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A Guide to Buying a Property in Spain

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A Guide to Buying a Property in Spain Powered By Docstoc
					by: Les Calvert

Overview

When it comes to investing in property in Europe, Spain has been on the top of the list for nearly
thirty years. A significant number of foreign nationals have spent a great deal of money on
property located in Spain during this time period.

As time moves forward into the 21st century, the Spanish real estate market has not been as hot
as it was some five years ago. Nonetheless, the returns that most investors have realized through
real estate holdings and investments in Spain have remained high. In addition, the market itself
has remained fairly stable overall.

Investment Property in Spain

As referenced previously, a significant number of buyers from different countries around the
world have invested rather heavily in real estate in Spain. Since the restoration of the monarchy
in Spain, the gates have been opened to heavy foreign investment in property ownership by
overseas buyers. (During the reign of General Franco in Spain, foreign investment in real estate
was restricted. The regime of Franco enacted fairly stringent laws that limited foreign investment
in real estate.

Residential Real Estate in Spain - Single Family Properties

Over the course of the past decade, many foreign nationals have spent vast amounts of money on
single family residences in Spain. Primarily these foreign nationals are buying the residences for
use as second homes, for use on holidays to Spain. (Spain has been a popular end destination for
European travellers for years.)

In many parts of Spain, the single family residential market is what some people would term a
buyers market. In other words, people interested in buying residential, single family homes in
Spain -- including foreign nationals -- have a significant number of housing choices available to
them (in major cities and in rural communities alike).

While the residential property market in major cities in Spain have found brisk sales for years,
the rural areas in the country have also been experiencing an upswing in the property market in
recent times also. Many people, including foreign nationals, are finding the ownership of homes
in rural environments to be pleasing, appealing and cost effective. Generally, these people are
buying in smaller communities in order to escape the hustle and bustle of the Spanish urban
scene.

Residential Real Estate in Spain - Apartments

In large cities, such as the Spanish capital of Madrid and the coastal resort towns, the apartment
market has been booming for the past fifteen to twenty years. A significant number of people
have turned to apartment ownership when it comes to the buying of property and real estate in
Spain.

Overseas buyers have expanded into the apartment ownership market with a vengeance over the
past decade. Some industry experts in Spain estimate that as many as twenty percent of all
apartment purchases in Spain during this time period have involved foreign nationals buying
apartments in Spain.

Foreign nationals tend to be making the purchase of apartments in Spain for three primary
reasons. First, these foreign citizens are buying apartments for retirement. Many people have
been flocking to Spain from different European countries (and from some other nations around
the world) for retirement because of its milder climate.

Second, with the creation of the European Union, and with Spain being a leading economic
region in the EU, many people are finding it imperative for them to present themselves in Spain
for a part of each year. As a result, these men and women are buying apartments to serve as
second residences in Spain.

Finally, people are snatching up apartments in Spain in record numbers to provide them with a
second home to be utilized for holiday or vacation purposes. Apartment ownership is proving to
be a convenient, practical and economic means through which a person or a family can own a
second residence that can be used for a holiday retreat and for similar situations not only today
but well into the future.

Holiday Property in Spain

As referenced, many people are buying property in Spain for vacation and holiday purposes.
(This includes both apartments and single family residences in different parts of the country.)

In many instances, foreign nationals are buying real estate in Spain that they can utilize for their
own travel and holiday purposes during part of the year and which they can rent to other
individuals seeking a vacation spot at other times during the course of a given year. Thus, these
men and women are buying property in Spain for a dual purpose: holiday travel and income
generation.

The tax and related laws in Spain make this kind of dual property ownership a profitable
enterprise for most overseas buyers. Indeed, it is expected that more and more foreign nationals
will invest in vacation real estate for this dual purpose well into the coming decade. They suggest
that the growth of the European Union will spur on this type of real estate investment in Spain
and in some other countries that comprise the EU at this time.

Successfully Purchasing Real Estate in the Spain:

Specific Steps to Buying Real Property in the Spain

At the present time, there are no significant restrictions to a foreign national purchasing and
owning real estate in Spain. Indeed, foreign nationals are able to purchase and invest in nearly
any type of property to be found for sale within that country -- commercial, residential or other
types of investment real estate.

When it comes to making the purchase of property in Spain, many experts maintain that a person
is well served is he or she takes the time (and spends the money) to hire a lawyer to assist in
managing and overseeing the legal affairs associated with the successful purchase of real estate
in Spain.

Once a person identifies a piece of real estate that he or she is interested in purchasing, the first
step in the purchase process (after an oral offer to purchase has been made by the buyer and
accepted by the seller) is the creation of a preliminary or initial contract for sale. In Spain, it is
highly recommended that a person makes absolutely certain that the ownership of the property
and any encumbrances on the property are clearly identified before this agreement is signed.

In most instances, a preliminary contract is a fairly substantial and a firm legal agreement. Along
with the agreement itself, a buyer will need to put down a deposit of at least 10% of the total
purchase price. Under the real estate laws of Spain, the buyer has a more significant burden than
is found in some other countries to ensure that the title to the real estate has a title that can be
conveyed to the buyer at the conclusion of the sale (clean title). Thus, there are instances in
which a title proves to be imperfect, in which the ultimate transfer of ownership cannot occur,
and in which the buyer may lose out on the deposit he or she paid because they simply did not
carry out the correct checks at the outset.

Many people who have experience in dealing with the buying and selling of property in Spain
suggest that foreign nationals should retain the assistance of a capable lawyer at this juncture.
While Spanish real estate laws are not particular confusing or difficult to understand, a person
seeking to buy a property in Spain bears a greater due diligence responsibility early on in the real
estate buying and selling process than do buyers in some other nations.

During the period following the signing of the preliminary or initial contract, the buyer has the
opportunity to obtain financing and a mortgage loan to consummate the sale and actually
purchase the real estate.

Again, as referenced earlier, the buyer of real estate in Spain has a bit of a stiffer burden to make
certain that the title to real estate in Spain is clear before he or she makes a purchase.
Additionally, a buyer bears a greater burden than buyers do in other countries when it comes to
making certain that there are no mortgages or liens from other lenders on a particular piece of
property. While in most other countries the world over, the burden for clearing title generally
rests nearly exclusively with the seller, such is not the absolute case in Spain.

Unlike in some other countries the world over, the laws governing the buying and selling real
estate in Spain generally are uniform across the country. There really are no regional or local
differences. (There are some local differences when it comes to matters relating to municipal
taxes.)

The final task in the sales process is the payment by the buyer of the amount due and owing
under the terms of the initial contract and the conveyance of the deed and possession of the
property from the buyer to the seller.

This article was posted on October 17, 2006

				
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