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Buying Property In Spain
Understanding The Legal Documents For buying new properties in Spain

Many people choose to buy a new property in Spain for many reasons as if they want to choose their own designs or put a deposit down and not have to move into it for 2 years or so, or maybe they just want to have an architect design one to their specification. This starts with the decision to buy property in Spain. We will now follow the standard legal process.

Plan Of The Property


It makes sense to get a copy of the plans for your new build. Not a glossy brochure but a 3d lined drawing from the architects which most developers will have in their possession. This will show all dimensions of the floor and each rooms square metre age. The overall size of the property is important as it determines its market value and the valuation for any mortgage and for the local tax assessment.

Locating The Plot


It also makes sense to get a line drawing of the plots location. This is called a plan parcial this is the Spanish term for a parcel or plot of land, which is registered with the planning department at the local town hall. This ensures the property is registered with the town hall. This also shows if there are any other developments going to invade you plot or as on occasions new major road plans. While the line drawing, supplied by the agent or builder, will be suffice on most occasions, the plan parcial, from the Urbanismo department at the Ayuntamiento (town hall) is the approved source.

Registro del La Propiedad


When buying property in the Costa del Sol or any other region of Spain, this is the last piece of paper in the buying cycle. Strangely enough, it's not the escritruas last step. The escritoire de complacent has to be registered with the Spanish Property Registry making it an escritrua publica and being stamped Registro de la propiedad. This is a one page document simply closes the loop to the nota simple which was considered at the commencement of the buying cycle. What does this mean?
  1. details of the property in a public place
  2. who has the title
  3. which notary was responsible for the escritoire
  4. details of the mortgage

Small Building Alterations


Although a property has been built to a correct specification, let us assume there to construct a small modification such as a dividing wall between adjacent properties perhaps a shed to hold some tools etc.

Do you need permissions to do this? The answer is yes. In fact, permission is usually straightforward. A visit to the town hall, the completion of paper entitled solicitud de licencia de obras, clearly marked minor, and the payment of a small fee, will result in the necessary approval. That is of course provided the modification fits in with the overall urbanisation design, style and specification.

Unfortunately, few people do apply. Should a neighbour object, or should the alteration infringe community rules, there is a risk of being fined or having to knock the structure down.

Reservation Contract


This document represents the first step in the process when buying property in Spain. It is an outline agreement to reserve the property. It should contain as a minimum the following.
  1. Name, address, telephone number and passport number of the purchaser
  2. Name, address, telephone number and the business or personal identification of the agent
  3. House type, plot number and the address of the property
  4. The price in Euros. This should state clearly if IVA (Value Added Tax) is included
  5. The reservation, deposit and payment formula. Initially this normally involves a non-returnable deposit.
  6. Sign and dated by both parties.

The Nota Simple


This document, which translated means a simple note, is issued by the Land Registry Office and is a copy of the Property Registration details. For a property yet to be constructed, it will show proof that the person selling the property is the registered owner of the land and property. It will also show any debts on the property. It should be noted that a similar methodology for existing properties is also followed, showing details of the present owner, if the property has an outstanding mortgage or loan or any debts registered against it.

The significance of the document is clear. It establishes that the person building or selling the property or land is the said person.

Obtaining a copy of the nota simple is straight forward. Firstly, locate the Local Registry Office with jurisdiction over the property or land. This is not always in the nearest town or village. Then all you have to do is fill in a request from asking for the details of the property or land, this will cost a small fee. Then normally within 2 weeks, you can go and collect the note simple.

The All Important Contract


While conveyance procedures end with the notary, if there is anything commercially wrong, it is too late for alteration. For this reason, the purchase contract is the most important document in the process when buying property in Spain. The signing of the contract signifies the

  1. The plan of the house and the location of the plot are satisfactory.
  2. The nota simple has been checked and is in order
  3. The contract has been read and understood
  4. Signing the contract triggers the release of a normally non-returnable cash deposit
  5. The purchaser has the necessary monies, or mortgage, available to complete the transaction

It is well written and comprehensive. It is normally set out paragraph be paragraph in Spanish and then in the tongue of the purchaser, thus ensuring no ambiguity. The key points are highlighted below.

