Law in Spain
Purchase procedure
Contratto
Spanish law does not require the stipulation of a pre-contract for the purchase of real estate. The parties can directly sign a sales contract, generally of the public type.
Registry de la Propiedad
The purchase of a property in Spain must be formalized by means of a public deed of sale drawn up before a Spanish notary and subsequently registered in the Registro de la Propiedad. Furthermore, the publication of the deed is equivalent to the delivery of the property for the purposes of the transfer of ownership (Spanish civil legislation requires, in addition to the corresponding document, the material and effective delivery of the object of the sale).
Deposit
In certain cases, to protect the interests and rights of the parties, it may be advisable to sign a preparatory document in advance, based on verbal agreements reached between the parties. The effects will depend on the form, usually chosen by the seller. The most common are the following.
Deposit: delivery of an amount, which does not correspond to the total purchase price, as a deposit to reserve the property. The delivery is translated into a document that explains the essential terms and conditions of the sale.
Sale compromise / purchase option
Unilateral or bilateral agreements, one party grants the other the exclusive right to opt or not to execute the sale contract. The option must be exercised within a specific time frame and in compliance with defined conditions.
The most common form is the purchase option, which grants a pre-emption right to a party upon payment of a sum, which will be considered an advance if the sale is completed and which will remain with the seller if not. The party granting the pre-emption right is required to:
maintain the offer for the entire agreed period
not sell the property on which the pre-emption right has been granted to third parties
in the event of exercising the pre-emption right, transfer the property under the agreed conditions.
This document, even if it is a sales contract, is not a transfer of ownership and cannot be enforced against third parties.
Before formalizing the contract
The buyer must be informed about :
· Property Register of the area in which the property is located ;
· verify the seller’s ownership of the property;
· verify the Cédula de habitabilidad or Licencia de Primera Ocupación or an equivalent document
· request for a declaration from the municipal authority on the condition of the property and compliance with urban planning regulations;
· obtain a receipt for payment of the property tax (Impuesto sobre Bienes Inmuebles);
· delivery of the certificate of payment of fees to the Comunidad de vecinos.
Forms of ownership
Condominium o copropiedad
The main characteristics are those listed below. It has no legal personality. Each of the owners is the undivided owner of the common object and can use the property within the limits of a use that does not prevent the other owners from exercising their rights. The participation of the owners in the benefits and obligations is proportional to their respective shares. Decisions are made on the basis of the agreement of the majority of the owners. Each of the owners can request at any time the division of the common object or the sale by dividing the price if the property is effectively indivisible.
Corporate form
In Spain, real estate ownership can be exercised through a corporate form; the most common forms are the Sociedad Anónima (SA) and the Sociedad de Responsabilidad Limitada SL).
Propiedad Horizontal
Special regime applicable to floors, apartments, houses or parts of houses that can be used independently, or to urban or real estate complexes consisting of two or more independent lands or buildings, the owners of which participate indivisibly in the ownership of common elements, systems or services.
Characteristics of Propiedad horizontal
Each co-owner is the owner of his or her own house or apartment in full. The parts in co-ownership cannot be divided and are inseparable from the private parts. The share of participation in the common elements is defined by the Comunidad, and the statutes define the rules to be respected.
The decision-making bodies of the Community are the General Meeting of Co-owners , the President, the Secretary and the Administrator.
The assembly meets at least once a year. Owners are required to maintain the property and its facilities, both private and communal, in good condition, carrying out any necessary repairs. Owners must also indicate a domicile in Spain for notification purposes. If an owner does not indicate an address, all notifications will be directed to the Comunidad ‘s address and the owner will be considered to have been informed for all purposes.
Purchase costs
Fees
Notary and registration fees arising from the stipulation of the purchase, which vary according to the value of the property being purchased. They range between 1% and 2% of this value.
