Your step-by-step guide to problem free purchase

1. BE PREPARED

Before you arrive in Spain, you should ensure that you have the funds available to cover any reservation sum. The minimum required is usually the 10% of the full amount, but it may be greater for more expensive properties. The reservation sum may be paid in cash or by credit card. Remember that a cheque, if drawn on a foreign bank, can take up to ten days to clear at a Spanish bank - a delay that could cost you the sale. If you can't come up with a reservation sum immediately you may risk losing the property to another buyer who can.

2. FINANCING YOUR PURCHASE

There are almost no exchange controls in Spain, which means that whether you're a resident or not, you can obtain a loan or a mortgage against your property in any currency and from any bank in the world. Spanish banks are willing to lend to non-resident purchasers of real estate.

You will need:

• A bank reference
• Last three months bank statements
• A photocopy of your income tax returns
• Three months salary slips
• A breakdown of assets and liabilities
• If self-employed, a statement of accounts

3. NEGOTIATING THE TERMS OF SALE

Once you've chosen a suitable property the purchase price and terms will need to be negotiated with the seller: You may wish, for example, to make your offer subject to a mortgage, or you may want to vary the method of payment or final completion dates.

4. FORMALISING THE OFFER

Once there is a verbal agreement between the parties, the next step is to formalise the terms of the offer to purchase in writing. Funds should be lodged in a local bank account, or with your legal representative person to show there is a real intention to purchase. It is common practice in Spain to include with the offer a sum of money to reserve the property until the exchange of contracts.

You should seek sound legal advice from a Spanish professional able to act in your interests, be the person a lawyer a registered real estate agent, a gestor; specialized in the type of property you are looking to buy or an administrador of fincas. If you choose a real estate agent, we recommend only those in position of a specialist title: API or GIPE one. Many real estates are only trading with little legal knowledge. In Sol Riviera^® our team have a degree and GIPE specialist title in real estate.

5. EXCHANGE OF PRIVATE CONTRACTS

Once the seller has accepted your offer the next step is to exchange private contracts of sale or to sign an option to purchase. This will usually take place within two weeks after formal acceptance of the offer; or sooner Your legal representative person will have conducted during this time his searches and investigations of the property and will have arranged with the seller for any outstanding debts to be cancelled. The private contract of sale, or option, will reflect all the agreed terms of the offer and will specify the date for final completion at the notary It is customary at this point to pay 10% of the purchase price, which normally is non-refundable should the purchaser not complete.

6. FINAL COMPLETION

A sale is formally completed in Spain when the public title deeds of purchase are signed before a notary, the final payment is made and possession passes to the buyer.

7. REGISTRATION

Once the title deed is signed, the notary will fax a copy of it to the local land registry Your lawyer will pay all the relevant transfer taxes on your behalf and will deal with the formalities of registration of your title deeds, which may take up to two months. Your legal representative person will also arrange for the payment of accounts with utility services, such as water and electricity through your local bank account.

8. COSTS INVOLVED

In theory there are three fees and two taxes to pay when buying property in Spain. As a guideline, you should budget that the combined total of these amounts will be around 10% of the purchase price.

THE FEES:

1. Legal fees: min 1.200 € or 1% of the purchase value, whichever is the greater plus value-added tax (IVA) currently charged at 21%.
2. Notary fees: the scale is fixed by law and may range from 600 € for lower-priced properties to 1800 € for higher-priced properties.
3. Property Registry: generally 60% of what the notary charges.

THE TAXES:

Transfer tax (ITP) on residential property is 8% or when buying from a promoter or developer (IVA) is 10%, plus Stamp Duty at 1%. An IVA rate of 21% is applicable when purchasing plots of land, commercial premises or garage spaces. Plus valia is normally payable by the seller but it may be stipulated that the buyer pays. This tax may range from a few hundred euros to several thousand euros or more on larger properties with a lot of land. The negotiations and consultation with your legal representative person will determine who pays this.

Click here to learn more about registering a mortgage on the Costa del Sol