The following are obligatory costs, above and beyond the purchase price - on buying property in Spain.
1. Notary fees (drawing up and notarizing the "escritura" (title deed))
2. 7% IVA purchase tax (equivalent of VAT) - 16% for a business)
3. "Registro" - registering the title deed at the Property Registry
4. Electricity hook-up / changeover
5. Water hook-up / changeover
6. Gas hook-up (if necessary)
7. Legal fees
8. Community fees
9. "Contribucion Urbana" - Local Land Taxes
10. Community Fees (if applicable)
BUYING A PROPERTY (apartment example)
Our apartments are sold with the client paying half of the sales price during the course of construction (the other half being paid to us by a mortgage that has already been granted to us with a local bank).
When the apartments are completed and the client wishes to take title he can either pay off the bank's half and thereby have clear ownership of the property OR continue the mortgage with the bank (which is generally for 15 years with the option to extend or cancel it at any time).
In most cases though, you would purchase the property, ideally, free of any liens or mortgages, and therefore should generally never total more than 10% of the purchase price.
1. The Notary ("Notario") - This is the man who acts on behalf of the Spanish government to make sure that:
a) The seller is who he says he is; and
b) Whether he is authorized to sell; and
c) That the title ("escrituria") is clear and if not the title will state what status and what rates of interest are owed on that property.
2. VAT (IVA in Spanish) - Equals 7% of the Escritura's declared value. If you are purchasing a commercial unit, taxes are 16%.
3. Registering Your Title Deed (at the Land Registry) - Registering your Title Deed with the Registar of Deeds in Vera should cost approximately 275€. That price is for a 2 bedroom apartment of approximately 75m2 in size. Naturally a larger Apartment or House would cost even more. This must be done as soon as you have taken title or you could face a fine.
4. Electricity - About 180€ for the standard contract of 3,500 Watts. You pay bi-monthly fees based upon consumption and the amount of watts you have contracted.
5. Water - Contract is usually 185€ and depends on consumption. There is also a one of first-connection fee that varies based on the property (how many taps, bathrooms, etc).
6. Bottled Gas ("Butano") - If you cook with gas the bottles cost 6.50€ for a refill. The contract per bottle costs 30€.
7. Legal Fees (Solicitor)- Lawyers usually charge about 1200€ (£700)for over looking the legal paperwork on purchasing a typical two bedroom apartment. "Gestores" often charge much less for the same work.
8. Community Fees - In the past, all the complexes that we';ve built, I have also owned a substantial amount of apartments in them for my own rentals, consequently I too want to keep phase and charges for Communiity ownership as low as possible.
9. I.B.I - Land Taxes ('rates") approximately 90.15€ per year, per apartment.
10. Community Fees (if applicable) - If your property is part of a community, YOUR obligations toward THE COMMUNITY of owners. By law the Community must meet once a year (AGM) and elect a President, an Administrator, a Secretary, and in some cases a Treasurer (unless this role is performed by one of the aforementioned); to manage the daily running and maintenance of the community. The date for that meeting is inserted into the title deed. If you have a good developer he will usually managed the entire project, keeping maintenance costs as low as possible.
Fees usually run from 30€ to 55€ per month, depending on how large the community is and what they have to maintain: pools, garden, parking etc.
FREQUENTLY ASKED QUESTIONS (FAQ)
"There is no such thing as a dumb question; it is the question that is not asked which is dumb!" - (quoted by your old school teacher in 19xx)
This section is an interactive FAQ, which aims to shed light on the purchase process.
When do you "take title", and where do you go to do it?
You can take title at any time you like, but in most cases it is best to take title when the obligations of the contract are 90% or more, fulfilled - especially on a new building.
Therefore, once your contract is reaching its final stages in terms of obligation, typically your final payment is made during the taking of title process. It is at this time you and your estate agent find an adequate time frame to fulfil this final step by making an appointment at the Notary.
A "Notario" - ora Notary arbitrates and witnesses the signing, but in most cases keeps the details of your deal independent from the procedure. His role is to ensure that the deed is properly formatted, mistakes are caught, and done in accordance with Spanish law.
When you take title, who must go?
Basically, "everyone" has to be there. The process is not as glamorous as it sounds, but very fulfilling once accomplished.
Polansky & Associates actually recommend that you give power of attorney to your solicitor to do the signing, but it is part of the Spanish property purchase experience, so you might want to be there, especially if there are crucial questions that might arise during the proceedings.
Parties who should be at the signing include: :
You (unless you sign a Power of Attorney (POA) and have someone represent you
Your solicitor (with POA if you are not present)
Your representative (if POA is not designated as to your solicitor). A friend who you can trust and help you in your absense.
A representative from the bank if you have a mortgage
Seller(s), unless they have a Power of Attorney (POA)
Seller(s) solicitor (with POA if they are not present)
A translator if you do not have a firm command of the Spanish language.
Estate Agent (if the property was being sold through one)
The Notary him/herself
What happens after taking title, and what tips do I need to know?
