The buying process
Firstly, the property is selected and the terms agreed. The property will normally be secured, through a private contract (option contract) between the two parties. It is customary that 10% of the purchase price is paid on signing of the option contract. The Option Contract secures both the seller and the buyer, as the seller will now be prevented from selling to others without compensating the contracted buyer. Similarly, the buyer will forfeit his deposit in the event of his non-completion of the purchase.
On completion of the transaction a deed of conveyance 'escritura pública' must be signed by both parties under notarial supervision in Spain. It is possible to issue your lawyer or another person of confidence with a power of attorney so you do not have to be present at the signing of the deed. This power of attorney can be made abroad through the Spanish consulate but be aware that this is very costly and time consuming. At MJC Associates, we suggest you sign the power of attorney whilst you are in Spain, in front of a notary. You'll find this takes just a few minutes.
Once you have bought the house the deed of conveyance must be registered in the property registry. Either you can do this yourself, pay the notary office to do it, or pay your lawyer to do it for you. Bear in mind that you will also have to change the ownership of all supplies such as electricity, water, telephone and television. Again, you can either do this yourself, employ a Gestoria/Legal Services Firm, or get a Property Management Firm to help you get it right. As specialist Mallorcan Estate Agents MJC Associates works with several such companies and we are very happy to put you in contact with them.
A Spanish notary always has to be appointed for any property or other legal transaction taking place. The notary's fees are usually paid by the buyer - unless agreed otherwise - and are fixed by law on the basis of a scale. It is advisable to appoint a local lawyer who can advise you on all aspects of the investment.
Lawyer's fees are between 1-2% of the purchase price of the property. As a rule with larger value properties the fee can be negotiated.
It is not necessary for EEC citizens or citizens coming from the Swiss confederation to have a Spanish residence permit. For non-EEC citizens, if you want to reside permanently in Spain, you would need to obtain a special visa at the Spanish consulate in your country of origin, which then allows you to apply for a residence permit.
NIE numbers (Spanish identification number for foreigners)
When you buy property in Spain in your own name, you must apply for a NIE number. This number must exist before the public deed can be signed and the transaction finalised. So, it should be in place as early as possible in the process and takes 3-4 weeks to receive. Normally this can be taken care of by your lawyer or your Spanish bank.
As a guide, it is suggested that you add 10% to the agreed purchase price, which will cover most of the expenses involved in the purchase - even though generally it is less than that. If a mortgage is required, there will be additional opening fees etc. from the bank.
Company or private ownership
Apart from individual ownership, a property may be owned by more than one individual or a company. The 'owning' company can be:
- Spanish in origin
- From countries with double taxation agreements with Spain
- A combination of the above
Each of the above options has its pros and cons, just as each buyer and property have their particular characteristics. Therefore, we strongly suggest that a lawyer is consulted regarding the existing legislation as and when your purchase is agreed.