Buying process in Spain

Once you have found the right property and negotiated the price, the purchase process begins with you signing a reservation agreement. Your property will subsequently be taken off the market and the purchase price will be locked at the agreed sum.

At this stage, you will need to pay a deposit which can range from €6,000 upwards depending on the price of the property in question. So, before arriving and buying real estate in Spain, make sure that you have sufficient funds available.

The Reservation Fee

The best way to pay your reservation fee is usually by credit card either to your lawyer or to the vendor or developer. Whilst the property is reserved your lawyer will carry out all the necessary searches to give you peace of mind, and make sure all is in order.

Private sale and purchase agreement

Approximately 10 – 14 days after you sign the reservation agreement, you will need to sign a private sale and purchase agreement (usually referred to as PPC, private purchase contract) with the seller (or their authorised representative). During this time your lawyer will have been carrying out the due diligence and completing the relevant searches into your new home or investment. If necessary they will also conduct a cancellation procedure of any outstanding debts that the seller may have.

The Funds

At this stage you will be expected to pay approximately 10% of the purchase price less the reservation amount. Your funds can be in your own Spanish bank account or it can be arranged for it to be held in an escrow account.

Notary – your title deed for real estate in Spain

Your property sale is formally completed in Spain when you sign the title deed (“Escritura de Compraventa”) before a Public Notary. Next, you will need to make the final payment. At this stage you are now the new owner of the property and the keys are handed over to you. However, if you cannot be present at the completion, you can grant a Power of Attorney to your lawyer, and have them carry out this part and receive all on your behalf.

The Title Deeds

Once you sign the title deed, the notary will send a copy of it to the Land Registry. Your lawyer in Spain will make sure to pay all the relevant transfer taxes and deal with the formalities of registration of your title deed on your behalf. It is important to note that the final registration of the title deed may take several weeks or months.

The lawyers can also arrange to transfer or set up utility accounts, such as water, electricity and any other bills to your Spanish bank account by direct debit. Once again, connection to utility services may take some time, so you’ll need to factor this in when buying a property in Spain. Aside from utilities they can also help with things such as internet connection, alarm systems and home insurance.

Buying real estate in Spain (New Developments)

When buying property in a new development, it can take up to 18 months before your purchase is finalised, which is what we call “Completion”. As a result, your payment structure will be different and is usually divided into 30%-70% or 40%-60% instalments. Payment is usually through bankers draft cheques from a Spanish bank account or by bank transfer.

Bank guarantees

Many developers will offer you these bank guarantees free of charge whilst others will charge you a percentage. A bank guarantee protects your payments. In the unlikely event that the developer fails to complete the property, goes into liquidation or fails to complete on time and you do not wish to wait, then you can expect a full reimbursement.

Your purchasing costs

Costs and taxes when buying in Spain are quite simple but very important to keep in mind when buying real estate here. Usually all prices given whether by a developer or a resale property are without the added tax. These can add up to approximately 10-14% of the purchase price. This increases if you place a mortgage on the property, in which case you can expect to add another 3-4% of your mortgage amount.