Once we have helped you to find the property you are looking for the next steps are to reserve it and commission your lawyer to start the background checks. A lawyer’s services are very important for your protection and their counsel will help clarify the more complicated aspects of Spanish property law. This guide has been written to explain the services your lawyer will provide prior to your purchase.
We recommend that before you start looking at property you have a meeting with a Spanish lawyer to get a clear picture of the buying process, a buying strategy based on your personal circumstances and the costs involved.
Background checks: Checking the property is free of debt and liens
Your lawyer will conduct a full background check to ensure that it is free from debts and liens, etc. This is one of the most important tasks that he will perform. In Spain the debt is carried by the property, not the owner, so you will be liable to pay for any encumbrances discovered at the point of sale, and thereafter.
The way this research is conducted will vary depending on whether you are buying a resale or an off-plan property. A resale property is a completed property that has a previous owner and a title deed (Escritura Publica), an off-plan property is still in the process of being built by a developer and hasn’t yet been granted a title deed. Buying a resale
Your lawyer will request a copy of the Nota Simple (a summary of the title deed) from the Land Registry (Registro de la Propiedad). This document shows any charges against the property, such as unpaid mortgages, or loans, or associated taxes.
Your lawyer will also request the following documentation from the seller:
The property’s Escritura Publica
The Escritura Publica describes the property, specifies the current owner, provides information about the location and records any debts or court embargos (the Nota Simple provides up to date figures).
The receipts for annual property tax (IBI: Impuesto sobre Bienes Inmuebles)
The receipts show if the tax (IBI, equivalent to local rates) has been paid. The receipt makes reference to the Referencia Catastral and Valor Catastral (see below).
The Referencia Catastral
The Referencia Catastral details the property’s physical description and boundaries. The certificate itself comes in two parts, one being a description in words and the other a graphic representation with either a plan or aerial photo. The document also quotes the Valor Catastral, the Spanish tax office’s (Hacienda) assessed value of the property used to calculate taxes.
The receipts for community fees
This assures you that the previous owner has paid all of the maintenance fees due. If the property is part of a community you become a member and you will incur any remaining debts.
Furthermore, it may be a good idea to get your lawyer to obtain a copy of the community statutes and the minutes of recent meetings. This will give you valuable insights into how the community is run, if there are any problems with the community and what are the rules and regulations.
When your lawyer has performed the relevant checks on the above documentation he will be able to advise you properly. If charges or encumbrances are discovered, he may advise you to negotiate directly with the vendor to have them removed from the sales price, or to obtain a written undertaking that the vendor will deal with the debts or problems prior to the signing of the title deed. Either way his work will ensure that you don’t get any nasty suprises while buying or owning the property.
Buying an off-plan property
Off-plan property is in the process of being built and finished by a developer and does not have a full title deed. Your lawyer will ensure the developer’s paper work is in order by checking:
* that the building license has been issued,
* that the certificates from the Architect and the town hall have been obtained for the completion of the building (Certificado de Fin de Obra).
* the details of the insurance policy or bank guarantees to ensure they are in order (read article: Buying a Property from a Developer)
* that the property is legally registered by checking Plan Parcial (the urban plan that shows the parcelas, or building plots) at the Ayuntamiento (town hall)
* the Nota Simple is in order with the various permissions and that there are no embargos or debts on the property
* If any anomalies are discovered within the paper work, your lawyer will be able to advise you accordingly. He may discover that the problems are quite easy to solve and include the remedies as specific terms in the contract, or in extreme cases he may advise that the property is not worth the risk and that you cancel the sale.
Other services performed by your lawyer
Apart from these very important checks, your lawyer will also perform the following tasks on your behalf:
* Ensure the seller is legally entitled to sell the property,
* Advise you on the various ways you can negotiate contract terms,
* Ensure that the clauses in the purchase or reservation contract and the additional clauses you agree with the vendor are legal,
* If you are building or refurbishing a property, the lawyer will also check out the prospect of obtaining the relevant consent from the Town Hall and other associated authorities (read article: The Guide to Building your Own Property in Spain),
* Prepare a will to protect your Spanish assets (read article: The Spanish System of Inheritance Law),
* Set up an escrow account (a bonded account that only allows deposits to be collected once the contract has been completed according to the terms of the sale) to protect your deposit money,
* Contract the utilities,
* Prepare a complete list of costs for both you and the vendor to ensure that you understand your financial responsibilities. Have him send this breakdown to the vendor so that the vendor is also aware (read articles: Paying for you Property and The Spanish System of Capital Gains Tax).
* Power of Attorney
If you have a busy schedule and find it difficult to be available in Spain, the grant of ‘power of attorney’ allows you to empower a third party to do certain things (specified within the document) on your behalf. This includes the right to sign property title deeds or purchase contracts. Your lawyer is the ideal candidate for this as he or she is accountable to the Spanish equivalent of the Law Society and is under a duty to act in accordance with your instructions. The power of attorney document can be drawn up by your lawyer but must be signed by you in front of a public notary to make it legally binding.
Reserving your Property
Once the property has been checked and you are happy with the agreements, you move to the next phase of the buying process comfortable in the knowledge that future transactions should run smoothly.