Tips for taking title quickly, and without “hitches”:
For those who decide to take title & sign (escritura) at the Notary:
First and foremost, you have to get an appointment at the Notary in order to sign. Typically, this is arranged by the estate agent, and then communicated to the solicitor. Once a date and time has been set, for the clients who wish to take title, part of our procedure is that we ask that you request of your solicitor and/or representative (as well as translators if needed), to have them do the following important points:
Get all of your personal information into the Notary BEFORE the signing date, preferable at least 24-48 hours in advance, so that the secretary at the Notary can prepare the minuta (document content) for you.
The content (minuta) contains personal information of all individuals who are involved with the title taking process, and includes:
- Full names and addresses of the title takers, (including the maiden names of any female title deed holders.
- Passport numbers, DNI numbers, Residencia numbers of all parties involved in the signing.
- NIE certificate number.
- Marital status - and in that light any prenuptial agreements you might have too), what unit you are signing for, etc.
- Identify who is buying and who is selling, and their legal information.
- What is being purchased/sold, and Registry data (Libro, Tomo, etc.)
Although procedures like this in Spain always run late, it is still important to be there on time, and if possible, even earlier.
Part of our procedure is that we also ask that you ask of your solicitor/representative (and/or translators) to obtain a DRAFT of the escritura printed by the secretary at the Notary in order to fully proofread and understand what you are signing, BEFORE the time of the signing. This also serves to eliminate mistakes, typos, and ultimately speeds up the process.
We have found that we have lost our slot in line (appointment time) when these items have not been done in advance. What is supposed to be a one hour-long appointment turns into a three and a half hour ordeal, which is painful for everyone (and takes the spark and excitement off of signing for a new property).
Last note, bring anything else you think you will need, even the documents you don’t think you need!
Bring a list of your questions, or concerns. Make sure you have your solicitor, Notary, or even your estate agent clarify and explain any additional queries you might have. It is always better to know now, than to find out later on “the hard way” (uninformed).
What do you need bring with you to the Notary in order to take title?
Rule of thumb: Everything that you think you will need, bring it with you! Invariably, you will always need something else too, so if you think you won’t need it, bring it anyway!
Generally though, you require the following items when taking title in Spain:
Your Passport(s), and/or “Residencia”. Your DNI will suffice if you are a Spanish citizen.
N.I.E. Certificate if you are not a Spanish citizen. NIE stands for Numero de Idenficacion de Extranjeros – which translates to “Foreigner ID Number”. Although this law and requirement has in effect for a long time now, it is now STRICTLY enforced, as of February of 2005.
- You will NOT be able to take a title without one now, and in some cases, you will not be able to sell your property in the future either; without one either.
- So at one point or another, you’re going to need it! Your solicitor can assist you in obtaining an NIE, and it can take up to 6 weeks to obtain. It is a legal document that enters you fiscally into the Spanish system, usually for tax purposes.
- This is most likely because your passport number as a form of ID changed with each renewal, but your NIE in Spain is for life.
- Later on if you decide to reside in Spain, your NIE essentially becomes a Residencia with some additional paperwork.
Original or copy of your purchase contract. Although seldom leveraged, it is good to have as a referential source for any clarifications needed at the time.
If you have any prenuptial agreements that differ from normal marital law obligations, bring a copy with you too – if you want this part of your deed by having it written in.
Your solicitor should also have information on the property’s status in terms of any outstanding liens or mortgages, fees, debt, or similar snags. These are usually found (for the most part) on a Nota Simple requested days before from the Property Registry.
Final payments (as applicable) for:
- I.V.A. (VAT) Tax (bank certified check).
- Outstanding or final balance payment (typically cash, or a bank certified check).
Signing Day – Taking title:
So you all huddled in an office at the Notary, ready to do the title deed. First of all, the bank needs to close the mortgage (if the property has one). Then, you as buyers have to sign for the mortgage (if the property has one).
Once the property is “freed” up, the solicitors then read out the details in the Escritura (title deeds) to make sure that we all agreed on what was being sold by the sellers and bought by you, along with confirmation of the price, so that all is clear to both parties – buyers and sellers.
At that point, monies exchange hands, and documents are reviewed. Everyone gets paid at that point in time, including estate agents fees, (if applicable). So everyone has a vested interest in turning up!
All of this takes about 1-3 hours, depending on how busy the Notary is. At times, it can be in less than 15 minutes, but usually rarely ever happens.
Then, once everyone is happy, the notary then sweeps in. He introduces him/herself formally, and then moves to do a formal declaration of what was just done by the solicitors, usually reading what is to be signed aloud by rattling off some paragraphs in Spanish, ideally, “in about 5 minutes flat.”
The Notary will then ask for confirmation via yourself or your translator, if you AGREE with what you are signing. Ideally, this would have already been hammered out when you and your translator (if needed) went over the draft escritura.
It is at this time you officially sign the deed, and the deal is done! Time for some champagne! (Or vino, or a beer of course.)
At this same point, if not already, final payments are made, and the agent hands the keys over to you, the new proud owner of a fine Spanish investment property.
