Experts in Property Conveyancing.
We offer independent and comprehensive legal advice in all sort of real estate law issues, especially related to conveyancing transactions.
Our services include assistance in the following matters:
- Conveyancing of all type of real estate properties (residential, commercial, rustic, etc).
- Residential, commercial and rustic rentals.
- Set up of real rights over real estate property.
- New building declarations/ registrations.
- Registrations at the Land Registry.
- Claims for construction defects.
- Building contracts and contractual service contracts.
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PERSONALIZED LEGAL ADVICE
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The Purchase Process
Once you decide to buy a property in Spain and the price has been agreed with the vendor, it is advisable to appoint an independent lawyer to assist you in your purchase transaction.
MT LEGAL LAWYERS will ensure the property is legal, there is no hidden charges nor embargoes, and your money is safe until completion.
Legal Searches:After appointing MT LEGAL LAWYERS to assist you in your purchase process, we will request the vendor to provide all the necessary paperwork to make the appropriate legal searches and check that everything is in order.
Legal Report:Once this information is available to us and we have done the appropriate legal searches, we will prepare a legal report informing you about what the legal situation of the property is, and the terms and conditions of your purchase transaction.
Reservation Contract /Private Purchase Contract:
If everything is in order, we will request you to authorize the signing of the reservation contract or the private purchase contract (in some cases, it will be required the signing of a reservation contract firs; sometimes you will sign the private purchase contract straight forward).
At the moment of the signing of the reservation contract, it will be required a partial payment of the price of 3.000-10.000 Euros approximately.
At the moment of the signing of the private purchase contract, it will be required a partial payment of the price of 10-30% approximately (less reservation deposit, plus VAT in off-plan properties).
Next step will be the signing of the title deeds on completion before a public notary. At that stage, the balance of the purchase price (and the VAT, in off-plan properties) is paid, and possession of the house is received. From that moment, you will be the lawful owner of the house.
By completion, in off-plan properties, MT LEGAL LAWYERS will check that the developer has obtained the appropriate licenses (habitation license) so that everything is in order and you can receive possession of the house legally; in second hand transmissions, we will ensure there are nor debts nor charges affecting to the property. We will assist you with the signing of your title deeds in due course.
After completion, it will be required to pay stamp duty (in off-plan properties, the 1,2% of the purchase price) or transmission tax (between 8 and 10%, only in second hand properties).
It will also be necessary to register your title deeds at the land registry, to complete the registration with the community of owners, to register the new owners for the payment of the local taxes (Council tax and Rubbish tax), and the connection of your utilities. Also, in off-plan transactions, if you are not planning to come the days before completion or few days after, it is advisable to appoint somebody to prepare the snagging list of the house, so that we can request the developer to solve any eventual physical damage at the property. MT LEGAL LAWYERS will assist you with all these matters in due course.
What´s Needed when Buying a Property?
When buying a property in Spain, you will need to prepare the following:
- NIE Number
- Spanish Bank Account
- Notarized Copy of Your Passport
- Evidences of Incomes/Savings
- Power of attorney (POA)
The costs of buying a property in Spain are in the region of 13-14% (off-plan properties) or 10-12% (second hand properties) of the purchase price.
The purchase costs are as follows:
Off Plan Properties:
LAND REGISTRY FEES
UTILITIES CONNECTION FEES
POWER OF ATTORNEY NOTARY FEES
Second Hand properties:
LAND REGISTRY FEES
UTILITIES CONNECTION FEES
POWER OF ATTORNEY NOTARY FEES
POWER OF ATTORNEY NOTARY FEES
The mortgage costs will vary depending on if you are setting up a new mortgage (setting up costs will be in the region of 3-5% of the principal, approximately) or if you are taking an existing mortgage (in this case, costs will be in the region of 1-2% of the principal, approximately).
