Lawyers Background

Avance XXI Abogados is a firm of lawyers situated in Marbella and has extensive experience in all legal aspects of foreign real estate investment in the Costa del Sol, providing legal services mainly specializing in property law, company law and fiscal advise for property purchasers and investors.

The firm’s partners are fluent in English and have been practicing law in Marbella and Madrid for the last 15 years. With our international network of associated offices we believe we can offer you one of the most dedicated and focused services available to property purchasers in Spain.

We are proud to provide our clients with the mentioned services and at the same time with the personal attention that we have always maintained in the past, while strengthening customer communications and ensuring dynamic transactions shall remain our main priority.

Following, you will find a brief scheme for the purchase of a property in Spain:

Finding the Property

First of all, you will need to be assisted by a real estate agent with the appropriate knowledge and experience, who can provide you a wide offer of properties in the Costa del Sol. The real estate agent will help you to choose through all the properties available on the market, selecting those that would adapt to your needs and budget

Reservation Agreement

Before you arrive in Spain, you should ensure that you have funds available to cover any reservation sum, which takes the property off the market. The minimum required is usually between € 3,000.00 - € 6,000.00, although it may be higher for more expensive properties. The reservation sum may be paid by banker’s draft, cash or by credit card. If you cannot come up with a reservation sum immediately, you may risk loosing the property to another buyer who can.

Choosing the Lawyer

Before taking the next step, you will need to be assisted by a local Lawyer, who will negotiate the purchase price and terms with the seller on your behalf and ensure that any offer meets the legal criteria required.

Avance XXI Abogados offers its services to the highest professional standards and provides legal guarantees for the purchase of property. We ensure that the Spanish legal requirements are met, that the property is bought free of any charges, encumbrances or debts and that all payments related to the property are up to date. In property transactions with strict completion dates, we realize speed is often of the essence. Processing paperwork quickly and solving potential problems fast ensures a smooth uncomplicated purchase. One of the ways we make sure this happens is by endeavouring to be contactable and available seven days a week.

Private Contract of Purchase and Sale

The next step is to exchange private contracts of purchase and sale or to sign an option to purchase. This will usually take place within one or two weeks after signing of the reservation agreement. Your Lawyer will have conducted during this time, searches and investigations of the property and will have arranged with the seller for any outstanding debts to be cancelled. The private contract of purchase and sale, or option to purchase, will state all the agreed terms of the transactions and will reflect the date for final completion at the notary. At this stage, it is customary to pay between 10% and 30% of the purchase price.

Bank Bonds / Insurance Certificate

It is compulsory by law in Spain that when the property is under construction, the vendor is obliged to give a bank bond or insurance certificate to all the purchasers as guarantee of the sums paid during the construction period. In case that the property is not finalized or something happens during the construction, the bank or insurance company will refund the moneys paid by the purchasers up to date plus 6% interest. By this way the purchasers are absolutely guaranteed by a bank or insurance company. Your Lawyer will also confirm that the developer is giving you these bank bonds or insurance certificates duly formalized in accordance with the Spanish law.

Financing your Purchase/ Mortgage Loan

Whether you are a resident or not in Spain, you can obtain a loan or a mortgage against your property in any currency and from any bank in the world. Spanish banks are willing to lend to non-resident purchasers of real estate.

You will need:

If employed applicants:

A bank reference letter. Last three months bank statements. Latest income tax return. Last three months salary slips.

If self-employed applicants:

A bank reference letter. Last three months bank statements. Latest Annual Accounts (Profit and Loss Report). Certificate issued by your Chartered Accountant confirming your annual incomes

If retired Applicants:

A bank reference letter. Last three months bank statements. Benefit Statement.

However, each particular case, depending of the property and the incomes of the purchaser, should be studied and treated individually.

Final Completion
The purchase of the property is formally completed in Spain when the Title Deed (“Escritura”) is signed by the vendor and purchaser before a Public Notary. The final payment is made at this stage and possession passes to the buyer. If the purchase is financed with a mortgage loan, the Mortgage Loan Deed is also signed by the purchaser and the bank before a Public Notary at the same time as the Title Deed.

