Buying a Property in Spain
If a particular property is of interest and you wish to purchase, it will be necessary to place a holding deposit and sign a reservation contract. The property will then be removed from the market at the agreed purchase price while searches are conducted.
At this juncture we suggest you instruct an Abogado (lawyer) to act on your behalf for the conveyance and to assist you with additional pre-purchase items such as opening a Spanish bank account and obtaining a Spanish identification number "NIE". There are also a number of post-purchase items your Abogado can help you with, for example; registering at the local town hall, arranging utility connections etc.
The Role of the Abogado
The Abogado is a Spanish Lawyer appointed by you to safeguard your interests and legal rights to clear title of the property. The Abogado will prepare a purchase contract to be signed by you and the vendor, research the property for any outstanding debts, tax arrears and unpaid bills. Your Abogado will prepare the information used in the title deeds "Escritura de Compraventa" to be notarised by the "Notario Publico" (Notary) on the day of completion and pay any outstanding purchase costs.
The Notario Publico
Appointed by the government the Notario Publico is responsible for overseeing and recording the details of the transaction. The Notario will ensure that both the vendor and the purchaser understand and agree the details of the transaction, highlighting any issues in Spanish property law and taxation legislation that may apply to the purchase. Once satisfied that everything is in order the Notario will then instruct you to sign the Escritura de Compraventa in his presence and he will counter-sign on behalf of the government. Once this has been completed he will lodge a copy of the Escritura de Compraventa with the local land registry office. The original document is kept in secure archive.
Total Legal Costs
As a guide you should calculate around ten percent to add to the purchase price for legal costs and purchase expenses. This will cover the Transfer Tax, Abogado, Notario and Land Registration fees.
Spanish Identification Number "NIE"
As an owner of a Spanish asset such as a house you are required to obtain a "Numero de Identificacion Extranjero" (NIE) if you are not a Spanish citizen. It is also important to obtain a "Certificado de no-residente"certificate of non-residence at the same time as you obtain your NIE.
These documents are obtained at the local "Oficina de Extranjeros", it is a straight forward process, your Abogado or Real Estate Agent will be able to help you obtain these documents.
Opening a Spanish Bank Account
Your lawyer or real estate agent will be able to help you open a Spanish bank account, it is a reasonably straight forward process provided you have all the correct original documents as follows:
- Your newly issued Spanish NIE document.
- Your newly issued certificate of non-residence in Spain.
- Utility bill showing your home address as proof of primary residence.
- Tax document showing you are registered for taxes in your home country.
- Bank document showing the name and address for your bank in your home country.
- Official document showing your profession.
- Your Passport.
Spanish Mortgage Loan
It is possible to get a mortgage for a property in Spain as a non-resident owner. The majority of the larger banks offer a mortgage product and will loan up to 60% or in some cases 70% of the value of the property. The actual loan to value for a particular property is determined by an independent valuation survey.
Spanish banks like Santander will arrange everything but they will also ask for several documents including tax returns and credit rating reports from the applicant to determine the applicants qualification for a loan.
Assuming the bank approves a loan there are several expenses and fee's that are paid by the applicant, bank fee's, Notary fee's, taxes, valuation etc. . Depending on the total amount of the loan additional costs could exceed 2% or 3% of the total loan.