After buying your property, you will have to bear in mind the following costs every year:
- Council tax (IBI tax)
- Rubbish Tax
- Community of Owners’ Fees
- Non-Resident income Tax
- Home Insurance Policy
You can put your property in the market and try to sell it personally, or be assisted by a real estate agency which will not only increase the number of prospective buyers interested in buying your house, but will also assist you in deciding the reasonable selling price and manage your selling expectations. The real estate agency fees are normally in the region of 4 to 7,5 %, plus VAT (21%), depending on the services provided.
There are some documents and information that must be available to the buyer’s lawyers so that they can do the appropriate legal searches to ensure the property is legal and there is no debts nor charges affecting to your house. This is normally required by any buyer prior to committing to buy and pay any deposit. We explain what these documents are in the next paragraph (“WHAT DOCUMENTS ARE NEEDED WHEN SELLING?”).
Reservation contract /Private purchase contract
If after doing the appropriate legal searches everything is satisfactory to the buyer, we will request you to authorize the signing of the reservation contract or the private purchase-sale contract, depending on what has been agreed with the buyer (in some cases, it will be agreed the signing of a reservation contract first, and after that a private purchase contract; sometimes you will sign the private purchase contract straight forward).
At the moment of the signing of the reservation contract, the buyer will make a partial payment of the price of 3.000-10.000 Euros approximately.
At the moment of the signing of the private purchase contract, the buyer will make another partial payment of the price of 10-30% approximately (less reservation deposit).
Next step will be the signing of the title deeds on completion before a public notary. At that stage, the balance of the selling price is received, and possession of the house is given to the buyer.
In the event the vendor is non-resident in Spain, the buyer will withhold the 3% of the selling price and will pay this to the Inland Revenue within 1 month after completion. This 3% retention works as a provision to cover the payment of the capital gain tax of the non-resident vendor (currently, the capital gain tax amounts to the 19% of the net profit obtained by the vendor with the sale).
In case there is not any profit obtained with the sale, or the 3% retained is more than the capital gain tax due, then the vendor is entitled to claim the refund of this 3% (or the remaining surplus) from the tax office after completion.
On completion, the property must be up to date in all payments (i.e. community of owners’ fee, Council tax, etc) and the appropriate certificates showing this must be provided to the buyer. We will ensure these certificates are obtained in due course.
Also, in the event there is any mortgage on the house, it must be cancelled simultaneously at the signing of the title deeds. We will ensure the bank’s representative attends completion to this end, and the buyer prepares a separate check to pay off the mortgage loan, so everything is arranged properly.
In case you are assisted in the sale by a real estate agency, we will also ensure the buyer prepares a separate check for the payment of their commission on completion, and the appropriate invoice is provided by the agency.
After completion, it will be necessary to do the following work:
- To Pay the Plusvalía tax
To submit the form 210 (“Modelo 210”) for the payment of the capital gain tax, or for claiming the refund of the 3% retained: in the event of claiming the refund of the 3% retention, it will be required to provide a bank certificate confirming the bank account details where the funds should be refunded. The Inland Revenue is taking from 9 to 18 months approximately in refunding the funds.
Please note that in order to get these funds refunded by the Inland Revenue, it is absolutely necessary to be up to date with the payment of the annual Non-Residents Income tax (please see information about ANNUAL EXPENSES in our BUYERS GUIDE in this respect).
- To inform the administrator of the Community of Owners about the sale of the property and the new owner details.
- To inform the Town Hall about the sale.
- To ensure the utilities contracts have been duly transferred to the buyer’s name, or to cancel those contracts in case this has not been arranged by the buyer in a reasonable period of time.
As explained above, when selling a property it is necessary to have some documents available for the buyer so that the appropriate legal searches can be done.
MT LEGAL LAWYERS will assist you in obtaining all these documents:
- Copy of your title deeds
- Updated certificate from the land registry (up to 3 months old)
- Last IBI and Rubbish tax invoices
- Last utility bills
- Certificate from the administrator of the community of owners confirming the property is up to date, how much are the community fees, and on which basis are paid.
