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TRAMITES LEGALES PARA LA COMPRA DE UNA PROPIEDAD

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					Legal Procedures for de Purchase of Real Estate in Spain.                          www.bufete-calzada.com
V. Calzada Solicitors – Marbella, Costa del Sol, Spain.




                           LEGAL PROCEDURES FOR THE PURCHASE
                                  OF REAL ESTATE IN SPAIN


If you are thinking of buying a house or a plot of land in Spain, either as an investment or as a holiday or
retirement home, please take into account the following:

   Choose your Estate Agent carefully. He or she will help you find the property you want and may also
    assist in initial negotiations with the seller. You should look for a professional with a good reputation
    and solid knowledge of the area in which you want to buy your home.

   We would also recommend you to look for a Lawyer specialised in conveyancing, who speaks English
    fluently and works in the area where you intend to buy the property. He/she will negotiate the
    conditions of purchase with the seller on your behalf, ensuring these are favourable for you; he/she
    will check that the real estate is registered in the name of the seller, and free from liabilities and
    charges (mortgages, repossession, etc.), tenants or other occupants, and that it is up to date with all
    payments; he/she will inform you of the amount of taxes and costs deriving from the purchase, and
    will carry out all the necessary legal proceedings once the Deed of Sale and Purchase has been
    signed, etc.

    If you don’t know a Lawyer in the area in question, ask your own Lawyer, friends, or the Estate Agent
    you have contacted if they can recommend one.

   If you have decided to begin the search for your property or plot of land, keep in mind that once you
    have made your choice, you will have to immediately pay the promoter anything from 300,000
    pesetas, depending on the price of the real estate, in order to reserve the property or as an option to
    purchase (and I say immediately because, at least on the Costa del Sol, if you take 3 or 4 days to
    think it over, you run the risk of someone else buying the property you wanted).

    If you live outside Spain, you can make a bank transfer to the Client Account of your Lawyer, and he
    or she will then pay the seller the reservation or option to purchase on your behalf. As soon as the
    promoter/seller receives the copy of the transfer, he/she will see that there is a real intention to buy,
    so will make a definite reservation and will stop offering the property to other possible buyers.


FORMALISING THE OFFER

Even before paying the reservation price, your Lawyer should have carried out basic investigations in
order to determine the following: that the seller or promoter is registered as the owner of the real estate at
the Land Registry; that the real estate is free from levies and encumbrances; in the case of properties
under construction, that the promoter has obtained the corresponding works licence, or if it is a plot of land
on which to construct a house, the urban zoning classification of this (you wouldn’t be the first to discover
that the land you had bought in order to build your luxury home, or extend an already-existing one, is
classified as a green area), etc.

At the same time as these investigations are being carried out, the purchase conditions will be negotiated,
culminating in signing of a Deed of Sale and Purchase, in the case of property which is already completed
or under construction.

A private contact is normally signed when you buy a home in a development which is under construction
and, on occasions, also in the case of already-completed homes. This contract establishes the
percentages to be paid at the time the contract is signed and during the construction phase, and whether
payments during this phase are monthly or quarterly, etc. Generally, you will have to pay between 30 and
50% of the total price during the construction phase.

If there is any debt or charge pending on the property, this fact should be reflected in the private sales
contract, with the stipulation that they must be liquidated by the promoter or seller before the Deed is
signed.

Equally, if the property you are acquiring is at the construction phase, you should make sure that all the
payments made on account of the price during this phase are guaranteed by the Promoter by means of
bank guarantee or insurance contract with an Insurance company.


                                                    -1-
Legal Procedures for de Purchase of Real Estate in Spain.                         www.bufete-calzada.com
V. Calzada Solicitors – Marbella, Costa del Sol, Spain.




This guarantee on receipt of advance payments in the construction and sale of homes is established by
Spanish Law 57/1968, of 27 July. It covers the eventualities of the construction not beginning or not being
completed, for whatever cause, within the agreed time, and ensures that, if either of these occurs, you will
recover the amounts paid plus the corresponding interest.

