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Spanish
Properties brought to you by BFR-Invest
Call us on 0871 990 20 24
or
email us info@bfr-invest.net
| www.bfr-invest.net/sp
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| Buyer’s Guide
- Spain |
Prior to viewing
Before arriving in Spain you should make sure that you have
at your disposal sufficient funds to cover the reservation
sum on a property. If you do not have the means to lodge a
reservation sum immediately, you risk losing the property
to another party who does have the reservation sum available.
The absolute minimum required is normally 6.000 euros, but
may be up to 12.000 euros for higher priced properties. The
reservation sum may be paid with a credit card or cash. A
cheque, if drawn on a foreign bank account, may take up to
ten days to clear by Spanish banks. The deposit is refundable
if the vendors change their mind but is not refundable if
you cancel.
Choosing a property
It is unwise to mix a holiday with a property purchase therefore
you will find that BFR-Investoffer discounted viewing weekends.
Consider the frequency with which you will use the property,
think about the distances from airports, rental potential
and long term investment - establish a budget and remember
to add ten percent to the purchase price to cover fees associated
with the buying process. Acquiring the home of your dreams
shouldn’t cause a headache providing the research is thorough.
If unobstructed views are a priority, consider homes which
are beachfront, frontline golf or in elevated positions and
always ask if further development is planned for the area.
The southern coast of Spain offers top calibre golf courses,
superb build quality and much improved infrastructure - not
forgetting the best climate in Europe.
Negotiating the purchase
Once a suitable property has been chosen, the first step is
to make a verbal offer. The purchase terms and price may need
to be negotiated with the seller |
and BFR-Invest will proceed on your
behalf until a price is agreed. You may wish to make your
offer subject to mortgage, or vary final completion dates,
or the terms of payment. At this stage, it is beneficial to
bring into the buying process a lawyer to assist further in
the negotiation making sure that any offer meets all necessary
legal criteria.
Appointing a lawyer
There are many excellent local lawyers in Spain who are fluent
in your language. A lawyer will provide the legal guarantees
for the purchase of the property ensuring that Spanish legal
requirements are met and that the property is bought free
of encumbrances, charges, liens or debt and is up to date
in all its payments of local contributions and community charges
etc. The lawyer may also assist the estate agent in difficult
and complex negotiations with the owner. Lawyers will tell
you in advance what their fee will be - usually between one
and two percent of the purchase price. Using a lawyer from
your home country will substantially increase your legal costs
and most certainly delay the sales process.
Formalising the offer - reservation deposit
Once there is a verbal agreement between parties, the next
step will be to formalise the terms of the offer in writing.
It is normal practice in Spain to include with the offer a
reservation deposit until the exchange of private contracts.
Paying the reservation deposit guarantees that the property
is taken off the market and is reserved for you at the agreed,
fixed price. This initial reservation deposit will be held
in your appointed lawyer’s client account. This money is protected
until the time of completion and is never given directly to
any private vendor. |
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| Buyer’s Guide
- Spain |
Exchange of private
contracts
Upon acceptance of the offer by the owner the next step in
the process is to exchange private contracts of sale or to
sign an option to purchase. This normally takes place within
two weeks following formal acceptance of the offer. Your lawyer
will have completed his searches and investigations of the
property and will have arranged with the owner the procedure
for the cancellation of any outstanding debts. The private
contract of sale or option will reflect all the agreed terms
of the offer and sale and set out the date for final completion
at the notary. At this stage it is usual for the buyer to
pay a ten percent deposit of the purchase price which is non
refundable.
Completion at the notary
A sale is formally completed in Spain when the public title
deeds of purchase are signed before a notary, the final payment
made, and possession given to the buyer. On the assigned day,
the buyer and the seller (or their authorised representatives)
will attend the notary’s office to sign the title deed ’Escritura
de Compraventa’. At this point the payment of the remaining
balance is made and possession passes to the buyer with the
handing over of the keys.
Registration
Once signed, the notary will fax a note of the title deeds
to the local land registry. Your lawyer will also arrange
payment of all the relevant transfer taxes associated with
the purchase and will handle the formalities of registration
of your title deeds. Final registration of the deed may take
up to two months. Similarly, your lawyer will arrange for
the transfer of accounts with local suppliers of utility services,
such as water and electricity, and organise their payment
through a local bank. |
Costs involved in purchasing
a property
There are, in principal, three fees and two taxes to pay when
purchasing a property in Spain. As a rule of thumb, you should
estimate that the combined total of these amounts to be around
ten percent of the purchase price.
THE FEES
- Legal fees: Usually between 1% and 2% of the purchase price
whichever is the greater, plus value added tax (IVA) currently
charged at 16% on the fee amount.
