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Legal requirements and steps for buying a house in Spain.

Posted on Posted in English blog

Having a house in Spanish coast might be a great option for those seeking for a peaceful retirement, or maybe for those who would appreciate a place to rest in the summer seasons. Nonetheless there are some requirements that people need to meet before taking the step. There is the legal factor, which surrounds extra costs and time. Learn what must be taking into account.

Contract

Even though there are legal systems where the contact might be enough, in the Spanish legal system is not that easy. Our system stipulates that a property, real state, is completely translated to a new owner when two requirements are done.

The first one is a contract, this contract would include all parties’ personal data and of course the identification and price for the property object of contract.

Is this private contract enough for the new buyer to be considered the legal owner? Not yet.

Another thing to enlighten is what’s called an “arras” contract. This is used often as a way, for the time during the agreement until the notary, to close de deal throughout a payment of a quantity which isn’t technically, part of the price, rather than a “deposit” that would be when the moment arrives, part of the price and discounted from it.

Notary.

The second requirement is the possession of the thing object of contract. Let’s say, the physical occupation of the thing having it at your disposal. In our legislation, this is considered accomplished once the keys are handed, but, in any case, when there is an escritura.

An escritura isn’t anything more than a contract, but an special one, signed before a notary whose powers to certify this contract´s content , make it, according to law, certain and truthful  in all aspects. Our civil law makes the escritura mandatory, and without it, you would not have the chance to become the legal owner –with some very unusual exceptions-.

Notary fees are to be taking into consideration. It is hard to determine a specific price as long as this would depend on the price of the selling, place, and a few more features that change from contract to contract. About timing, a lawyer could easily get an appointment in a matter of a week or even sooner.

In this escritura lots of things must appear. For instance, we need to make sure that this property is burdens free, such a mortgages, tenants, debt with maybe a city hall or an owner´s community. We could sell a house with these burdens, but certainly we don’t want to buy one with some hidden burden. This is an essential task for your lawyer to make.

Property records

Once we get the escritura –and we have already paid for the price for the house, taking out, if it is the case whatever quantity paid in concept of arras- it is not over. We became by now legal owners but no one would know as this escritura act would be among the parties and nobody else.

There is no legal obligation to add our new acquisition to a property record, but not doing it is actually a risky business. Our law, to be precise our “ley hipotecaria” actually allows for any third party to address to any property that belongs to any debtor. This meaning that if we do not take our escritura to these property records, and if the seller had some debt, his /her creditor could go and seize our new property and that would be legally feasible.

The property records are a semi public institution and also have fees. These fees also depend on the house, and if there is another thing that must be registered, such a mortgage these fees will increase.  The timing should not go longer than two to three weeks approximately

Taxes

Buying a house is also a transaction that has to be notice and paid for before our revenue system, our “Hacienda”. This is probably the most important thing to be taking into consideration as this might be quite relevant.

The taxes to be paid are going to depend in the fact if we are buying a new house (directly from the constructor) or second handed (from another owner). In the first of our cases the price will be increase in 21% wich is the Spanish VAT and paid directly to the seller in the price.

If the house we are buying is second handed, we need to firs, figure what are the taxes as they change from one to another of our 19 comunidades autonomas. For instance, in Andalucía these taxes are 8%, to be paid in a month period to Andalusian taxes agency. You might need a lawyer for this too, as if there is any mistake they could come back at you with some extra requirements that would make it more expensive.

On the other hand if you are the one selling, you need to consider that another taxes as “plusvalia” or IRPF (3% of the price will be directly paid and the rest once the fiscal year is over) will be paid.

Alejandro Marin Melgar
Partner of the Firm