[Spanish guide: General Information]

This summary is intended to give a broad outline to the first time buyer of residential SECOND HAND property.

Once you have chosen the property you wish to acquire, the next step is to enquire on features of the property, terms of payment and extras if any. At this stage, your serious real estate agency will aid you and clarify any points and costs involved. 

Most vendors will require from 10 % to 20 % of the purchase price to be paid at exchange of contracts and balance at completion.

Before exchange of private contract, your real estate agent will have completed searches and investigations on the property being sold and will secure that it is sold free of charges and encumbrances and up to date in its tax obligations. The private contract will set out the legal description of the property, price, terms of payment and the obligations of both parties.

Security of your investment 

Most properties are registered at the Land Property Registry which will allow your real estate agent to confirm at completion that the property is sold free of charges and encumbrances and that it is bought from the owner.

Final completion and formalisation in public document

The sale will be formally completed in a Public Title Deed, which will be granted by the vendor in favour of the purchaser before a Public Notary against final payment and handing over of keys.

The Title Deed is faxed to the Registrar, which will register the purchase at the Land Registry. Your agent will advice you to pay all relevant fees which are dued to the notary, taxes and will handle the formalities of registration of your Title Deed. Similarly, your agent may contract relevant supplies of utility serrvices such as water and electricity and organise their payment through a local bank by standing orders.

Costs of acquiring second hand property

*	The buyer will have to pay 7% Transfer Tax on the purchase price, which must be paid within a month from completion and prior to the registry of the Title Deed.
*	Plusvalia is a one-off local tax on the increase in value of the land on which the property is built, since the last recorded transfer of ownership. It is based on the rateable value of the land. The vendor is the subject of this tax, but it may be stipulated that the buyer pays it.
*	Legal fees normally charged at 1% of the purchase price plus VAT
*	Notary and Land Registry fees: These are set by law and the scale for the notary will range from Euro 450 to 1.550. Land Registry fees are also set by law and are approximately 50% of those of the notary.
*	Provision should also be made for bank charges when transferring monies abroad.

So, in summary, the buyer has to allow for an additional 10% of the purchase price to meet the transfer costs involved in the transaction.

Financing your purchase

Spanish banks will offer to finance up to 60% of acquisition price through a mortgage. Your real estate agent will be able to advise on costs and taxes regarding these facilities and applications on your behalf. Some developments already have mortgage facilities for their products, which are worthwhile considering as they usually have good market conditions and are cheaper in cost.

Ongoing expenses

Once the property has been purchased, the owner will have to pay: community fees, rates, rubbish collection, Income and Wealth Tax, which as a guideline will be approximately 1,5% of the purchase price per year (considering a property with a price of Euro 180,000). Water, electricity and insurance costs should also be budgeted.

Wills

Those who own property in Spain are strongly recommended to have a Spanish Will confined to their assets in Spain, as it will save the heirs having to translate, notarise and legalise any grant of probate or letters of administration issued in their own country. It will also allow them to simultaneously wind up the Spanish and home estates of the testator.

 - By Yogesh Chhabra -