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Buying a Property in Málaga. Tips and Recommendations!

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Purchasing a property in Spain is a process which can become complex at times, among other reasons because numerous factors and variables need to be addressed. The presence of a lawyer is not a legally required, yet is highly advisable, given that you will certainly end up saving time and money and thereby avoid undesirable setbacks.

Notarial involvement is arguably a prerequisite, however, their role is different from other jurisdictions, as for example the United Kingdom. In Spain, their role is limited to verifying the identities of the different parties involved, that they are of legal age and mental health and that the comprehend the essence of the operation. It is important to note that they will not provide any sort of legal advice nor will look after the interest of any of the parties.

Nonetheless, they are required toward registering an estate in the Land Registry, which will provide the buyer with the certainty that nobody can rebut his ownership over the acquired property at any time.

It is also common the presence of one or various real estate agents or intermediaries.  Their role is to put the different parties in contact, both buyer and seller, in exchange for a commission. Yet, it is not their role nor their duty to legally assist them.

That is why is paramount you find a lawyer you can trust, who looks after your interest at all time and guide you through the whole process of buying/selling a property. Indeed, most things can be handled by the solicitor of the buying party on his own, provided he has been given a power of attorney, which is not expensive and will considerably speed up the process.

First, foreigners have to get a NIE (Foreign Identification Number), in order to legally purchase a property in Spain. It is issued at Police Stations (Ask for date online); subsequently it has to be registered in Hacienda (Tax Office) in order for it to be operative. All this can be handled by the solicitor of the buying party

Once this is done, it is advisable to open a bank account in Spain from where easily and efficiently operate.

The next step is to carry out due diligence over the property  we want to buy. To that effect, different documents and information from various institutions need to be collated as well as analyzed.

We should then go to the Land Registry to check as to whether the estate is registered and if so in which name. In this body we are also provided information as to whether the property is free of any charges or debts; such as mortgages. In case the property is not registered at the land office, we will not have a 100% reliable source about any of these matters and in time we will have to spend time and money finding out this information to be able to register the property. In this scenario, it is important to reconsider as to whether we are still interested in the estate and at what cost.

We have to go to the cadastral registry. This will provide us with information over the fiscal value of the property and about its graphic description. It is convenient to check whether the title holder of the cadastral registry and the land registry match; otherwise, we should delve into it. All this is also applicable to the graphic description.

Next, we have to go to the Town hall where the property is located to check that the is up to date in the payment of municipal taxes; such as IBI and rubbish collection tax.  In the town hall, we can also find out the yearly total   to be paid by the new buyer for those concepts. Also, if the property is part of a neighbor association, we have to be informed as to whether is there any outstanding debt and how much is its monthly fee.

Once we have checked that everything is in order, or after solving the inconveniences that we have encountered along the way, it is expected that the seller sign a pre-sales contract. It is not fundamental, but its common practice, given that in this way the buyer is given the guarantee that the seller will not sell the property to any third party and the seller gets part of the total sale price in advance; thereby expressing commitment.

The amount to be paid depends on the private agreement reached between both parties.  It can be a fixed amount, like 3 or 5 thousand euros; or it can be a percentage as 10% of the total sale price. Usually, if the seller changes his mind and do not sell the property as agreed, he will be due to pay double the deposit back.

Now it is time to discuss financing. If we have our own funds, then everything is more convenient. Yet, if we have our money in a currency that is not euros is advisable to change it into Euros at an exchange company that offers us a good deal, in view of transferring the total sale price as well as expenses to the Spanish bank account, from where is easier to operate. The total sale price is usually paid by a bank check which is handed over to the public Notary at the time of signing the deed, minute in which you will receive the key of the property.

If we do not have sufficient funds to buy the property we want, it is always possible to seek financing. You can either do this in your own country, or in Spain. In case you decide to do it in Spain, you have to be aware that as a general rule they do not tend to finance over 60% of the sale price, therefore is convenient that you have sufficient funds to be able cover the outstanding 40%.

It is also possible that we encounter the scenario in which we are asked to sign the purchase and sale agreement before signing at the notary. This is no way necessary, yet it is done at times in order for the buyer to provide in advance part of the total price, for instance the 40% that will not be financed by the bank. In any case, there is not actual need to do this.

Once we have ticked all boxes, the only thing left  is meeting at the Notary on the agreed day and signing the public deed, followed by an exchange of money and keys. Our solicitor will have all paperwork ready to be signed; provided he is is confident that everything is in order. After the signature, we just need to pay the corresponding taxes to registering the acquired property at the Land Registry.

If we are buying a new development that is being sold for the first time, we will pay the VAT and asked price at the Notary and the seller will be responsible to present the tax declaration to Hacienda. If it is not the first time that the new development is sold, we will have to pay the ITP in lieu of VAT, which is more reduced, and in this case it will be the   buyer who will have a 30 days period from the date of purchase to present the tax declaration and make the payment. Also, usually and unless agreed otherwise, it will be the buyer who pays the Notary and Land Registry fee.

These are in broad terms the steps that are to be followed for a buying a property in a safe way, thereby avoiding possible problems or unwanted surprises. In our law firm, we can guide you through the whole process; or if otherwise preferred, we can handle the entire process on your behalf.

Last, I want to remind you that hiring a solicitor for this sort of operations is the best guarantee you can possibly have, as we work under a Civil Responsibility insurance to which we are accountable to  in case of poor legal advice; opposite to other involved professions such as the Public Notary of the real estate agent.

 

 

 

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