FIVE important Steps to take BEFORE you buy property in Spain.
By Claudia Font. Partner, Solicitor & Spanish Lawyer.
You might be quite certain on what kind of property you want to buy, whether it is a seaside place in one of the Spanish islands, or a cottage in the Pyrenees. You will also have a clear idea on how much you would like to spend on it.
But it is likely that you are not very familiar on how the conveyancing will work in Spain, and guided on how you think it would, or assuming that it will work similarly than it would in the UK, things can end up getting more complicated than you had imagined.
Many clients contact us when they have found “the” property in the sun, the one they really want for them or for their family. This might seem a sensible way to proceed, but we will explain here why it is more than advisable engaging a Spanish Lawyer at an earlier stage.
So, when is the right time to start talking to a Spanish Lawyer?
The answer is, AFTER you have made the decision to buy property in Spain, but BEFORE you have found “the” place you want to buy. In other words, as soon as you contact an estate agent with your wish-list, you should contact your Spanish Lawyer too.
Because this will help you being able to move things forward much quicker when you find the property you love, without risking losing it because you do not have the necessary documents in place.
Some clients contact us even after having signed a reservation agreement, thinking that this way they have secured a property. But quite the opposite, this might increase the risk of losing it.
In many cases, even if a reservation fee is paid and a reservation document is signed with an estate agent, the property might not be taken off the market until a private contract is signed, and it is quite common that the reserve will be for a few days only, thus buyers may end up rushing themselves to sign a private contract without obtaining a proper property due diligence and more importantly, committing themselves to deadlines for completion that might not be feasible because they do not have some necessary paperwork in place. The risk of breaching the contract and losing the deposit i.e. 10% of the price, increases.
Whereas if you look at certain steps BEFORE you find the property, you will certainly be in a better position to make an offer knowing that you are ready to move things forward.
What should be done beforehand?
1. Choose the right Solicitor
Decide whether you want to engage a local Spanish lawyer, or a dual-qualified lawyer, registered in the UK. Both options are perfectly possible but make sure they are independent. Many estate agents will offer you to engage their in-house advisors or will recommend you some lawyers they normally work with. We would recommend engaging someone independent, free to tell you if the property want to buy has any defects or problems you should be aware of.
The admin process of engaging a Solicitor can take a couple or three days. Should you contact the Solicitor once you have signed a reservation agreement that gives you e.g. one week to exchange contracts, by the time a file is opened in your name and you have put them in funds to allow the firm to start carrying out the necessary searches, the reservation might be close to expire.
Therefore, when you have found the lawyer, ask them to have a file opened and ready to start as soon as you give them the green light.
2. Be informed about taxes and costs involved
You will most certainly have a budget in mind for your investment in Spain. But on the top of the price, you will have to pay Taxes, Notary fees, Land Registry fees and legal fees. You will probably agree that having a clear breakdown on how much you should add on the top of the price BEFORE making an offer is a sensible thing to do.
3. Obtain a NIE number
In order to buy property in Spain, you will need to have a NIE (Spanish Tax number). Without it you will not be able to complete nor pay taxes, and therefore, you will not be able to register the property in your name until you have a NIE.
Obtaining a NIE can take between two to six weeks. Therefore, committing yourself to deadlines for purchasing a property before having a NIE in place is quite risky.
NIEs for British citizens can be obtained both in the UK and in Spain. Your legal advisor will be able to tell you what is better, and more importantly, what is quicker in each case.
4. Open a bank account in Spain
As soon as you find the property you like and the due diligence over it is positive, you will certainly like to secure it by paying a 10% deposit (what in Spanish is called “arras”). You can transfer the deposit from your UK bank account but at the time of completion, unless the seller is also a UK citizen and is happy to accept the price in Sterling, you will need a bank account in Spain with the money ready for completion.
Should you need a mortgage, you will also need a Spanish bank account. Some Spanish banks accept opening bank accounts for non-residents in Spain from abroad, but some others require to sign the opening of the account in Spain, personally or through an attorney, and again, this can take some time.
5. Sign a Power of Attorney
It is advisable that you sign a POA appointing your Solicitor and their team in Spain to be able to act on your behalf to complete the transaction whenever necessary. The date for completion might not be convenient for you and you might not want to travel to Spain for the bureaucracy and would rather ask your legal representatives to sign on your behalf in Spain. Furthermore, the POA will allow them to obtain your NIE and to open a bank account for you.
Ready, Steady, Go!
You are now in a good position to make an offer and to take the transaction forward with much more chances to succeed in front of other potential buyers.
Spanish lawyer & English Solicitor
Claudia.font@gunnercooke / firstname.lastname@example.org
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