You should also make sure that these advance payments are paid into a special account which the
Promoter must open with a Bank or Savings Bank (normally it will be the same one that provides the
guarantee). The purpose of this account is to ensure that these sums are kept separate from any other
type of funds belonging to the promoter, and that they can be drawn on exclusively for matters related to
the construction of the homes.


COMPLETION OF THE SALE AND PURCHASE

The purchase of a property is formally completed in Spain when the Deed of Sale and Purchase is signed
before a Notary Public, at which time the buyer pays the seller the remainder of the purchase price, and
the seller transfers possession to the buyer.

This Deed includes all details of the Sale and Purchase (description of the real estate, registration and
cadastral details, price, form of payment, distribution of costs deriving from the sale and purchase, etc.)
and is signed by the seller and the buyer, with their respective Lawyers and, where appropriate, legal
representatives, as well as, again where appropriate, the Bank which grants the mortgage loan.

The Notary Public, if requested, will notify the Registrar of the Land Registry that this sale and purchase
has been carried out and, approximately one week later, your Lawyer may collect the Deed from the
Notary’s Office and present it at the Land Registry for it to be recorded. At the same time, he/she will pay
(within 30 days from the time of signing of the Deed) the taxes and costs which we explain below, and will
change the name of the owner of the property at the Municipal Authorities and at the companies supplying
electricity, water, telephone, etc., making arrangements for the corresponding direct debits for payment of
bills.

For these purposes, it is a good idea to open a current account with a local Bank or Savings Bank, or
provide your Lawyer with funds in order that he/she can take make payments from his/her Client Account.


ASSOCIATED COSTS OF THE SALE AND PURCHASE

As a general guideline, the total amount of costs and taxes associated with a Sale and Purchase are
approximately 10% of the price. These costs are as follows:

   Notary Fees: From 50,000 Ptas., depending on the price of the property.

   Property Registry Fees: If you have acquired only the home itself, approximately 40% of the Notary’s
    Fees. If you have also bought a parking space which is an independent property, the fees will be
    similar to those of the Notary.

   Lawyer Fees: A minimum of 200,000-300,000 Ptas., or around 1% of the purchase price for properties
    whose price is over 20-30 million pesetas, plus 16% V.A.T.

   Property Tax (Capital Gains Tax): This is a council tax on the profit made by the seller since the time
    he/she acquired the real estate. According to the Law, it must be paid by the seller, but quite
    frequently it is agreed that the buyer will pay it. The amount depends on the value assigned to the real
    estate by the Municipal Authorities (cadastral value) and the number of years it has been in the
    possession of the owner.

   Transfer Tax: if it is a second-hand property, 6% of the sales price; if it is a new property bought
    directly from the promoter, V.A.T. at 7% and Documented Legal Acts (or Stamp Duty) at 0.5% of the
    purchase price. If you have bought a plot of land, commercial premises or a parking space, V.A.T. at
    16% and Documented Legal Acts at 0.5%.

There may be other costs and taxes if, for example, you have requested a mortgage loan; your Lawyer will
inform you in detail of the amount of this, and will provide any help you may need.


                                                   -2-
Legal Procedures for de Purchase of Real Estate in Spain.                        www.bufete-calzada.com
V. Calzada Solicitors – Marbella, Costa del Sol, Spain.




It would be also important that you made a Spanish Will for your Spanish property/ies, as the legal
procedure to enforce in Spain your foreign will if you were to die would take a long time, would be very
expensive and would be subject to the courts discretion. With a Spanish will you would be able to decide
how your estate would be distributed, but take into account that you would have to ensure that your foreign
will excludes your Spanish properties.

Finally, we should mention the Wealth and Income Tax of Non-Residents: this is a tax which must be paid
by non-residents whose only taxable wealth in Spanish territory is a home. The amount depends on the
value of the real estate, and the rates applicable to this value range from 0.2% and 2.5%. If you have used
the services of a Lawyer for the purchase of the property, he or she can become your fiscal representative,
acting on your behalf for presentation of tax returns and payment of this tax.


                                       2001 V. Calzada Solicitors




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