If you are thinking of buying a house or a plot of land in Spain, either as an investment or as a holiday or retirement home, please take into account the following:

• Choose your Estate Agent carefully. He or she will help you find the property you want and may also assist in initial negotiations with the seller. You should look for a professional with a good reputation and solid knowledge of the area in which you want to buy your home.
  
  
• We would also recommend you to look for a Lawyer specialised in conveyancing, who speaks English fluently and works in the area where you intend to buy the property. He/she will negotiate the conditions of purchase with the seller on your behalf, ensuring these are favourable for you; he/she will check that the real estate is registered in the name of the seller, and free from liabilities and charges (mortgages, repossession, etc.), tenants or other occupants, and that it is up to date with all payments; he/she will inform you of the amount of taxes and costs deriving from the purchase, and will carry out all the necessary legal proceedings once the Deed of Sale and Purchase has been signed, etc.
  
  If you don't know a Lawyer in the area in question, ask your own Lawyer, friends, or the Estate Agent you have contacted if they can recommend one.
  
  
• If you have decided to begin the search for your property or plot of land, keep in mind that once you have made your choice, you will have to immediately pay the promoter anything from 300,000 pesetas, depending on the price of the real estate, in order to reserve the property or as an option to purchase (and I say immediately because, at least on the Costa del Sol, if you take 3 or 4 days to think it over, you run the risk of someone else buying the property you wanted).
  
  If you live outside Spain, you can make a bank transfer to the Client Account of your Lawyer, and he or she will then pay the seller the reservation or option to purchase on your behalf. As soon as the promoter/seller receives the copy of the transfer, he/she will see that there is a real intention to buy, so will make a definite reservation and will stop offering the property to other possible buyers.

FORMALISING THE OFFER

Even before paying the reservation price, your Lawyer should have carried out basic investigations in order to determine the following: that the seller or promoter is registered as the owner of the real estate at the Land Registry; that the real estate is free from levies and encumbrances; in the case of properties under construction, that the promoter has obtained the corresponding works licence, or if it is a plot of land on which to construct a house, the urban zoning classification of this (you wouldn't be the first to discover that the land you had bought in order to build your luxury home, or extend an already-existing one, is classified as a green area), etc.

At the same time as these investigations are being carried out, the purchase conditions will be negotiated, culminating in signing of a Deed of Sale and Purchase, in the case of property which is already completed or under construction.

A private contact is normally signed when you buy a home in a development which is under construction and, on occasions, also in the case of already-completed homes. This contract establishes the percentages to be paid at the time the contract is signed and during the construction phase, and whether payments during this phase are monthly or quarterly, etc. Generally, you will have to pay between 30 and 50% of the total price during the construction phase.

If there is any debt or charge pending on the property, this fact should be reflected in the private sales contract, with the stipulation that they must be liquidated by the promoter or seller before the Deed is signed.

Equally, if the property you are acquiring is at the construction phase, you should make sure that all the payments made on account of the price during this phase are guaranteed by the Promoter by means of bank guarantee or insurance contract with an Insurance company.

This guarantee on receipt of advance payments in the construction and sale of homes is established by Spanish Law 57/1968, of 27 July. It covers the eventualities of the construction not beginning or not being completed, for whatever cause, within the agreed time, and ensures that, if either of these occurs, you will recover the amounts paid plus the corresponding interest.

You should also make sure that these advance payments are paid into a special account which the Promoter must open with a Bank or Savings Bank (normally it will be the same one that provides the guarantee). The purpose of this account is to ensure that these sums are kept separate from any other type of funds belonging to the promoter, and that they can be drawn on exclusively for matters related to the construction of the homes.

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COMPLETION OF THE SALE AND PURCHASE

The purchase of a property is formally completed in Spain when the Deed of Sale and Purchase is signed before a Notary Public, at which time the buyer pays the seller the remainder of the purchase price, and the seller transfers possession to the buyer.

This Deed includes all details of the Sale and Purchase (description of the real estate, registration and cadastral details, price, form of payment, distribution of costs deriving from the sale and purchase, etc.) and is signed by the seller and the buyer, with their respective Lawyers and, where appropriate, legal representatives, as well as, again where appropriate, the Bank which grants the mortgage loan.

The Notary Public, if requested, will notify the Registrar of the Land Registry that this sale and purchase has been carried out and, approximately one week later, your Lawyer may collect the Deed from the Notary's Office and present it at the Land Registry for it to be recorded. At the same time, he/she will pay (within 30 days from the time of signing of the Deed) the taxes and costs which we explain below, and will change the name of the owner of the property at the Municipal Authorities and at the companies supplying electricity, water, telephone, etc., making arrangements for the corresponding direct debits for payment of bills.

For these purposes, it is a good idea to open a current account with a local Bank or Savings Bank, or provide your Lawyer with funds in order that he/she can take make payments from his/her Client Account.

ASSOCIATED COSTS OF THE SALE AND PURCHASE

As a general guideline, the total amount of costs and taxes associated with a Sale and Purchase are approximately 10% of the price. These costs are as follows:

• Notary Fees: From 50,000 Ptas., depending on the price of the property.
  
  
• Property Registry Fees: If you have acquired only the home itself, approximately 40% of the Notary's Fees. If you have also bought a parking space which is an independent property, the fees will be similar to those of the Notary.
  
  
• Lawyer Fees: A minimum of 200,000-300,000 Ptas., or around 1% of the purchase price for properties whose price is over 20-30 million pesetas, plus 16% V.A.T.
  
  
• Property Tax (Capital Gains Tax): This is a council tax on the profit made by the seller since the time he/she acquired the real estate. According to the Law, it must be paid by the seller, but quite frequently it is agreed that the buyer will pay it. The amount depends on the value assigned to the real estate by the Municipal Authorities (cadastral value) and the number of years it has been in the possession of the owner.
  
  
• Transfer Tax: if it is a second-hand property, 6% of the sales price; if it is a new property bought directly from the promoter, V.A.T. at 7% and Documented Legal Acts (or Stamp Duty) at 0.5% of the purchase price. If you have bought a plot of land, commercial premises or a parking space, V.A.T. at 16% and Documented Legal Acts at 0.5%.

There may be other costs and taxes if, for example, you have requested a mortgage loan; your Lawyer will inform you in detail of the amount of this, and will provide any help you may need.
It would be also important that you made a Spanish Will for your Spanish property/ies, as the legal procedure to enforce in Spain your foreign will if you were to die would take a long time, would be very expensive and would be subject to the courts discretion. With a Spanish will you would be able to decide how your estate would be distributed, but take into account that you would have to ensure that your foreign will excludes your Spanish properties.

Finally, we should mention the Wealth and Income Tax of Non-Residents: this is a tax which must be paid by non-residents whose only taxable wealth in Spanish territory is a home. The amount depends on the value of the real estate, and the rates applicable to this value range from 0.2% and 2.5%. If you have used the services of a Lawyer for the purchase of the property, he or she can become your fiscal representative, acting on your behalf for presentation of tax returns and payment of this tax.

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