Asor-Estate légal information
When purchasing property in Spain certain steps are required by law. There are also steps you can take which are legally recognised and binding, but are not mandatory. The following list explains some of the usual steps that are followed.
Private Sales Contract or Contrato Privado de Compraventa
A contract that specifies, in as much detail as possible (price, dates, contents, etc.), the terms under which the transaction will take place. Several scenarios can be foreseen in private sale contracts. For instance the payment of an initial deposit of 10% of the price at the moment of signing of the private sale contract, and payment of the remainder at the moment of signing the public deed of sale. In this scenario the parties may agree that the deposit of 10% is lost if the buyer fails to grant the public deed.
This contract should specify when the public granting of deeds – known as Escritura – will take place.
Public Deed of Sale or Escritura Publica de Compraventa
The Escritura de Compraventa is a mandatory contract if the sale is to be registered publicly in the land registry. By law this document must be authorised by a Spanish Notary (Notario) and must also be signed by the buyer and seller (or their representatives with power of attorney) in front of the Notary. The Notary guarantees, by virtue of his public office, the legality of the transaction, and explains to both parties the terms of the transaction. At this moment the full price, or any remaining payments (should any exist) on the purchase price are made. Effectively this is the moment when the new owner takes possession of the property. This act, know in Spanish as the Escritura Publica results in the Escritura Publica de Compraventa, or title deeds, which state who the new owners of the property are. It is impossible to inscribe property in the land registry without the Escritura Publica de Compraventa, and inscription with the land registry is the most secure form of ownership. Certain documents should be provided by the seller, at the very latest, at the time of the Escritura. The precise documents required vary case by case, and you lawyer will be able to advise you on the documents required in your case. However documents could include, amongst others: - Original title deeds - Proof of payment of the most recent local property tax (IBI) - Proof of up to date payment of utilities - Certificate from the administrator of the community of owners showing that payments are up to date The title deeds will be in Spanish. Always have a legal representative with you to confirm that the final deeds you sign are what you are expecting to sign, and be sure to check the details of the property and the names of the parties just before you sign. Your lawyer will need to be there with you to confirm, in your own language, what you are signing. After signing the Notary will give the buyer both original title deeds and simple copies of the deeds. These documents are required to pay the appropriate taxes and for inscription in the land registry. Your lawyer should help you carry out these formalities.
Registering the property
Your lawyer should help you to register your new property with the land registry IMMEDIATELY after the Escritura. Once you have submitted the Escritura for registration, it may take 1 – 2 months for the process to be completed. Your lawyer should also register you as new owner of property with the Catastro which is the local government’s registry of property and owners. This will ensure that you receive all correspondence relating to the local property tax.
Other formalities
In some special cases, such as residents of tax havens purchasing property in Spain, or non-residents buying property for more than 3,005,061 Euros, there a number of other legal formalities to comply with.
Due diligence on Spanish property
Before signing any contracts that commit you to buying property it is important to confirm that the property belongs to the seller in its totality, and that it is free of debts and charges (in Spain mortgages, tax obligations, and other charges are ascribed to property rather than individuals). It may also be prudent to carry out a number of other checks related to land classification, urban development plans, the condition of the property, maintenance costs, and community obligations. Your agent and lawyer can advise you on the appropriate level of due diligence in any particular case. However never accept advice to forego due diligence entirely, especially not when purchasing resale from a private individual. Due diligence can involve some or all of the following checks:
Property Registry Report
Obtained from the Property Registry (Registro de Propiedad) for a small fee this certificate – know as a Nota Simple Informativa – states who owns the property and indicates if there are any debts and/or charges, such as a mortgage, attached to the property.
Title Deeds
Check that the seller has the title deeds, know as the Escritura Publica.
Official Plan of the Property
It may be prudent to confirm exactly what is included in the property, and the urban classification of the land. An official plan of the property is contained in the zoning plans (plan urbanistico) which can be obtained from the planning department (Departamento de Urbanismo) of the town hall. The plan urbanistico also shows the development plans for the land around a property. When buying out of town property that is not part of a planned residential estate (urbanizacion) it is important to know what will be built around you in the coming years.
Property Survey
There is always the option of having a chartered surveyor evaluate the property. This is advisable if there are any doubts as to the condition of the property. A survey can also be carried out on new build property to confirm that it is delivered in the condition promised.
Tax Check
The seller can be asked for the latest municipal tax certificate to demonstrate that there are no unpaid municipal taxes associated with the property which would become a problem for the buyer. The municipal tax is known as the Impuesto sobre Bienes Inmuebles, or IBI for short. For resale property a check can also be made on the local capital gains tax (Plusvalía) that will become due when the property changes hands. In theory this tax is paid by the seller, however sometimes it is assumed by the buyer. It is important to know how much it is and who will pay it before committing.
Utilities
When buying resale property it may be prudent to ask the seller to demonstrate that all utility bills are up to date, and to specify in the deposit or private contract (if you enter into any such contracts) that they will be up to date at the time of granting of the public deed of sale.
