When you are buying a Spanish Property just like in any other country there is a process to go through to make sure that what you are buying is exactly as stated by the owner or agent. Whether you are doing the conveyancing yourself or getting a lawyer to do it for you, always recommended by the way there are standard checks that will make sure that what you are buying is secure and without hidden charges.
There are also other checks that wouldn’t appear in any conveyancing but you should do to make sure that the property could be lived in without any problems. Take a look at the list below and if you think there are more that could be added let us know at email@example.com.
Conveyancing in Spain
1) Nota Simple From The Property Registry
This will give you various bits of information, most importantly making sure that the person or entity selling you the property has the right to do so. However it will also tell you the state of any charges levied against the property including mortgages, embargoes and other charges. If there are charges then you should ask the owner for a Carta de Pago of any outstanding charge before signing the final deeds. Usually the only charge is the outstanding mortgage if there is one and a representative of the bank should attend the signing of the deeds to cancel the mortgage by receiving the outstanding payment as part payment.
2) Note From The Community About Charges
If you are buying an apartment or a house on an estate or development where there are common charges, for example for garden maintenance or pool cleaning, those charges are shared between the properties on the community. The president of the community needs to sign a letter stating that the owner of the property being sold is up to date on community payments. If they are not then you need a breakdown of the costs owed by the property you are buying and if the owner cannot or will not pay them the notary should note this and a retention on the sale price should be made in order to pay up to date as the notary ensures that the property is sold with all payments up to date and therefore the property is sold free of charges.
3) Check Out The Community
It is also necessary to know if the community itself is up to date on payments and has no debts that you could inherit a part of by buying a property. You should also check out any by laws of the community such as whether pets are allowed and what are the rules governing use of common areas etc…
4) Minimum Declarable Price
In some autonomous communities it is now law that the tax on purchase is paid on the higher of two prices ie the real price paid or the minimum price of purchase according to the Cadastral Value of the property (This is the case in Valencia for example and you can see an article about it here) Because there are some absolute bargains around now oftentimes the minimum declared price according to the Catastro is well above the actual sale price and therefore the tax payable may well be considerably higher than the 6-10% charged by different autonomous communities (Madrid is 6% at the time of writing whereas Catalunya and Valencia are 10% as examples)
5) Total Cost of the Purchase
Never make an offer and sign a deposit contract if you cannot afford the purchase. It seems obvious right? However, many agents will not spell out the total cost of a purchase which can add 15% or even more onto the base cost of the property. remember to add in tax, estate agent fees, notary, registry, gestor, lawyer and the potential for a higher tax if the conditions in point 4 are right. Also if you are getting a mortgage remember there is also a tax, opening commission from the bank, notary, registry and gestor for the mortgage and possibly even a commission for making the study initially.
6) Buildings Inspection
If the building is over 20 years old then it should have an ITE (Inspección Técnica de Edificios) done within the last ten years. A building should have this done every ten years and any issues that come up should be sorted out by the community.
7) Outstanding Legal Cases By Other Members of the Community
Has the property got any pending legal cases from other members of the community? When that new bathroom was put in did it affect the flat below? Have there been leakages into the flat below which haven’t been sorted by insurance or agreements with the owners? It isn’t common as community living is usually pretty convivial in Spain but it can happen.
8) Projected Work on the Building
The community of owners needs to inform you if they have any upcoming building or repair plans that will require a “Derrama” (Extra payment to community funds) This may include painting the facade on a block of flats and repairing pipework, installation of a lift or changes to the entrance hall for example. These costs can be considerable so it is better to know them beforehand.
9) The Property’s Services. Charges and General State
Checks need to be made to find out if the property owner is up to date on water, electric, phone, internet and gas charges. The last three receipts that have been paid should be asked for and if a property is not connected up, maybe to the electric for an example, there will be a reason. You need to look into it. The reconnection charge can be high especially if there a a report made to the authorities about illegal hooking up of the electric for example and getting reconnected can take a long time. With this in mind if the house is not connected up to services then you need to ask for the First or Second Occupation Licence (First licence on new properties and second on older properties) as without it the electric, gas and water services cannot be connected up after purchase.
Also it is advisable to check water pressure, electrical circuitry, gas connections and more. However this is not always possible if the services are turned off. Remember that there is no point investing in a power shower if there is no water pressure.
10) Comparison Between The Property Registry and the Catastro
This is especially valuable for houses as there may be a discrepancy between the size in the registry and the Catastro due to extensions that have been added onto the property. If the property is found to be larger than stated on either of the two then a new build declaration should be done which in theory is the responsibility of the seller to pay for and register (They have to sell what is there in reality not what was there some years ago) Many people built an extension illegally and paid the fine but never got round to registering the extra build. On selling they should do that. Again if it is not done before signing the full deed you should get an estimate of the cost of doing the new build declaration before signing the final deeds and hold back a payment for the full cost of it. This should be done in full knowledge of the owner otherwise it will cause a problem on signing.
There are other checks that should be done of course according to the individual property, surveys for damp and building defects, checks on local river courses, if the building is on a flood plain, rights of way over land etc… etc… However they are not for every property in every place although we make a good argument for getting a survey done in every case.