First and foremost you need to make sure that you understand the basic process of purchasing a property in Valencia, Spain. The process is similar in many ways to the way in which you will buy a property at home, but there are some key differences.
It is important be aware of some key points:
-2- Property documents: Escritura, IBI.
-3- Property Register, Catastro and nota simple.
-4-Agreeing the sale – Arras Contract or Purchase contract
– 5-Taxes and fees
– 6-What is an NIE number? How can I get an NIE certificate?
Purchasing a Property in Valencia:
Use a lawyer
It is essential to find a good quality Spanish lawyer who speaks English. Ideally, they should be in the area you intend purchasing in but this is not an absolute requirement.
If you would like to benefit from Found Valencia experience, please feel free to contact us and we will be able to give you some guidance as to where you find one.(Found Valencia can put you in touch with an English speaking Spanish Lawyer).
Escritura Publica (Escritura de Compraventa)
This is the property owners’ title deed.It is registered at the Property Register (Registro de la Propiedad) and is the only guarantee of a title here in Spain. Included within the title deed is be a brief description of the property, the details of the owners and any details on charges that affect the property such as mortgages, rights of way, water wells etc and court embargos.
Ideally, the escritura will describe the property you are buying but it is likely that this description only details the property as it was bought by the current owners. It is important that you are aware of any significant changes that might have been made by the seller whilst they have owned the property.It is important to bear in mind that an Escritura is in reality a contract between to parties. Terms and conditions of the sale can be included in the document that my limit or extend the parties liability going forward. Errors may exist in these very important documents therefore inaccuracies can be passed on from the seller to buyer over a number of years. It follows that it is extremely important to check the public registers for the property you are buying – these include the Property Register and the Catastro (more on both later).
IBI Impuesto Sobre Bienes Inmuebles:
This is a receipt of the owners’ annual property tax that is known as IBI or in spanish named: “contribución”.This receipt is very important because it confirms what the owners have paid in the last year on their rates and it also provides information in relation to the Catastro.
• The IBI bill will show the property’s Catastral reference number which can give you information (via internet at the Catastrowebsite) on the property you are buying (this website has details of the size of the land or plot, the size of the property and sometimes there pictures showing the property and may planes)
• The IBI bill will also show the property’s Catastral value as assessed by Tax office- “Hacienda” which in turn dictates your annual rates bill as well as any possible tax due when you sell the property.
Your lawyer (prior to completion) will make sure that all IBI taxes have been paid for the last 5 years so that there are no ongoing liabilities for you.
The Property Register
The Property Register is the public register for properties in Spain. It is akin to the Land Registry in the UK.
Once you have bought your property you will have an “escritura de compraventa” which is signed in front of the Notary and this will confirm you (the buyer) as the new owner of the property.
Following the signing at the Notary, your lawyer should then forward the “escritura de la casa” to the Property Register for public registration,this register holds information about the legal ownership of the property together with details of mortgages, any other charges (it is a very important information)
Another important document which is obtained from the Property Register is a nota simple which is a summary of the records for your property.
There are often old copies attached to the “escritura de copraventa” and it is extremely important that you ensure that your lawyer updates the Property Register now that you are the new owner.
The Catastro office is the second system used to identify the exact boundaries and the location of the property as well as giving a brief description of the property. While the Property Registry deals with a title the Catastro is best described as an administrative registry that is principally used for municipal and tax purposes.
As mentioned previously, the Catastro dictates the amount of IBI (rates) you pay.
While some minor variations may exist, it is important to ensure that the property you are buying is described in the escritura, the Property Register, and the Catastro in a similar way.
Reservation and the Arras Contract
Once you have found your new home and have agreed the price with the owner you will need to pay a holding deposit. It is time to make reservation, the amount payable is agreed privately but is normally in the region of 3000€- 5000€ payment depens on the value of the property.
Once the reservation is signed and the payment is made, the property must be taken off the market. This deposit or reservation will normally be effective for a period of two to three weeks. This process should always be overseen by the lawyer. No document, however, innocuous it may seem should be signed until you have consulted your lawyer. A mistake in signing an incorrect document at this point can seriously compromise your rights as a purchaser as the matter progresses.
Steps to take during the Reservation Period
During the period that the reservation is in place, you will need to agree the terms of the private purchase contract (Arras Contract). Your lawyer should draft this document. It will set out the terms and conditions of the sale including any special conditions that you require or that have arisen as a result of the inquiries carried out by your lawyer. Once the contract is signed an arras deposit can be made. This is normally the balance of 10% of the purchase price less the amount paid on reservation.
A key feature of most Spanish Arras Contracts is that if the purchaser pulls out of the transaction without just cause, the amount paid will be lost to the vendor. If on the other hand the vendor pulls out without just cause the vendor will have to pay the purchaser back the 10% plus the same again in compensation.
The above stipulation focuses the mind somewhat and provides a strong incentive for everyone concerned in the transaction to work hard to ensure that the purchase completes successfully. It is precisely for this reason that as much ground work as absolutely possible is carried out before signing the arras contract to ensure that all issues that the property may have are identified and catered for in the agreement.
Taxes and Fees
There are a number of fees and taxes which will be payable on any property that you purchase in Valencia-Spain.These will vary for each property, however, the general likelihood is that approximately 15% of the purchase price will be needed to cover all costs including the Real Estate Commissions, lawyer, notary, and taxes. Remember that it is not necessary to be a resident in order to apply for a mortgage in Spain but if you do you should keep separate costings from the bank in this regard.The main tax that you must pay if you are buying a second-hand home in Spain is known as Impuesto Sobre Transmisiones Patrimoniales (“ITP”). This tax may change from region to region and may be subject to change. At the time of writing, the present rate of ITP in Valencia is 10% of the purchase price.
Notary fees are fixed with an official scale of charges. The fees will vary according to the amount of land, the size of the property and the price at which the property is being sold. The costs of the Notary can be shared although often, the buyer will be expected to pay all notary costs. In addition to the notary, there will be fees payable to the property registry.
You should consult your lawyer on this costs based on the property that you are buying.
Who Pays fees ?
The seller must pay the Capital Gains Tax on the sale together with Plus Valia which is a local authority tax due on any gain in value based upon the Catastro.
Normally the buyer will pay the transfer tax and the fees as mentioned above. Spanish consumer regulations advise that this is split between the buyers and the sellers, however, there are instances where the seller will insist that the buyer pays all. Again this is a point that your lawyer should address with you.
Remember that if you are foreigner, you will need a NIE number, this number is needed for transactions such as, buying a property o even if you want to work or start a business in Spain or if you want to Study, you can find more information about NIE number in our website