the bank account.
This is the initial document that outlines the buyer's intention to purchase the property under specified conditions. It includes the offer price and any conditions for the purchase, and there can be a small, monetary transaction required to reserve the property.
For obvious reasons we must check that the real estate is all in order. There could be problems with the ownership, pending mortgages and debts, seizures, etc. but issues can also arise regarding architecture defects or urbanistic affections that could cause problems to the actual intentions of the party.
At Conesa Legal we have professionals who can check that everything is in order so that the operation can procede smoothly.
Normally, next, as a second more serious and binding step, there is a contract drawn up between the buyer and the seller relating to a bigger monetary amount which acts as a pre-payment or promise to sell/buy. At this stage, it is very important to count on the support of our Aliant real estate lawyers as there are three different options for these pre-payment contract penalties, with different binding effects:
In Spain the Notary is a public figure who attests to what he/she sees, so he/she is required to draft and oversee the signing of the final contract, and he/she ensures that all legal requirements are met and that the property is free of liens or other encumbrances. Therefore, while the real estate purchase can be completed via a private contract, it is highly recommendable to go to the Notary, and it is mandatory if you want to register with the Property Register (Registro de la Propiedad).
We offer support for foreign clients who do not speak Spanish because the Notary has to make sure the seller or the buyer knows what they sign. If there is no representation, the Spanish law requires the presence of an official interpreter and two witnesses.
We offer to appear at closing on your behalf as your attorney-in-fact through a power-of-attorney (POA), so the deed may be executed in Spanish (we provide our clients with an informal copy in English for their reference as well as a package with all of the relevant documentation).
Both parties can come to an agreement as to who will bear the cost of the taxes but normally the distributed between both parties is as follows:
Depending on the property's nature (residential or commercial) and whether it is a primary residence, various taxes apply, including VAT (IVA), registration tax, mortgage tax, and cadastral tax.
There is also the Judicial Document Tax because of the Notary deed.
After purchase, you will be responsible for annual property taxes, including IBI (municipal property tax) and waste disposal taxes.
Also, regarding post-purchase taxes, the buyer can either choose for the notary or the lawyer to handle the registration of the property with the local Land Registry, ensuring the transfer of ownership is officially recorded. Normally the Notary does this since he/she will be used to making this application on a daily basis.
The seller has to face the increment of the real estate value which is a % of the difference between the initial purchase value and the selling purchase value.
In addition, there is another increment tax which is the "plusvalia municipal" related to the City Council who taxes a % of the value because the law deems that he/she also participates in the increment of the value of the real estate.
We offer other real estate services and administrative tasks to help you to settle into your new property. Contact us here if you need any help:
Our team is dedicated to providing you with expert legal guidance and support throughout your real estate journey in Spain.
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