Community by-laws and fées
When buying property that is part of a community of owners (Comunidad de Propietarios) it is important to know what the by-laws governing the workings of the community are, and what the financial obligations are per period. A copy of the community by-laws can be obtained from the land registry. It may also be necessary, in the case of resale, to obtain confirmation from the president or secretary of the community that the previous owner is up to date with community bills.
Developer insurance
Developers that sell property under construction are legally required to have a bank guarantee or insurance policy that protects any payments you make to the developer before the property is completed. This ensures that you get your money back if for whatever reason the developer fails before completion. If there are any doubts about the developer it may be necessary to see proof that the appropriate insurance is in place. Note that developers are also required by law to hold an insurance policy which guarantees for 10 years eventual damages occurring due to defects affecting ground work, supports, beams, reinforcement bars, retaining walls, or other structural elements. As has already been stated, each due diligence should be considered on a case by case basis, and should be managed by a lawyer. Depending upon the circumstances some or all of the checks may be required, along with further checks in special cases. Your lawyer will advise you as to what is appropriate in your case.
How much deposit is required to secure a property?
As a general rule, a 10% deposit is required, although this may vary, especially with new or off-plan developments. If you need time to organise payment of the deposit, it may be possible to reserve the property with a smaller amount.
Do I need a lawyer to buy property in Lanzarote?
There is no obligation to use legal representation, but we at Asor-Estate strongly recommend that you always use the services of an English-speaking Spanish lawyer. Good legal advice will ensure the safety of your investment.
Can I choose my own lawyer?
Of course. We recommend an independent and reputable lawyer who speaks English and is based here on Lanzarote, but you can choose your own legal counsel if you prefer. The important point is that you find a professional that you are happy with, and that your interests are always protected.
Will I own the property freehold?
Yes.
Do I need to make a Spanish will?
There is no obligation, but it is advisable to make a Spanish will because otherwise there are complications and probate may take up more time than otherwise necessary. Your lawyer will advise you on all aspects of drawing up a Spanish will.
How long does it take to complete?
Typically, it takes 6 – 8 weeks, but this timeframe can be lengthened or shortened to whatever suits both the buyer and seller.
How do I open a Spanish bank account?
We at Asor-Estate will help you open a bank account and introduce you to a friendly bank manager. You will need a photocopy of your passport to open the account.
If I want to do some work on my property, do I need to apply for planning permission?
If you are simply renovating the interior, for example if you want to change your bathroom suite or kitchen, it is not necessary. However if you wish to extend your property, raise a boundary wall, install a swimming pool or carry out any type of construction that changes, increases or reduces the physical dimensions of your house (and walls, garage, terrace etc.) you need to apply for planning permission. We can advise you on legal requirements and handle the necessary paperwork for you. In all cases you should always find out before you begin any work.
Can I apply for a mortgage with a Spanish bank in Lanzarote?
Yes, in fact Spanish banks are very keen to lend to foreign buyers and offer very attractive interest rates.
How much do I need to allow on top of purchase price to cover stamp duty and legal costs?
You need to allow 10% to cover everything. This includes 6% stamp duty, notarial costs, land registry, lawyer’s fee, various minor taxes and all paperwork. If you have any questions, consult us at Asor-Estate , or alternatively your lawyer will answer any questions you may have.
What is an Escritura?
This translates as title deed in English. It contains the essential details of the property, such as the legal owner, registered plot size and built area, and whether the property is urban or rural. When you purchase a property, make sure you always receive your original escritura, and keep it in a safe place!
What is a Nota Simple?
This is the land registry search that is performed on the title deed of the house you are interested in buying. It is also known as a certificate of non-encumbrance. When you decide on a property, it is necessary to request information on the property from the land registry, in order to verify that the person who says they own the property is indeed the true registered owner. It also tells us whether they are the sole owner or the property is co-owned. If there are any mortgages on the property they will show up on the nota simple, as will any liens, encumbrances or embargos. We at Asor-Estate obtain the nota simple on your behalf and check that everything is in order. Your lawyer will also need to see the nota simple before allowing the transaction to proceed any further. In short, the nota simple document provides a mechanism to help safeguard your purchase.
Do I need to personally be in Lanzarote to sign for completion?
No, it is not necessary. You may grant your lawyer power of attorney to sign on your behalf and save yourself at least several hours waiting for your turn in the notary’s office. However it is particularly suitable for people who do not want or cannot travel to Lanzarote simply to complete. In this way, when you do travel to Lanzarote, the transaction has already completed and you can concentrate on enjoying your new property with a minimum of fuss.
What living costs do I have to pay if I own property in Lanzarote?
Water and electricity are metred, so you pay for what you use. You will pay annual rates or property tax (IBI – Impuesto sobre Bienes Inmuebles) and annual rubbish collection fee (basura). Both of these are paid to your local town hall. If you live on a complex or estate with shared facilities and communal areas, you will probably pay a community fee. We at Asor-Estate will tell you all the costs that apply to ownership of your chosen property before you make your decision to buy. Your lawyer will handle transfer of utilities into your name and will set up direct debits from your bank account to pay all bills. If you have a Spanish mortgage your bank will require you to have house insurance, which is recommendable even if you don’t have a mortgage.