Professional services fees
Professional service fees (real estate agent, legal, tax or other advice, real estate consultancy, etc.). Specifically, the fees for real estate agents and consultancy vary depending on the location of the property; in the case of purchasing residential properties, they range between 3% and 5% and can reach 10% of the total price in areas with greater tourist incidence (basically, coastal areas). These fees are paid by the seller.
Bank charges
In the case of credit or mortgage agreements (opening and analysis fees, etc.).
After purchase
Once the purchase has been completed, the most common expenses are those normally due to the Comunidades de propietarios (relating to common areas, water, electricity, heating, etc.).
Taxes
Tax expenses associated with the purchase and ownership of real estate, described in the corresponding paragraph.
Public registers
The purchase of a property in Spain requires the consultation of the public registers (Registro de la Propiedad, Departamento correspondiente de Urbanismo, Oficina del Catastro, etc.) and the corresponding documentation of the Comunidad de propietarios, in order to avoid any legal impediments, due to registrations or otherwise, relating to the completion of the transfer of ownership by the seller.
Notary
The notary before whom the transfer of ownership is formalized must obtain a deed from the registry relating to the real estate property which is the object of the sale, in order to verify that there are no legal or registration-related restrictions and/or impediments in the transfer of ownership.
Registry de la Propriedad
The notary who will formalize the transfer of ownership must forward the corresponding public deed to the Registro de la Propiedad, on the date of such deed: with this procedure the rights of the buyer are protected during the period between the date of purchase and the registration of the new title of ownership.
Marital status
In cases where the seller is divorced or legally separated, the appointed Notary will verify, before the purchase, that the other spouse is not recognized as the holder of any rights to the property.
Responsibility
The contractor of a building is liable for damages caused by defects in construction for a period of ten years from the completion of the work. This liability extends, during the same period, to the architect who directed the construction work, if the damage or collapse is due to defects in the ground or in the direction of the work. If the collapse or damage is due to the contractor’s failure to fulfill his contractual obligations, the compensation action lasts for fifteen years.
Rental agreement
The purchaser of a rental property is obliged to respect the rental contract for a period of five years from the signing of the contract even if it is not registered in the Property Registry.
Purchase Restrictions
Nationality of the buyer
Spanish law only provides certain limitations regarding the acquisition of real estate by non-EU citizens in areas of national defense interest.
To purchase property in these areas, you must obtain a military permit. Generally, this permit is not required for the purchase of property in towns or cities, although it is advisable to request information on this matter from the relevant local governments (Ayuntamientos) and the Registros de la Propiedad.
Purchaser's residence
In accordance with the provisions of Royal Decree 664/1999, of 23 April on foreign investment, the purchase of real estate in Spain by foreigners is considered a foreign investment if the amount of the purchase exceeds
EUR 3,005,060.52, or, regardless of the amount, the investment is made by a resident of a country classified as a tax haven by the Spanish authorities.
As a general rule, foreign investments in Spain are free and not subject to authorization. However, once the investment has been made, it must be declared by submitting an MC-6 form to the Dirección General de Transacciones Extranjeras (DGTE). If the buyer resides in a tax haven, the submission of the MC-6 form is required before purchasing the property.
Pre-emption rights of tenants, neighbors or family members
They can be of a legal or contractual nature.
Contractual rights not registered in the Property Registry cannot be exercised against third-party buyers in good faith.
Legal restrictions: the tenant of urban real estate has a right of pre-emption on the purchase of the rented property, if it is his habitual domicile, and in any case if there is no agreement excluding this pre-emption, regardless of the registration of the rental contract in the Property Registry. The owner must communicate to the tenant his intention to sell the property, its price and the conditions of sale, so as to allow the tenant to exercise his right within 30 days. In the event of the sale of the property without complying with this requirement, the tenant may exercise his right and cancel the sales contract within 30 days of becoming aware of the sale.
Co-owners have a right of pre-emption in the event that one or more other co-owners wish to sell all or part of their share to a third party. Owners of properties bordering a property for sale have the right of pre-emption on the same if it concerns rural land with a surface area of up to 10,000 m2, not separated by watercourses, passages or slopes.