Once you have reached an agreement to buy a property the first step is to take it of the market, the way to do so is by paying a small deposit, once this is paid , the next step is to engage the services of as Spanish registered lawyer, who will guide you through the procedure to buy.
Basically there are three main stages in the procedure to buy a new or a resale property:
- RESERVATION AGREEMENT.- You pay the deposit as mentioned and property is taken out of the market.
- PRIVATE PURCHASE CONTRACTS.- After your lawyer has carried out all the searches on the property, to make sure that everything is in order, parties will enter this private agreement which will rule all the transaction conditions: expenses, completion date, price payment schedule, etc. When exchanging this contract the buyer will a higher deposit as part of the price, usually 10%.
- COMPLETION.- This happens on the agreed date stated on the private contracts, parties appear before Spanish Public Notary who will authorize the transfer of the title deeds to the buyer, the vendor will then deliver possession by the handing over of the keys and the buyer will pay the rest of the price. This procedure is totally safe for the buyer, the Notary will request from the land registry to inform about the current status of the property which is being sold: ownership and situation of charges. If this information is proved to be in order, the buyer will buy from the registered owner and free of charges. Once the deal is done the Notary will notify the Land Registry to prevent any charges being registered. This makes the procedure totally safe for the buyer.
Expenses involved in buying property are not the same in every case, when buying resale property the tax paid is called Transfer Tax starting at 8%, when buying new property the tax to pay is VAT being the rate currently 10% along with Stamp Duty starting at 1.2% . In both cases there are common expenses such as: Notary and Land Registry fees.
As a general guide, when buying a residential Property in Spain, you should account for costs of about 10-13% of the purchase price.