LDT SPANISH MORTGAGES & LEGAL SUPPORT
LEGAL STAGES IN THE BYING PROCESS
Buying in Spain the stages in the legal process.
Stage 1.
Searching for a Spanish Home.
Select a Spanish property for purchase and request a copy of the Nota Simple and check yearly IBI (Council tax costs) and level of community charges where applicable. At this point you should appoint a Spanish lawyer.
Stage 2.
Reserving a property in Spain.
Sign a reservation contract and pay a reservation fee to remove property from active marketing. This stage is equivalent to sold subject to contract’s.
Risks associated with signing a reservation contract.
Most agents will want their own reservation contract signed. We would recommend before signing a reservation document and passing over funds that you take advice from a lawyer in Spain. A good Spanish lawyer will provide these early stages of advice for free. Appointing a legal adviser to check the reservation details is advisable in order to help you protect your reservation fee in the event of you requiring to pull out of the purchase. Your Lawyer in Spain will help provide sufficient time to undertake initial legal searches, provide a cooling off period, and where required provide time for financial arrangements like a mortgage in Spain to be put in place. Contact us today
Stage 3.
The legal implications in Spain of signing a purchase contract.
This part of the buying process is the equivalent to an exchange of contracts and has the same legal implications. It is normal at this point for a 10% deposit to be passed to the seller. At the point it is signed you will become legally liable to complete within the stated timescales or you risk losing your deposits and or incur late payment penalties.
It is possible to write into the purchase contract certain “get out” clauses like, subject to Spanish mortgage, and legal searches etc, however if one of the clauses finally needs to be acted upon, you may have to take court action in Spain to get your money returned, this can be a long and costly process. It is at signing of purchase contract it is also agreed what expenses will be picked up by the buyer and what fixture and fittings form part of the sale and the price.
You should before signing a Private Purchase Contract also have decided exactly who will be buying as it is difficult to add or remove buyers in Spain after this point.
We would always advise that rather than writing in clauses, no purchase contract for a property in Spain should be signed until.
A Spanish mortgage where required is offered and legally binding.
A valuation where required has been undertaken.
All legal searches have been undertaken and it is clear there are no infractions or possible debts outstanding. Outstanding debts and fines remain attached to the property in Spain not the individual and will become the responsibility of the new owner if not cleared before completion.
That it is clear the full asking price will be recorded at completion and you are not going to be expected to take participate in tax fraud by way of paying black money (cash) at completion.
Risks associated with a Spanish purchase contract being signed.
Vendors, their lawyers in Spain, and agents will often push for the purchase contract to be signed as quickly as possible and often without allowing for sufficient time to ensure you are safe and secure. No matter what the pressures you will always be taking a risk if you sign before all matters above have been finalized. The opposite risk is that until the purchase contract is signed the vendor can legally sell to someone else. It is better however to lose the property than to lose large sums of your money or be tied up in a long and costly court battle.
Stage 4.
What to expect at completion of your Spanish Home.
Completion is undertaken in the offices of Notaria Publica. All parties connected to the completion in Spain including any bank personnel for redemption or subrogation of an existing loan, the bank providing a new mortgage, and seller or their legal representative must be in attendance to sign. Either the buyer or a buyer’s lawyer must also be present.
In the event you wish to sign in person the Notary will insist you either are fluent in Spanish or have an attendant with you who is. Before completion you will need to understand and ensure you have accounted for all costs, have sufficient provision of funds required for costs and taxes and all relevant cheques, or bankers drafts have been written and are available.
Signing on day of property completion what can I expect.
When signing at the Notary if you intend to attend in person patience can be required. It is not unusual for there to be delays and not unknown for one of the parties required to cancel in which case the signing cannot take place and must delayed. Never assume it will happen on the day booked and leave sufficient time in Spain to allow for delays.
The notary will check all paperwork and again it is not unknown for them to raise issues and require clarification on points and suspend the signing until these have been sorted. You or your power of attorney will be required to have a certified passport or original passport and original NIE certificates available. The notary will also require to see evidence of the full monies required for completion and be able to verify their source. You can avoid completion day personally by appointing a Spanish lawyer who has power of attorney to sign on your behalf.
Stage 5.
What happens after signing and what is the legal process of registration of ownership.
After signing for completion, a copy of the deeds are given to the buyer or their legal representative by the Notary. The originals are sent to land registry to be registered. The registration process can take up to three months. After registration the original deeds and all invoices relating to the transaction become available.
Why do I need to check registration has correctly taken place.
You should always check that registration has taken place and get into your possession or pass to your lawyer in Spain for safe keeping, the originals of all documents and invoices. If you wish to sell in the future these will be required for the sale and to ensure you do not pay Spanish capital gain tax on costs incurred at purchase through lack of evidence of these costs. Contact us today