- Articles of Association of the community of owners
- Certificate of energetic efficiency (EPC)
- Vendor’s NIE number
- In case there is a mortgage, bank certificate confirming the mortgage balance. It is also advisable to have the mortgage conditions available for prospective buyers, in case they are interested in taking the existing mortgage
- Power of attorney: granted to your lawyers, so the necessary arrangements to complete the sale can be done on your behalf
- First Occupation License /Habitation License (“Licencia de Primera Ocupación”)
- For the claim of the 3% refund, bank certificate confirming the vendor bank account details
- In case the property is sold furnished, inventory of the furniture
- In case the vendor is tax resident in Spain but not Spanish, it is also necessary to obtain a tax certificate from the Inland Revenue confirming the vendor is tax resident in Spain, so that the 3% retention can be avoided
Additional documents may be required in some cases (i.e., when the vendor is a company, it is required the “Acta de Titularidad Real”, etc). MT LEGAL LAWYERS will provide the appropriate advice and assistance in this respect in due course.
When selling a house, the vendor must bear in mind the following expenses:
PLUSVALIA TAX: this is a local tax which is due to the Town Hall. The amount due varies depending on the cadastral value of the property, the number of years the property has been owned by the vendor, and the Town where the property is based. The amount due for this tax is normally in the region of 600 to 3.000 Euros approximately, although in some cases the amount due can be higher for properties of high value which have been owned for a long period of time.
MT LEGAL LAWYERS will make an initial estimation of the Plusvalia tax on instruction to avoid any last minute surprise, and will ensure is properly paid after completion.
- CAPITAL GAIN TAX: as explained above, this is the 19% of the net profit, and when the vendor is non-resident, the buyer withholds the 3% of the selling price paying this to the Inland Revenue as a provision of funds. In case of no profit, the vendor will be entitled to claim the 3%, providing the annual Non-Resident income tax is up to date. We will take care of this after completion
- REAL ESTATE AGENCY’S COMMISSION: this cost is in the region of 4 to 7,5% of the selling price, plus VAT (at 21%), depending on the services provided by the real estate agency. This amount is due on completion.
- MORTGAGE CANCELLATION COSTS: apart from the outstanding mortgage and the bank mortgage cancellation commission, in order to cancel the mortgage at the land registry, it is necessary that the bank representative signs the mortgage cancellation deeds at the notary, and also this mortgage cancellation deeds must be registered at the land registry, so that the property is sold free of charges to the buyer. The notary and land registry fee for this arrangements are in the region of 400-600 Euros approximately. MT LEGAL LAWYERS will ensure this is duly paid after completion.
- CERTIFICATE OF ENERGETIC EFFICIENCY (EPC) fee: this document shows how efficient the house is from the electricity consume perspective. The cost of this document is in the region of 80-200 Euros approximately. We will assist you in obtaining this document in due course.
- BANKING COSTS: in the region of 300-600 Euros, approximately.
- POWER OF ATTORNEY NOTARY FEES: in the region of 60-250 Euros (it is normally cheaper to grant the POA in Spain).
- MISCELLANEOUS: you also have to bear in mind a provision of 150 Euros to cover minor and unforeseen expenses (i.e. community of owners certificate fees, land registry certificates fees, etc.)
LEGAL FEES: Our fees are the 1% of the selling price, plus VAT (at 21%), with a minimum of 1.400 Euros plus VAT. This will cover all the necessary legal work from A to Z, without any time limitation. Fifty per cent of our fees should be paid on instruction, and the balance on completion.
On instruction, we will also require the necessary funds to cover the miscellaneous provision and the EPC cost.
Again, as the property must be sold free of charges and up to date in all payments, in case there is any outstanding debt pending to be paid, the vendor will also have to bear in mind the necessary funds to cover the payment of those eventual debts.