Resale or New Properties
The Processes of Buying your Property in Spain

Buying a resale property

When buying a resale property, it is usual to agree a preliminary contract with the vendor. This commits both parties - the vendor must sell to you at the stated price within the terms of the contract, and you must buy. At this time you must usually pay a "reservation deposit" which is normally 3,000 Euros but can be as high as 12,000 Euros. This is followed, usually 14 days later, by a payment of 10%, less the sum already paid as a "reservation". If you, the buyer, elect to pull out of the sale, you will usually lose any monies paid. If the vendor pulls out, they must pay you back twice the monies they have received.

Your lawyer must complete all the checks on the property after signing the preliminary contract and before you sign the escritura - normally between four and eight weeks but sometimes longer.

The preliminary contract should state the names of the parties to the contract, a description of the property by way of its land registry entry, the agent's commission (you pay a maximum of 1.5% commission when buying through Properties Direct!) and when the final deed will be signed. It should also specify the penalty if either party breaks the contract.

The contract should include escape clauses under which you can cancel the purchase and have your deposit fully refunded. These might include your right to withdraw if the searches are unsatisfactory or if your planning application is declined. It must also state that the vendor must clear all debts on the property before the deed of sale will be signed.

Buying a new property

When buying a new property from a builder, you will usually be asked to sign a reservation contract on your chosen property. You must then agree a full preliminary contract, when you may have to pay a deposit as high as 40% of the purchase price. In this case, there are several ways of dealing with the fact that the property has not yet been built.

When buying a plot of land from a builder or developer who is also building a house for you, the best option is to buy the land outright, together with whatever construction has already been built, and then to separately contract for completing the property. A construction contract which lets you pay stage payments as the building work progresses provides the security of owning the land, so that if the developers go out of business or you are dissatisfied with their work, you can cancel the contract and engage another builder.

When buying a villa or apartment on a complex, you will usually enter a contract under which you agree to buy the property once it is finished. You still make payments as the construction progresses, but you wont own it until the work is complete. Developers prefer this contract, because you are dependent on them to complete the construction. They will normally stipulate fixed stage payments, regardless of the progress of the building work, but to give you more control, you should try to agree a payment schedule which is dependent on defined stages of the work being completed.

When buying a property on a complex, you will probably be buying into a community of owners - a legal entity which manages shared facilities such as communal pools, parking areas, lifts, external lighting, shared gardens, etc. The community does not effect the ownership of your property, which you will own in entirety. It is simply an organisation of owners who jointly manage and pay for common facilities. Every community must have a committee which must hold annual general meetings and have rules covering everything from use of the swimming pool to whether or not pets are permitted. It can also charge fees - which may vary according to the amount of maintenance work, for which all owners are responsible.

Completing your purchase

The legal transfer of the property can only occur in the presence of a notary based in the area where the property is being purchased. The notary prepares the escritura (the final deed of sale) and is responsible for its registration in the property register and tax register.

The notary charges the vendor and purchaser, according to a fee schedule set by government. Make sure you have arranged all the finances so that you are ready to sign the deed to transfer on the agreed date!

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