The buying process of rural property
Once you have made the final decision, the paperwork begins. You may decide to employ a lawyer to handle the purchase on your behalf; this is not strictly necessary, but it may contribute to your peace of mind (it will cost you about 1% of the purchase price).
Unless you and the sellers are in the position of finalising the sale immediately (and even if all parties are in that position), you are advised to complete a preliminary contract of sale with the vendors.
We have a standard contract, which has been accepted by all lawyers with whom we have dealt so far, and which includes the following points:
- The agreed price
- The amount which must be paid to reserve the property (we suggest 10% or €10000, whichever is the greater
- The length of time during which the property will be held against this deposit
- The penalties - if the seller does not fulfill the terms of the contract, double the deposit must be returned to the buyer. If the buyer does not fulfill the terms of the contract, the deposit is forfeit.
This contract protects both parties quite well. The seller is protected from delays in the sale of the property where the buyer is not totally serious (the loss of the deposit can be painful) and the buyer is protected from gazumping (where another buyer arrives on the scene and offers more for the property) in that the repayment of double the deposit minimises or wipes out the benefit.
Once all of the paperwork has been gathered, it is presented to the Notary Public (usually 2 days before the signing is sufficient) for the preparation of the new title deeds (Escritura). As we already have copies of most of the paperwork in our possession long before this stage, there is little chance of delay (delays usually occur if there is an inheritance issue, if death certificates need to be obtained, or if cousin Alfonso, who has lived in Venezuela for the last 20 years, is mentioned on the old title deeds).
In addition to the paperwork in our possession, we also obtain the following prior to signing at the notary:
- A copy of the last IBI (council tax) receipt
- A new copy of the search document, showing that there are no new charges against the property
You can now, together with your passport, go to the Notary Public with the sellers (as well as with the money and a certificate from your Spanish bank confirming that the money for the purchase has been brought legally into Spain) and sign the new Escritura.
- If you are unable to attend at the notary's office, you must appoint a power of attorney (poder). If you have employed a lawyer to handle the purchase, the lawyer will act on your behalf at the notary
- The notary will need to be assured that you speak sufficient Spanish to fully understand the consequences of the purchase and to follow the proceedings. If you have appointed a power of attorney, they will normally qualify. Otherwise, we can provide you with an interpreter (two of our staff are accepted as interpreters by the local notaries) or you can contract an independent interpreter.
The title deeds are available for collection from the notary's office normally no later than one week following the signature.
The final paperwork is:
- Registration of the purchase. This is done at the Property Registry Office for the area in which the property is situated. The registration tax (currently 7% of the declared purchase price) is paid at the time of submitting the Escritura. There is a further fee (usually between €150 and €250) which must be paid at the time of collection - usually at least one month later, but may be much later still.
- If the property was bought from a non-resident foreigner, 5% of the the declared purchase price must be withheld from the seller and paid by the purchase to the local tax office (Hacienda).
- The property must also be registered in the buyer's name for IBI (council tax) and the electricity, water and telephone connections must be changed to the buyer's name.