Real Estate Law in Spain

You will need to secure the services of a decent lawyer (Abogado), who will check the property for any debts or other encumbrances, or anything else you should take notice of.

He or she should inform you of their fees before undertaking the work. 1% of the purchase price of the property is usual.

When you have found the property you want, a contract will be drawn up by your agent and usually, you are then required to pay a holding deposit. The contract then needs to be signed by both parties. There should be an agreed completion date on this contract and also when the final payment will be made. This should happen in front of a Spanish Notary. Note that failure to complete on the property in the agreed period of time could see you losing your deposit. Try to make sure that your mortgage is approved and in place before signing any agreements to purchase.

When the property is yours the title deed (Escritura Publica) needs to be registered in the Land Registry Office.

The cost of purchasing a property in Spain

You should allow approx. 10% which should be divided between the property buyer and seller as follows:

Property Buyer Pays:

Transfer Tax or IVA (VAT) of 7%
Registration fees to change the deed to your name €120 to €300
Notary charges for the first and any further copies of the title deed, which is on a sliding scale. The average on a property of €360.000 is €360
If there is a mortgage on the property, you will need an extra deed and this will incur an extra charge.

Property Seller Pays:

Plus Valia Tax – A municipal tax based on the official increase in the value of the property since the last transfer. The town hall will assess the value

Agent Fees
Annual Costs – Make sure you receive copies of all the bills, as they should have been paid up to date
The Real estate tax or IBI (Impuesto Sobre Bienes Inmuebles)
Rubbish Collection (Basura)
Community charges, etc should be checked by your lawyer, as any debts are attached to the property rather than the person.
As a non-resident, you are liable for 2 annual property taxes, but this is a very complex issue and therefore we recommend you use a fiscal adviser

Community regulations

When you have purchased a property, you will become a voting member of a community of co-owners (communidad de propietarios), unless it is a freestanding villa on its own grounds and it is not part of a community.

Just by signing the purchase contract you become a member of this community, even if it has not been mentioned by the vendor. The Spanish Law of Horizontal Properties (Ley de Propiedad Horizontal), states that any cluster of attached houses or building of apartments must have such a legal body to control its management.

Many urbanizations of detached villas have also used these facilities to control the upkeep of their properties, and the payments of the taxes. These bodies have the right to put a lien (charge) on your property if you do not keep up your payments to the community. In extreme cases, this can lead to the repossession of your property and if necessary a forced sale to recover the debt.

The statutes will state exactly what your percentage of the community is depending on the size of your house or flat (cuota de participacion). If, like many owners of holiday properties in Spain, you are not in Spain when there is an annual meeting held you can appoint a proxy to vote for you. This is known as ‘poder’, which is the same as power of attorney.

Renting a property in Spain

There’s no shortage of apartments and villas to rent in Spain.

There are long-term (vivienda) and short-term rental contracts (temporada). The short term contract should state the duration of the contract, specify the amount to be paid, the manner of payment and the amount of the deposit, if any. The long-term contract often contains provisions for the tenant to pay community charges, real estate tax (IBI) and even rubbish charges.

Be careful with these charges as they soon add up. Strictly legal you will find that these charges are the responsibility of the owner of the property and even after signing the contract you can contest it.

With long-term contracts, you will find that the rental contracts tend to be for periods of time no greater than 11 months. If tenants stay longer than this period of time they are automatically granted legal rights to stay in the property for pretty much as long as they want.
Rental Agents – Double Dipping

This is something that is currently happening in Spain (especially the Costa del Sol) and something you should definitely watch out for should you decide to rent out the property that you own in Spain.

It has been reported in the news recently that certain unscrupulous agents have agreed and signed rental contracts with property owners for an agreed amount of rental income for a minimum period of time, and then rented the properties on to tenants with a big rent increase. They will then pocket the difference themselves. This has become known as ‘double dipping’.

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