Buying and selling property in Spain – conveyancing procedure – why you should use a property lawyer?
There is a noticeable growth of number of people who are interested in purchasing a property in Spain. If you are one of them, your decision leads to an important question – whether it is inevitable to hire a lawyer – or if you can just contact a notary. It is a fact you need both of them to ensure that the transfer of your property is rightfully processed, you meet all the legal obligations and your rights are protected throughout the duration of the process. It is important to acknowledge that the notary is impartial and does not provide any individual advice – his presence is required to complete the purchase process. The lawyer acts on your behalf and ensures that your interest is well-represented.
DUE DILIGENCE CHECKS
You should never make any payments or sign a contract before a qualified and independent lawyer runs the legal checks. Majority of serious problems connected to the purchase are caused by buyer’s lack of knowledge, experience and failure to run due diligence checks properly. The purposes of due diligence checks are to identify the risks of the transaction and to give the seller security in the investment. All of those checks are necessary to be proceeded to ensure that the costs of the property are adequate to its value and the process of sale is lawful and legitimate. Professional help is the best solution in order to avoid such complications in the future.
Check the vendor’s title and property registration
Your lawyer will help you to determine whether the vendor has a legal title to the property which you intend to purchase and if it is legal to sell it. The lawyer will obtain a copy of a Spanish Land Registry Certificate (Nota Simple) from the Land Registry of Spain – (Registro de la Propiedad) a report which includes a collection of factual knowledge pertaining to the legal status of the property. Your lawyer will also confirm that there is no will or other people who might challenge the right to sell the property. The Nota Simple also includes an information whether the property is registered, what will confirm legality of the property.
Check the cadastral record
Your lawyer will check the boundary of the property and determine whether the cadastral record of your property is accurate and reflects the Nota Simple. It is common that mistakes appear due to the incorrect measurement of the property. The current owner is responsible for changes in cadastral record and your lawyer will ensure that changes are legally proceeded. It will have a significant impact on the cost of your property and for this reason it is important to hand it over to an experienced person.
Check the lack of charges, debts and easements
In Spain, unpaid taxes, mortgages or other debts are held against the property rather than an individual owner. It means that encumbrances against the property become a responsibility of the new owner. Despite the fact that the contract should state that property is free from debts, it is recommended to verify it. Here, the help of the lawyer is irreplaceable – he will confirm this status in order to prevent an investment error. It is also recommendable to check whether there are any easements that exists and might affect you, as they do not change when the property changes hand. In the Town Hall – Ayuntamiento – your lawyer will find out if there are any limits regarding the building permit. It is most important whether the house is located outside of the city centre and if there is a space for a swimming pool or garage. Your lawyer knows where to look for all the crucial information and it will save your valuable time.
Check the payment of local taxes
Your lawyer will check the latest receipts of payments of the property tax (Impuesto sobre Bienes Inmuebles) and tax on increase in urban land value called el Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana. Both of them depends on the value of the property. Unpaid amount of money becomes the liability of the new owner and for this reason it is important to hire a trustworthy lawyer who will protect your interest.
Check the community of owners and plans to upgrade the communal areas
If your future property is a part of comunidad de proprietarios – community of owners – the lawyer will help you to determine whether or not the vendor is up to date with the fees and check the plans to upgrade the shared areas. Communal areas relate to the swimming pool, garden, car park, lifts and other places which intend to be used by the community as a whole. It is community members’ obligation to maintain them as well as pay the share of service charge. It is also important to refer to the community rules which determine issues such as the cleaning schedule, whether you are allowed to keep animals or run a business. With the help of your lawyer you will not miss any inconvenient policies which can influence your decision to buy the property.
Check the utility providers
Your lawyer will contact the utility providers to obtain the receipts from the seller. In the case of debts – which have to be covered by the new buyer – your lawyer may negotiate lower purchase price. He or she will also negotiate the best deal for you and advice whether to sustain the current conditions with utility providers or contract the new ones.
CALCULATING COSTS: FEES, TAXES AND OTHER EXPENSES
In order to check whether the property fits within your budget, it is recommendable to contact a professional. The lawyer will provide an estimate of all the costs involved in buying your Spanish property. Apart from the purchase price, there are associated acquisition costs including notary and registry fees, stamp duty, legal and administration expenses, bank fees and taxes. If you need a mortgage to finance your property, the lawyer will also help you to acquire it. Due to the fact that debts are attached to the property rather than the owner, the property may have a mortgage already and will take over the responsibility to pay it off. Your lawyer can also obtain information about the current utility bills amount to calculate an approximate amount of money you will need to pay for using the property. Once you own the property, you will need to furnish it – costs of furniture as well as repairs and building maintenance should also be taken into account.
NEGOTIATING THE PURCHASE PRICE AND CONDITIONS
Agreeing on a purchase price is one of the most complicated parts of buying your property. Especially, when the property is located in a different country where another language is spoken. The best solution to negotiate the best price is to allow the lawyer to take care of communication. Established budget, your urgency and seller’s willingness to sell are the most important factors which will be taken into account. Due diligence performed by the lawyer may bring to light issues affecting the property and it may influence the final price. Negotiations do not include only the purchase price but also the method of payments, furniture, discussion who will pay the taxes, completion day. The lawyer will help you to negotiate the best conditions which will be favourable for you and your budget.
RESERVATION CONTRACT AND DEPOSIT
Once the agreement with the vendor is reached and the terms and conditions are discussed, the further step is to convert it into the contracto the reserva – the Reservation Contract. Such contract is rather customary than mandatory and ensures that your future property is not marketed for agreed period and that the purchase price remains as agreed. The Reservation Deposit has to be paid subsequently to proof the intention to purchase. It is non-refundable if you decide not to carry out the purchase. It is not recommendable to sign any documents and make the payments without the presence of an independent lawyer who will confirm correctness of the conditions and help you to choose the best method of payment.
PRIVATE PURCHASE CONTRACT
The private purchase contract is a binding contract which includes agreements and conditions of the sale. At this stage you usually need to pay the percentage of the agreed price. It is crucial to confirm the correctness of the document with your lawyer because, once the contract is signed, there is no option to withdraw from its clauses. Decision to carry out the process by yourselfis risky and may lead to financial issues.
The final step to become the new owner of the property of your dreams is to sign escritura de compraventa – the Sales Contract. It is certified by a notary who confirms that the legal requirements throughout the transaction are met. The outstanding sum of money has to be paid and it will lead to handing over the property. You should be accompanied by your lawyer who will act for you as an interpreter and will check the documentation to ensure that all agreed conditions are mentioned. If you cannot attend the final point of the transaction, the lawyer may act on your behalf. Upon the signing of this deed, the seller is entitled to receive the outstanding sum of money. This is the moment when you finally become the new owner of the property of your dreams. After all, you should make sure that your title deeds are registered and arrange payment of the compulsory taxes. It is presenting a few difficulties, but do not worry – there is the lawyer willing to help you.
Buying a house may be the most significant purchase which you will make in your life. In order to avoid complications while buying your Spanish property, it is strongly advised to appoint a local lawyer who will assist you with the legalities and ensure that your budget and rights are safe. The lawyer has knowledge, contacts, experience and the tools which are crucial in this process. Independence is a key factor which you should take into the consideration while choosing a lawyer – it ensures that your interest is prioritized and that unpleasant surprises throughout the process are avoided.
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