  1. It reconfirms all previous details, namely the parties to the agreement, the ownership of the land, its registration and freedom of debts, details of the plot, the size and description of the property
  2. It sets out in detail the payment method, time, currency and amount, financial penalties for failing to complete, emphasises the sale includes the services of water and electricity and usage of the community facilities
  3. Confirms that the purchaser respects the obligations of the law surrounding the community of owners
  4. This particular contract was drawn up by a builder. It is ambiguous on a firm date for completion and weak penalties for failure to complete on time

Community Charges - A Share Of The Costs


Buying a Spanish property on an urbanisation invariably means becoming a member of a community of property owners. The payment of an annual community charge will have to be paid for usage of communal facilities i.e. communal pool street lighting etc. You will also able to join the community for your community, which have general meetings from time to time to discuss community matters.

With a new property on a new urbanisation, the organisation of the community, the drafting of its rules, electing a president, appointing an administrator and the fixing of fees, all need to be settled.

It is advice able to at least understand the approximate community costs involved prior to signing contract, but in most situations, this would not materialistically effect the buying decision. Indeed, with a very new urbanisation an overall budget will not have been determined.

The allocation of costs will vary. On an urbanisation of 1000 homes of equal size, each will carry a charge of 0.1 per cent of the total expenditure. If however, the urbanisation had 500 larger and 500 smaller homes the allocation could be 0.125 and 0.075 per cent respectively. This allocation of costs called the quota and expressed, as a percentage of the total costs, is determined at a very early stage in any development. The information should be available upon signing the contract.

An agenda, minutes of meetings, a list of owners names with their allocated quotas and updated payments or debts are published for every meeting. The meetings are formal. The purchase contract, the law surrounding communities and the local urbanisation rules, bind the purchaser to speci9fic regulations. Appendix 2 is a good detailed example of the rules.

The Certificado Final de La Direccion de Obra


Translated this simply means Certificate of the Termination of the Building. It is a document produced by the architect when the house is completed. It enables a declaration for a new build to be made at the notary. It is used to obtain the licencia de primera ocupacion detailed below.

The Licencia de Primera Ocupacion


The license of First Occupation is obtained from the town hall on production of the Certificado Final de la Direction de la Obra. It is a license to inhabit the property, registers it for the purpose of local taxes and the connection of services.

On new urbanizations, the initial supply of water from external pipes and electricity without metres is obtained from the builders supply point. The reason for this is simple. The completion and occupation of the property is faster than the ability of utility companies to connect their supply.

A word of warning to all. The electrical supply company will not connect to an unregistered property.

Insurances


The builder will probably insure the property during construction and at a low nominal value for twelve months from the date of occupation. A copy of this policy will be available which will state the insured value. When the house is occupied, a top up building policy is all that is required by the new owner. The premium is based on the square meter age of the build.

Any additional policy for contents insurance should be dealt with in the normal way.

There is nothing unusual about insurance polices in Spain. While the market leader may be a Spanish company, many British companies now operate in this international market place. The mortgage will be insured by the lender.

The Escritura


The escritura is the deeds to the property. It is a record of the property at this point in time.

Copia simple (this is not to be confused with the nota simple) is a simple of the of the escritura, less the signatures which is sufficient to prove ownership. It is available on the day of signing at the notary and recognized as suitable for most legal purposes. It is normal for purchaser to hold a copy of this document.

Escritura de compraventa is the document signed in the notarys office. Escritura publica is the escritura de compraventa, complete with many official stamps from the property register, converting it into a public document.

The abogado, or the properties owner, or in the case of a mortgage the bank manager will hold the escritura, but irrespective of who holds it someone has to collect the finished documents from the notary. Thousands of escrituras lie gathering dust in the notaries uncollected or unregistered because of some minor technicality. In the latter case the property will remain, un registered until the problem has been rectified.

The document it self is written in Spanish legalese, making literal translation almost impossible. The owner never holds the original deed, but the first authorized copy. The original is always held at the notarys office. A second authorized copy can be requested if the first one has been misplaced or lost.

No one can doubt the necessity of having a comprehensive document, particularly one that states debts or mortgages, or indeed the transparency of having this document made public. However, there is considerable ceremony associated with its preparations and signing which people believe to be unnecessary.