Property Law

Spanish Property Law InfoPoint 

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The number one cause of financial catastrophe in Spain is, without doubt, failing to secure the services of an independent property lawyer who will ensure that your rights and your investment are protected throughout the conveyancing process.

Below you will find answers to common questions relating to property dealings in Spain. The topics covered relate not just to buying property in Spain but also selling and owning property, property taxes and the tax deductions you may avail of as well as landlord and tenant law.

What information do I need before buying a second-hand property in Spain?

There are a number of legal issues that need to be considered before it is prudent to consider purchasing. In particular the vendor must provide the following documentation:

  • Registry information regarding the property
  • Receipt of payment of the most recent IBI tax bill (rates bill)
  • Letter from the Community of Owners of the building or complex confirming that the community payments relating to the property are up to date

In addition, the buyer should confirm the following:

  • Name of the current owner of the property
  • If there is any mortgage or other charge over the property
  • The physical property conforms to the description
  • That the land is correctly zoned for building
  • The buyer should also make sure there are no sitting tenants in the property

And what if it is a new property?

Before buying a new property it is advisable to confirm the following:

  • The existence of a project license in which the relevant technical department confirms that the building project has been carried-out in accordance with the original  approval originally issued by the town hall
  • That the license of first occupation has been issued
  • The certificate of habitability of the properties should be available
  • Inscription in the property registry of the urbanization along with the necessary insurance for purposes of dealing with any defects in the building work
  • That any sums advanced (via instalments) for the purpose of purchasing a property ‘off-plan’ are protected by bank guarantee.

What legal and financial obligations do sellers have?

The vendor of the property has the following legal obligations:

  • To conserve the property until it is handed over to the purchaser
  • Transfer the property
  • Make good any defects or deficiencies in the property
  • To pay certain costs and taxes

If there are any defects in the property known to the seller and which may have not been communicated to the buyer, the buyer may rescind the contract or claim damages instead. There is a two year time limit, from the date of purchase, in which to exercise this right.

Unless there is agreement to the contrary, the vendor is obliged to pay the costs relating to the drawing up of the deeds of transfer as well as those costs necessary to effect the transfer of the property – this would include notary costs.

Any capital gains tax that is due will also be payable by the vendor..

What is a preliminary contract?

Assuming that all of the preliminary checks determine that the property is as stated and can be purchased safely, the purchaser may need some time to put together the funds necessary to complete the purchase.

The Spanish property purchasing process provides for this by use of a ‘preliminary’ or ‘deposit’ contract. Effectively this is a contract-to-contract and normally stipulates that before a stated future date, the property will have passed from the seller to the buyer.

Should either side fail to complete there are penalties. The buyer will forfeit the deposit (typically 10% of the value of the property) and the seller twice that amount.

What is an ‘escritura’?

The final contract or ‘escritura’ as it is known in Spanish is when the title of the property passes and the buyer’s new title may be registered in the local property register. The signing takes place in the office of the public notary who is a type of official registrar who must witness the contract signing in order for it to be legally binding.

On the day of the signing all interested parties meet in the office of the notary – this may include a representative of the bank if a mortgage is required.

The deed is read aloud by the notary and the parties then present their identification after which the deeds are signed by the vendor, the purchaser and the notary. At this point the monies for the purchase are handed over in the form of a bank-guaranteed cheque.

When may a contract for purchase be legally withdrawn?

The reasons for which a contract may be rescinded are normally included in the contract itself in order to protect the parties to the contract. The following would however be the main reasons for rescinding a contract for the purchase of property:

  • Failure to fulfil obligations under the contract
  • Loss of the property
  • Failure to pay
  • Hidden charges (over the property) or defects