The Title Deed to an apartment will transfer not only the freehold of the apartment but also the freehold to a prefixed percentage on the common elements of the complex such as staircase, gardens, swimming-pools, etc., which also governs your duties towards the general maintenance of the property.Your Lawyer is responsible for the preparation of all the deeds to be signed on the completion date and providing all the documentation to the Public Notary required by Spanish law.

Registration
Once the Title Deed is signed, your Lawyer will pay all the relevant transfer taxes and expenses on your behalf and will deal with the formalities of registration of the Title Deed to the property in your favour at the Land Registry. Your Lawyer will also arrange for the payment of accounts with utility services, such as water and electricity, through your local bank account.

Costs Involved
Our priority is to avoid surprises by letting you know clearly all the costs related to the purchase at the beginning of the transaction. We appreciate that the proper budgeting of funds is critical to a happy hassle-free purchase, especially when you are making transfers from abroad.

Should you not require a mortgage loan, the taxes, fees and expenses involved in the purchase of the property are as follows:

Notary fees The scale is fixed by law and may range from € 550.00 for lower-priced properties to € 900.00 for higher-priced properties. Land Registry fees Generally it is 60% of what the notary charges. Lawyer fees 1% of the total purchase price, plus 16% V.A.T., according to the Rules of the Law Society of Málaga. Stamp Duties Transfer tax on residential property is 7% or, when buying a property under construction from a promoter, V.A.T. is 7% plus Stamp Duties at 1%. Plusvalía Municipal Tax Plusvalía is normally payable by the seller but it may be stipulated that the buyer pays it. The negotiations and advice of your Lawyer will determine who pays this. Basically it depends on the property’s tax value and how long the property has been owned by the seller, it usually is between € 300.00 and € 1,800.00.

Will
It is very common practice and most advisable to grant a Will in Spain regarding your assets in this country, thus avoiding any kind of problems arising from the differences between Spanish law and the law of your country in succession matters.

The Spanish law states that your assets in Spain must be left to your children, wife or parents, and that you are only able to leave a diminutive part of your assets to anyone else. However, it is possible and indeed advisable to arrange a Spanish Will, in which you state that the applicable governing law relating to your Will in Spain is that of the country where you are domiciled.

By arranging your Will in this manner means that you avoid the application of Spanish law, which in turn will allow you to leave your Spanish assets to whom you would like, without the restrictions normally applied.

If you die without having a prepared a Spanish Will, your beneficiaries would then need to execute your Will of where you are domiciled and present it to the Courts in Spain. The legal procedure is then carried out through the action of the Spanish Courts, which can take approximately two years to resolve and costs in the region of € 1,500.00.

We therefore strongly recommend to all our clients that they should arrange a Spanish Will, avoiding the need for their beneficiaries to initiate a lengthy and costly legal procedure on their demise. The legal fees and expenses involved in the signing of each Will is € 300.00 approx.

Like the majority of our clients, you will probably be returning to your home country fairly soon following your purchase in Spain. At this point you need to know that your interests are going to be looked after professionally and efficiently, backed up by a personal service with clear communication in your language.

Avance XXI Abogados hopes that this brief information has provided you with a general idea of the legal aspects for purchasing a property in Spain. We are looking forward to being of service to you in the future and remain at your entire disposal for any queries you may have.

For further information, please contact Avance XXI Abogados at avanceaboga2@telefonica.net

The information above has been kindly provided by Avance XXI Abogados who are a completely independent company to Prima Overseas Properties and are solely responsible for any information or advice given.

Company Jurisdiction
Prima Overseas Properties Limited and any contracts or agreements made by this Company is subject to English Law and the Courts of the United Kingdom shall have exclusive jurisdiction. In the event of any disputes or conflict between English and Spanish Law, the English Law shall take precedence.