- Notary fees: the scale is fixed by law and normally range
from 300 euros for lower priced properties to 1200 euros for
higher priced properties.
- Land Registry fees: Generally about 20% less than notary
fees.
THE TAXES
- VAT (IVA) or transfer tax (ITP): ITP applies to resale properties
only. IVA applies to off-plan properties. Both are currently
at 7%. Stamp duty (AJD) of 1% is payable when purchasing off
plan.
- ‘Plus Valia’ is a local municipal tax and is based on the
officially assessed increase in the value of the land since
the last time the property changed hands. This tax is normally
payable by the vendor, but it may be stipulated that the buyer
pays. This tax may range from a few hundred euros to as much
as several thousand euros on larger properties with a lot
of land. Who pays this will be discussed in the negotiations
and in consultation with your lawyer. |
www.bfr-invest.net/sp
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| Buyer’s Guide
- Spain |
BFR-Invest is one of
the first estate agents in Spain to offer TITLE DEED INSURANCE
("SEGURO DEL TITULO"), for your peace of mind when buying
your property. As always, the Policy wording is the definitive
wording, though we have tried to be as helpful as possible
here in answering the most frequently asked questions.
Frequently asked questions:
1. What if the Property is not entirely Residential?
As long as the property, in our view, is substantially residential
we will arrange a Title Deed Insurance Policy to cover it.
2. The maximum payout under the Policy is 360,000 Euros
- What if the Property that I am buying is worth more than
360,000 euros, can you still cover it?
Yes, and of course all legal procedures and expenses are
undertaken and paid for by Title Deed Insurance. Remember,
there are 3 remedies, that arrive in 2 waves: Wave 1 : We
cure the title defect permanently in 6 months. This will solve
the vast majority of Claims. You only go on to Wave 2 if we
cannot cure the title defect within that 6 months.
Wave 2 : At the Insured's choice, either:
- The Insured keeps the Property and claims the drop in
value ("indemnity") caused by the title defect OR
- The Insured demands that Title Deed Insurance purchases
the Property
All 3 remedies are subject to a financial maximum, as the
Policy will cover actual financial loss up to the LESSER of
:
- the purchase price in the Escritura.
- the valuation on the date the policy is issued
- 360,000 euros.
So a purchaser of a Property costing more than 360,000 euros
can still be covered - Wave 1 will most likely entirely resolve
the problem. Failing that, he or she can (Wave 2) keep the
property and claim the Indemnity (and then, if they want,
go on to sell the property for its true value).
3. What if I am buying a Building Plot?
The Title Deed Insurance Policy is put into force on the
date of the Escritura. On that day there must be a dwelling
erected on the property to qualify for the policy. So:
- if you are buying a new property from a developer/builder,
as long as the dwelling is built by the time you sign
the escritura (which it should be), we are able to issue
a Title Deed Insurance Policy.
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- However, if you are just buying a plot of land, and
on the day that you sign the escritura no dwelling is
built on it, then regrettably we will not be able to issue
a Title Deed Insurance Policy for you. However, if you
envisage that the dwelling will be built and ready for
occupation in the next 30 days after the date of the escritura,
contact us immediately, as we may be able to arrange a
policy for you.
4. What are the Exclusions?
As with any policy of insurance, there are some exclusions.
These are mainly:
- Matters having an adverse impact on title which are
actually known by the insured owner and not disclosed
to Title Deed Insurance
- Those title defects which should be obvious to the insured
owner following a personal inspection of the property
(e.g. squatters)
- Title defects arising from contaminated land or toxic
waste issues
- Rights of the National or Local Government.
5. Does the Policy cover the "Land Grab" Law in Valencia?
The Title Deed Insurance Policy will cover this Risk,
as long as the Developer's rights (to requisition land owned
by the Insured Owner):
- were existing at the date of the Title Deed Insurance
Policy, and
- were not known to the Insured Owner (or were not obvious
to the insured using rational means to know it.
The Title Deed Insurance Policy covers actual loss up to the
lesser of:
- the purchase price in the Escritura
- the valuation on the date the policy is issued
- 360,000 euros.
Accordingly, Title Deed Insurance will take all factors into
account including:
- The value of the land requisitioned.
- The drop in value of the land retained.
- Any charge levied against the Insured Owner calculated
with reference to the land retained.
- The value of substitute land offered or provided by
the Developer.
- The value of the share attributed to the Insured Owner
in respect of the urbanization (development).
6. I already Own a Property in Spain (or on the Canary
or Balearic Islands). Can I arrange a Title Deed Insurance
Policy?
Yes, as long as you purchased (date of the Escritura)
in the 30 days leading up to the date of the Policy. |
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