The buying process. General Information
Where and what to buy on the Costa Brava?
You’ll come to spend your holidays, but people who can afford living in the Costa Brava has never regretted this. This is a little paradise on earth.
If you need to make short trips because of work commitments, or are able to spend longer spells on the Costa Brava then Girona & Barcelona Airports are ideally situated for this.
Is the temperature (can vary widely along the Costa Brava) important to you? What is your budget? Apartment? Villa? Rustic property? Next to the beach? Upside up a near mountain? Inland? In a city? In a small town?
You will need to brainstorm all this with your family, and it is not an easy decision. However, believe me, no one can make it for you. You are very alone to make this decision and no one should interfere in your final location.
How do you start?
World Wide Web will be the best tool to find the property of your dreams. You will find thousands of properties on sale and you will be able to compare and chose within these properties the ones to visit. COVID-19 is not making things easy, but it is highly advisable to make a quick one day trip to visit the properties you have chosen and ‘feel the property’ by yourself.
Do not let anybody convince you: this is a very personal decision, and at the same time it is important to keep in mind that a lot of money is involved in this project. This is a real investment, so may be a cold view will also be necessary. You have to protect your money and buy the right property.
Who should I contact?
Having found your new home, now the less exciting but most important part of the transaction begins, and below you will find a simple outline of the process that will be followed in the purchasing procedure.
It is important to know that you will need a N.I.E. Number that will identify you in Spain for the rest of your stay. You need this number to be able to pay taxes and in general to be identified in this country. Therefore, this will be your very first step.
There are two options: you either get an appointment at the embassy/consulate and ask for it in your country of origin at no cost, or you can do it through a Spanish ‘Gestor’ that will involve costs for each one of the N.I.E.’s you need. Your original passports will have to fly by means of a secure shipment, and will return same day by the same method. Therefore, all this mean expenses.
The second step is to hire a Lawyer to protect your interests and to explain you the process that has just began. All foreign Embassies advice their citizens to hire legal help, not only to verify that they are not being deceived, but also to have a friendly contact to get in touch each time you have a doubt. There is no other way to be able to invest your money with confidence and at the same time enjoy the purchase.
Once you have identified the property which you wish to buy, you may be asked to leave a deposit, typically a 10% of the final price to reserve the property, when signing a Reservation Agreement.
Of course it is not advisable that you sign or pay anything until your Lawyer has had an opportunity to check it all. You can be tied into a purchase which later you regret when searches etc. may have taken place and it may be difficult to recover any amount paid.
It is also important that this contract is checked by your lawyer to make sure that all your rights and the vendor’s obligations are incorporated into it. Often what is missing from a contract is more important than what is included.
Your lawyer will check that the vendor is the true owner of the property, carry out a Land Registry search, ensure that the property has no debts or encumbrances (such as an un-paid mortgage) and that the building is legally registered. Many different charges and debts incurred by the previous owner can be registered against the property and it is your lawyer’s job to ensure that there will be no unpleasant surprises.
Be sure that the funds will be available for the whole purchase price before proceeding to this stage, and in particular that your mortgage lender has made you an offer in principle. Otherwise, you could lose the deposit.
Unlike UK, Lawyers do not receive your moneys in their bank accounts. In fact in the past it was usual to deliver the 10% directly to the sellers and this became a problem when something went wrong. So Government obliged Real Estate Agents to maintain a safe account protected by an insurance, so your moneys are safe there.
My personal opinion: I prefer not to deliver a single penny, and go directly to Completion. Real Estate process in Spain is a quick process: if you are going to buy cash, in 2/3 weeks you can be the owner of the property.
The final payment is made at the time of taking possession of the property and this transaction is recorded in the Notarized Purchase Deed (Escritura de Compraventa) signed in a Public Notary. Afterwards it is duly presented to the Land Registry to obtain the inscription that will protect your ownership forever.
Payment of the property price is made in Spain by means of a Bank Cheque: it is a cheque extended by a Bank and this means that is real money. So at the Notary’s you deliver the money, the seller delivers you the keys of the house, and you’re the new owner!
So, this step means that you’ll need a Spanish Bank Account, not only to pay the property, but to pay the taxes associated to the property, the house supplies, owner’s community expenses, etc. Now it is feasible to open a Bank account on line, so it is not a big deal. Internet will help you with this step too.
Regular taxes are: 10% as a purchase tax (a little higher if it is a brand new property), and about 2000/2500 € to pay Notary Fees and Land Registry..
You should arrange insurance cover for the building and contents from completion and it is a mandatory requirement if you are obtaining a mortgage.
If you live on a community then the Community of Owners should certify what part of the building is already insured.
If you are buying in joint names you should consider whether you would have sufficient funds to complete the purchase if either of you died between exchange of contracts and completion. It is advisable to have sufficient life insurance cover in place following your commitment to purchase the property. Right now all the Banks offer a good range of insurances, and if you hire with them the insurances, they lower their fees on other services.
Payment of Taxes
The relevant taxes (VAT if a new property or Transfer Tax if a re-sale property) is paid at the Notary’s when you become the owner.
After signing the Purchase Deed taxes which are generated by the transaction must be paid, and only then can the Deeds be delivered to the Land Registry for inscription.
This is probably the most important stage of the purchase and it is vital that the property is inscribed in your name at the earliest date to protect your interests.
In a couple of months, the Notary calls you to pick up the definitive Deeds, that will include proof that all taxes have been paid. And that’s all!
Although is not a legal requirement I would always recommend that you should have a Spanish Will for your assets in Spain. Spanish inheritance law is complex and is different from English law.
If you have an existing valid British Will it can technically be used in Spain but it will be necessary to obtain a Grant of Probate and this could create misunderstandings, and lengthy proceedings.
I include this in my fee, and Notary costs are only some 50 € So, it makes little sense not to avoid possible future issues.
As a foreigner, your nationality laws will always prevail. But sometimes people that has been coming on holiday finally decide to live here, and they become resident without noticing. So, it is better to choose the Law that in your opinion best protects your interests.