Spain Buyers Guide
Is the Conveyancing process in Spain similar to that in England?
No. The Spanish legal system is very different from the English. Generally speaking, however, as long as your lawyer makes the necessary checks and enquiries similar to those that we would make in England, then there is hardly any more need to worry about buying a house in Spain than about buying one in England. Once you have chosen your independent legal representative then he/she will be able to proceed with the following checks:
* The title of the property is satisfactory: making certain that the person who is selling the property to you actually owns it and that there are no charges on the property that adversely affect it.
* When appropriate, checking to see that the property, when built, had the necessary licences and permissions.
* To ensure that the terms of the contract suggested by the person selling the property are fair and reasonable.
Once these checks have been completed satisfactorily you will then need to arrange for funds to be imported into Spain this is in order for the title to the property to be transferred into your name in the way required by Spanish law, for any fees and taxes to be paid and for the title to be registered with the government Land Registry.
What is the Escritura?
This is the title document proving who is the owner of the property and containing a detailed description of the property itself. It is, under Spanish law, necessary for the Escritura to be signed before a Spanish Notary Public.
Who is the Notary?
The Notary is a public official who is there to put on the public record the fact that the title deed recording the sale/purchase has been signed in his presence and understood by the parties concerned.
What does the Notary do?
The Notary is not there to advise or to protect either your interests or the interests of the person selling the house.
When the Escritura is signed in front of the Notary either the purchase price is, in his presence, handed over to the person selling the house or the seller confirms that the money has already been handed over. Proof of such payment is then incorporated into the title deeds of the property.
In certain cases the price may be paid wherever in the world the parties wish. In others, it must be paid in Spain. It is usually necessary for the importation of the funds used to buy the property to be recorded with the authorities in Madrid. This can be dealt with quite simply by your lawyer.
Do I have to be in Spain to complete the transaction?
The person buying the house may attend in person before the Notary, but, if this is inconvenient, arrangements can be made for a Power of Attorney to be granted enabling another person to attend on their behalf. A Power can be drafted for signature near your home.
What about paying the taxes due?
Once the purchase formalities with the Notary have been completed your lawyer can arrange, on your behalf, to pay any taxes due in relation to the transaction.
Is there a land registry system in Spain?
Yes. After the Escritura has been signed in front of the Notary your lawyer can arrange for it to be presented to the appropriate Land Registry and for the payment of the Land Registry fees.
Several months can elapse before the process of registration is concluded, but as soon as your lawyer is notified that the deeds are ready they will have them collected, checked and then forwarded to you.
Special Points for new Property.
By law all properties, where you pay all or part of the price before the property has been fully built, must have the benefit of a bank guarantee to ensure that, if the developer goes bust before he completed the building work, you do not lose your money. In some parts of Spain developers try to ignore this legal requirement but it is a valid point work checking thoroughly. You must also make sure that the property specification is agreed in detail with the builder and that the property will be delivered to you complete with the necessary licence to occupy it as a home.
In whose name should you purchase the property?
There are a number of ways to purchase the property:
1. In your own name
2. In the joint name of you and your wife or co-purchaser(s)
3. In your children’s names or in the name of somebody who will eventually inherit the property from you.
4. In the name of a limited company, whether English, Spanish or “offshore”
Each method has its own advantages and disadvantages. Everything depends on your own personal circumstances. We would recommend taking proper independent financial and legal advice as to which method would be most suitable. It is worth paying careful attention to this point because of the potential tax and other savings that can be made at a later stage. These tax savings arise because of the Spanish system of inheritance tax under which gifts on death can still attract very high rates of taxation . It is still possible to pay well over 70% tax on inherited wealth.
The tax savings also arise because of the way that each time a property changes hands, certain taxes and fees become payable. If, therefore you can prevent the property being inherited and minimise the number of times it changes hands, you can greatly reduce your tax liabilities.
Disclaimer: This document has been produced only as a guide. All of the above guidelines are presented in a general form and as each individual’s circumstances differ. Gatehouse International (for their part) take no responsibility for the advice when applied to a specific case. Gatehouse International and its representatives advise all clients to seek their own independent advice from professionals in their respective fields when purchasing or selling a property for legal, financial and tax matters.