Remember to pick your title deed up from the Notary within a week to 10 days of signing. There will be a fee to pay at this stage.
You will need to make copies of it for future paperwork, as you will read next…
Are we done yet?
Nope! Here are the next steps you must take ASAP to get your water and electricity hooked up!
- There are some documents (yes, more paperwork) that you will need to process in order to have your water (Galasa SA) and electricity (Sevillana-Endesa) hooked up (or at least transferred over to your name):
- Authorization for someone to process the paperwork if you yourself are not processing the paperwork. You will need TWO, one for Sevillana and the other for Galasa.
- TWO photocopies of your Escritura (title deed) – one for Sevillana and the other for GALASA.
- TWO photocopies of your passport, RESIDENCIA, or NIE Certificate; and if you are processing this yourself bring the original with you.
- “Boletines” (for new properties) for water and electricity: These are TWO certificates that show that your water and electrics are properly installed and under EU standards. You will have one certificate for the water and one for the electricity – each has a carbon copy of itself, which means that when you do each respective utility contract, you must retain and never ever lose these (unless you like pain and suffering through paperwork & red-tape beyond human belief). Please make (notarized) copies of them and keep them in a very very safe place – perhaps inside the front cover of your Escritura would be a good idea, and inside a wall-safe. Your boletines will be issued to you during or shortly after the Escritura process is completed by the seller.
- Licencia de Primera Ocupacion – License of First Occupancy: Certificate from the TOWN HALL showing that the building is complete and satisfactory to their standards & spec (for new properties).
- 20-digit bank account number (found on your resident/non-resident checkbook). Everything in Spain is done through DIRECT DEBIT, and you will not be able to do your water and electricity contracts without a 20-digit bank account number. Your first set of bills will have your hook-up and transfer charges as well as first use details.
Are we done now?
Almost! Often there are several very important items, which are unfortunately overlooked not just by the buyers, but also the solicitors even forget; that ultimately will cause lots of aggravation (for you) later on down the road.
One would think that most of these things would be automatic, but they must be not only carried out, but also done quickly! Here they are:
- Get your water and electricity changed over to your name ASAP! The consequence of not doing this, as the seller eventually will do this for you, is not pay the bill, and your property is then cut off from these services.
- Register the property at the Property Registry. Required by law, this ensures that the property you now own is entered into the Property Registry database. By having the property in this database, you will be listed as owning the property officially; you will be added to mailing lists for rubbish (aka “basura”) tax. Further, you will need to carry this out if you plan on selling some time down the road, and more importantly, to avoid a fine. There will be a fee for this step, and it is based on the physical size and shape of the property you have just purchased, so there is no index on how much it will run.
- Register the property with the town hall for “I.B.I.” tax. This is another often-overlooked step, yes as important; which essentially gets your property into the municipal database for local rates taxes. Again, the town hall can put a lien on the property, and when it comes time to sell this balance will need to be settled either within or independent of the negotiations of the sale.
- If your property is part of a community, like in an apartment block, it is highly advisable to contact the community president right away, as so they can brief you on community charges, outstanding and ongoing issues, community rules and regulations, and how to get more involved (if you really want to).
A solicitor can do most of these steps for you, which is what we recommend you have them do, but you must ask them to do so to make sure! Make it part of your checklist!
There are some steps that only you as the purchaser can do, however, hiring a solicitor to do the stand in line part is worth the money so you can take care of more important and fun things.
These final steps involve a lot of standing in line – and often these places are hard to find which can add to more frustration. Further, in 99% of all instances anyway, you must have a good command of the Spanish language, to avoid disappointment and additional red tape.
In the coming months you should receive indications (“signs”) through the mail that these important steps have all started to fall into place – and if not, best check into it right away!!! Sometimes in Spain no news, is bad news…
Last but not least, many clients perceive that once title has been taken, their solicitor is off the hook. For the most part this is true, however, they can still advise you and assist you with any open or ongoing issues. Leverage their advice to make your purchase in Spain as smooth as possible.
And now what?
Polansky & Associates have been in Spain doing what we do for almost 40 years now. We are good at it and very well informed. We want to pass on years of advice and assistance to you to save you time and energy so that you can enjoy your new property in Spain to its fullest.
We can help you find gardeners, build walls, rent your place, get you hooked up to the internet, inform you of where to go - and places to avoid; coordinate telephone installations, and even find you a chimney sweep if you need one!
We have an amazing contact base, which took decades to build. We would like to continue to offer these services to you as well as to our past clients. These are perks that most other agencies will not offer you well after you have purchased your property from them.
We have seen it all, and we have assisted our clients in many good ways, over the years. We have also assisted in refinancing properties and raising additional money for our clients. We have yet to not obtain a mortgage for any one of our clients. In fact, we have even helped them sell their place again, and make an amazing profit on their property. Now that is what it is all about.
We hope that you will take advantage of this rare and often overlooked resource - us.
P&A want you to become part of the family, and enjoy this special place with us. After all, isn’t it what it is all about? We are here to stay, and we hope you join us.
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