1) The private contract (El contrato privado de compraventa).
Once a property is chosen and a price and other conditions of the purchase are agreed by two parties it is possible to go straight to the completion (when all the money necessary for a purchase is already on the spanish bank account of a buyer) but most buyers/sellers prefer to sign a preliminary sales contract that provides for taking a property off the market. It is a simple agreement in which a seller agrees to sell a property and a buyer agrees to buy a property at the price agreed. This contract will contain all the relevant details such as a description of the property for sale, a purchase price, timescales and date of completion.
At this stage a buyer should pay a deposit that is normally at least 10% of the agreed purchase price.
According to the spanish legislation if then a seller decides to withdraw a buyer receives a double amount of the deposit as a compensation; if a buyer decides to withdraw he/she will lose the deposit.
Normally it is given a period of time of 3 months after signing this private agreement to complete the final purchase. During this period a buyer can obtain the Foreigner Identification Number (NIE), open a bank account and transfer the money, obtain a mortgage if it is necessary and etc.
2) Foreigner Identification Number (NIE).
All the foreign citizens who have social, professional or economic relationship with Spain (the individuals as well as the companies) should obtain the personal and exclusive Foreigner Identification Number (NIE) that will be used in all the documents and monetary transactions to be performed in Spain. It should be requested in person at the nearest police office where you have the intention to reside or buy properties. If in the future you apply for a residence in Spain this number will be the number of your residence ID card. It takes approximately 7 labour days to receive it after the request.
3) Opening of a spanish bank account.
For this purpose it is necessary to present a list of documents that is determined by each bank. Typically they are the following documents:
- Proof of identity (passport).
- Foreigner Identification Number (NIE) when you already have it.
- Proof of address.
- Proof of employment status (student card, employment contract, unemployment documentation, constituent documents of a company).
- Proof of funds (tax forms).
The principal spanish banks are: Banco de Sabadell, Banco Popular, Santander, BBVA, La Caixa. Many of them accept non-resident accounts that’s why it is possible to set up an account in advance of your arrival.
4) The Public Deed (La Escritura de Compraventa).
Some days before the completion date a notary requests from the property registry a certificate that confirms the information about the actual owners of a property and a presence or an absence of a property’s encumbrances.
On the completion date a buyer pays the rest of the purchase price (a sale price minus deposit paid on the stage of the private contract) and all the fees payable by a buyer. Then a seller and a buyer (or their representatives on the basis of the appropriate letter of attorney) sign the Public deed contract (La Escritura de compraventa) which is equivalent to the title deeds of the property.
A buyer is then issued with a Public deed of conveyance (La escritura de compraventa) in front of a notary who certifies the transfer and a copy will be sent to the tax office and to the Property Registry. It is important to know that a public notary in Spain is required to witness the deed of sale. However, it is recommended to use the services of an independent legal specialist to protect your own interests.
5) Purchase taxes and costs.
When you buy a newly built property the following taxes are applied:
- VAT (IVA – el impuesto sobre el valor añadido). For the residential properties the VAT is actually 10% of the purchase price, for the commercial properties and plots of land – 21% of the purchase price.
- and Stamp Duty (AJD – actos jurídicos documentados) that is actually 1.8% of the purchase price in Catalonia.
When we speak about a second or a further transmission of a property a Transfer Tax (ITP – impuesto sobre transmisiones patrimoniales) is applied. In Catalonia it is 10% of the purchase price.
The additional costs are the following:
- fees of a notary and of the property register – approximately 1% of the purchase price (their amount depends on the purchase price).
- fees of a legal specialist in a case of the necessity (it is not obligatory by law but is strongly recommended) – approximately 0.5%-1% of the purchase price (their amount depends on the purchase price and the complexity of a required work).
6) Registration of a deal and a new owner in the Property Registry.
It takes approximately 1 month to register a deal and a new owner in the Property Registry. After this procedure a buyer receives the official public deed with all the necessary stamps of the Property Registry.