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Enjoy Stress-Free Property Purchases in Spain
Spain expert legal tips when buying
Spain is a popular destination for buyers who enjoy the unique blend of breathtaking views and vibrant climate. Investing or purchasing a property in Spain is an exciting venture that promises a peaceful lifestyle.
Whether you are looking for a retirement home, holiday home, or property for sale in Sotogrande, a stress-free experience is necessary. However, navigating the legal aspects of property purchases in a foreign country can be daunting. Here are some expert legal tips for an stress-free property-buying experience in Spain.
Understand the Real Estate Market
Before diving into legal procedures, it is essential to understand Spain’s real estate market and its dynamics. The real estate market is diverse in terms of types of properties, locations, and prices. Prime locations such as Costa del Sol, Costa Blanca, etc., are a few popular places buyers prefer more. This is why such locations have higher prices than usual. Hence, it is better to understand the market’s dynamic from your real estate agent and choose the property that is right for you.
Legal Considerations
Attorneys suggest communicating with them as early as possible to understand tax implications and other details before making the first offer. Nonetheless, the legal process differs from that in other countries. Let’s understand this step by step.
Establish a Reservation Contract
The legal process starts with a reservation contract. The reservation contract is the first step in the process, where the buyer makes a minimum deposit of 1% to 5%. This amount allows sellers to block the property and remove the listings and other offers. The amount goes to an escrow account, and the seller can’t sell the same property to someone else. As a result, both buyer and seller have the confirmation of such a transaction with the reservation contract.
Conduct Due Diligence
Once the property is finalized and the reservation contract has been signed, the next step is conducting due diligence. The attorney asks for all the relevant documents and verifies them with the local town hall, tax office, and other authorities. Due diligence is as important as any other step to ensure the property has no issues that could affect the sale.
Administrative Process
Attorneys also take care of all the administrative things, such as electricity supply, water, etc. This step also includes the following:
- Opening a bank account.
- Apply for NIE number.
- Apply for a mortgage if required.
- Ensure a smooth transaction.
- Pay the necessary taxes and so on.
Difference in New Development and Resale Development
The process of purchasing a property is the same for new and resale developments. The difference lies in commercial and regulatory aspects. When you purchase a resale property, you buy it from a private vendor, giving you enough room to negotiate. In the case of a new development, the prices are fixed. The advantage of buying a new property is that it has regulations and certain guarantees that protect buyers.
Safeguards
As mentioned earlier, guarantees are available when you purchase a new development. For instance, vendors of a new property give a ten-year guarantee on the structure and other aspects. They are also bound to fulfill certain procedures such as bank guarantee, promoter, special bank account, etc.
For resale development, connect with attorneys right after entering a reservation contract. Attorneys help simplify buyers’ and sellers’ obligations to each other to avoid legal repercussions. Also, there are times when you find special conditions in a contract and understand other kinds of conditions.
What to Do When a Developer is Late in Completion?
From a contractual point of view, the private purchase contract generally has clauses relating to this. However, if there are two long delays, buyers have a right to cancel the operations, or promoters have penalties. There are usually delays in completion. Hence, having all the information as a buyer from the start is better.
Understand the Legal Costs Involved
Purchasing property in Spain involves various costs beyond the purchase price. These can include notary fees, land registration fees, and taxes such as the annual property tax, Impuesto de Transmisiones Patrimoniales (transfer tax) or VAT for new properties. Additionally, there may be legal fees and costs associated with obtaining a mortgage. Being aware of these costs upfront will help you budget effectively and avoid any financial surprises.
Cost can be simplified in two ways: New development costs and resale development costs.
New developments attract the following costs:
- 10% VAT on top of the price of the property.
- Stamp Duty as per the region.
- Notary Fees.
- Land Registry Fees.
- Fees of an attorney.
Resale developments attract the costs:
- Different types of taxes. Every region has different property transfer taxes. So, you’ll have to check the prevailing transfer tax for the property in question. For instance, in Andalucia, there is a transfer tax of 7%.
- There are similar fees for a notary, land registry, and attorney.
In addition, if you purchase a property as a company, the transfer tax decreases from 7% to 2%. However, there are various others aspects too that must be considered. Such as the use of the property, reselling the property within five years, and others.
Conclusion
The process of purchasing a property does seem like a challenging task. But finding the right attorney can help you with every step in the process. Whether you enjoy picturesque coastlines or countryside silence, Spain has something for everyone.
Watch our video on Stress-Free Property Purchases in Spain to learn more about property purchases!
