Buy a Property in Spain
Step by step guide
Once you find your ideal property and decide that you wish to move forward with the purchase, the next step is to draw up a “Reservation Contract”.
A reservation contract is used in Spain as a standard procedure to reserve a property for a specified period of time, whilst your lawyer conducts a Due diligence process.
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What is a reservation contract?
The reservation contract sets out the basic terms and conditions of the purchase, and must be approved and signed by both the buyer and the seller.
The document must include:
- Full name of buyer and seller
- Price of the property
- Property address
- Date to sign a private purchase contract
- Other special conditions (ex. subject to finance)
- Deposit amount placed to reserve the property
A 3,000 Euro deposit serves to reserve the property whilst your chosen lawyer conducts a due diligence process. This deposit can be paid by credit card, bank transfer or in cash. It can be held in our company client account or with your lawyer of choice.
If your lawyer discovers any legal impediments pertaining to said property the reservation deposit will be fully refunded. Furthermore, should you at the completion of the due diligence process wish to continue with the purchase the 3,000 Euros will be used as part payment towards the purchase price.
What happens next?
Once your lawyer has conducted a full and thorough Due diligence, he/she will inform you of their findings and if satisfactory discuss, if applicable, the move to a private purchase contract.
What is a private purchase contract?
A private purchase contract is a contract between the buyer and the seller setting out the terms and conditions of the purchase. The contract will be prepared by your lawyer and contain:
- A legal declaration from the seller that he/she is legally positioned to sell the property
- The exact address and dimensions of the property and its features as set out in the “Referencia Catastral” (Government registration of the property).
- The completion date and hand over of keys etc.
- The agreed terms and conditions as agreed by you the buyer and the seller
The buying costs in Spain vary from 10% to 13.5% of the purchase price, broken down as follows:
- 8 to 10% IVA (VAT). 10% on NEW properties and 8% to 10% on re-sale properties depending on price category.
- 1% Notary fee (Notarization of property cost)
- 1% Legal fee (fee charged by your selected lawyer to conduct the Due diligence process)
- 1.5% Stamp Duty Tax (tax charged to make all documents legally effective)
- If you should require a mortgage, you should calculate an average of 1- 1.5% in set-up fee for a mortgage with a local Spanish bank