Buying an Inland Spanish Property: Glossary of Useful Terms

The legal procedures involved in buying a Spanish property can seem complicated, but we can help you with all of it. The following guide is intended as a brief introduction to some of the terminology used by Spanish estate agents, and we hope it gives you a good basic idea of Spanish legal procedures for buying property.

Appointing Your Abogado
An Abogado is a Spanish solicitor who carries out all the necessary searches & handles all payments on behalf of the purchasers. It is generally advisable to engage the services of a Spanish solicitor to look after your purchase. HomeEspana has a relationship with an experienced bilingual solicitor. He will ensure that the property has no debts attaching to it and that it is properly registered.

Autopromocion
A way of building a new property in rural land when the buyer buys the plot of land and contracts the services of the builder to build the property. With this way, the buyer can benefit from a Préstamos de Autopromotor (Self-promoting Mortgage) by which the bank will release money for the construction in stages – the first amount being released when the plot of land has been acquired.

Building and Contents Insurance
This is your responsibility upon taking possession of your property, however, HomeEspana Ltd can advise you on this matter.

Building license
The building license is requested from the Town Hall by the builder once all the paperwork for the plot has been completed and the project plan has been agreed with the buyer and approved by the architect.

Burden
Any debt that the property might have, such as a mortgage or an unpaid tax.

Capital Gains Tax
A tax that is paid on the gain made on a property when it is sold; the rate of the tax can vary. Your Abogado or fiscal representative will be able to provide accurate & up to date information.

Community Fees
If you purchase a property within an apartment block or complex, you are obliged to join its resident association which administers the general maintenance of the areas of common ownership, such as gardens, hallways, lifts swimming pools, exterior lighting etc. An annual budget is calculated to cover these costs, which is divided between all the owners according to the size of their properties. All owners have a vote to agree the budget at the annual general meeting.

Completion Date
This is the date on which the balance of the purchase price must be paid together with all fees and the title deeds are signed over to the new owner(s). This date should be set when signing the reservation/holding agreement. (note that with a new property 40% of the purchase price must be paid four weeks after signing the reservation contract and the balance on completion)

Deposit
A deposit is the amount of money put down to secure a property/plot of land and remove it from the market. The amount will vary depending on the property price, although it tends to be 3,000€ for a resale property and 6,000€ for a new property. If you are interested in a property, you have to open a Spanish bank account and lodge this sum. The deposit is paid to the vendor of the property on signing a reservation/holding contract. The deposit will normally be refunded if problems arise which mean that completion cannot take place. All being well, the remainder of the purchase price together with all fees has to paid on completion.

Fees
All fees are due on completion and are as follows:7% of the value of the property for IVA (Spanish equivalent of VAT) for new properties or for transfer tax for resale properties
1% of the value of the property for legal fees
1-2% of the value of the property for Notary fee, Land Registry, changing of water & electricity, wills and NIE numbers

Finance
Different types of Finance can be arranged when buying a property inland. With a new property, around 50% of the total property price can usually be financed. Other options include re-mortgaging an existing property or the Préstamo de Autopromotor when the bank will release the money in the different stages of construction. If it is a resale property, the normal valuation of the property will take place and the bank will generally offers 80% of the valuation price to the buyer.

Hacienda
The Spanish tax authorities (equivalent to the Inland Revenue)

Land Registry Office/Registered copy of Title Deed
Official body that deals with all property transactions. This is where all Escrituras (title deeds) relating to property transfers are registered after taxes have been paid and where the title and any charges against the property can be checked

Making a Will
As Spanish inheritance-laws are different from the UK or Ireland, it is generally recommended that you instruct the solicitor to draw up a Spanish will covering the succession rights to your property

New Property
Property that is owned by a developer/builder. All properties are sold freehold and carry a minimum 10 years structural guarantee. HomeEspana has several contracts with local developers and we will show you around a range of developments best suited to your needs.

NIE numbers
Número de Identificación de Extranjeros.
This is the "foreigners identity card" given to all non-residents purchasing a property in Spain. This should be obtained by all non-residents preferably prior to purchasing a property.

Notary
The Notary is a lawyer appointed by the Spanish government to ensure that the change of title is properly executed. It is the Notary's job to make sure that the seller is legally entitled to sell and the taxes are paid. The notary will register the change of ownership in the Land Registry Office.

Nota Simple
A simple document of ownership and registry details. This will need to be checked and verified by the buyer´s solicitor.

Payments according to stage of construction
This is common practice when buying inland. It will depend on the builder but payments are normally divided as follows:

- 6,000€ deposit
- 25% of property price - Deposit +7% VAT on foundation stage
- 25% of property price + 7% VAT on roof stage
- 25% of property price +7% VAT on tiling and pavement stage
- final 25% of property price +7% VAT on Completion of the property and Signing of the Title Deed.

If a mortgage needs to be arranged, the final 50% can be paid on completion.

Property Guarantees
Spanish law states that all new properties must be guaranteed for 10 years, the architect and the builder being legally responsible for same. Most new developments also include a bank bond within the terms of their contract, guaranteeing each stage-payment and frequently a no-later than completion date.

Resale Property
A resale property is owned by a private individual, family etc. HomeEspana has a wide selection of resale properties available to view for a variety of tastes and budgets. However, the golden rule is that before you make an offer you should be in a position to buy. Therefore, you need to be certain that you can raise the finances before making the offer.

Signing a Reservation/Holding Agreement
When putting a deposit on a property you must sign a reservation/holding agreement thereby reserving the property. This agreement will also act as a receipt for monies paid.

Signing of the Escritura (Title Deed)
This is done on completion in front of the Notary in Spain by you or by someone (usually your solicitor) with power of attorney from you to sign on your behalf. Full payment less the deposit given earlier together with all fees (see below) is required before the title deed can be transferred into the name(s) of the new owner(s).

Taking Possession
The handing over of the property and the keys will normally take place only when the full purchase price and all fees have been paid on the completion date.

Title Deed/Escritura
The proof of ownership of a plot of land or a house. It includes the names of the previous and current owners, all details of the property and the price that it was sold/bought for. On completion a new Title Deed will be produced with details of the sellers and new owners.

Town Hall
Official body from which building licences are requested. Together with the Land Registry, the Town Hall also holds information about properties and also provide information about plans for the area which may impact upon the property in future.

Transfer of Services
Having completed the purchase, it is necessary to connect or transfer services. For example, electricity, water and Impuesto de basura (garbage tax) need to be in your name and up to date when exchanging a property.

Note: As the terms and conditions governing property purchase in Spain are subject to periodic changes, all points of information included in this buyers guide are intended as a guideline only. Always consult a solicitor when buying a property.

Links:
Strong Abogados - Spanish lawyers

Please note that the above links are for information only and that Country HomeEspana has no connection with any of these companies.