Buying a home in Spain?

Many clients ask us to advise them on the process of purchasing a property in Spain, whether as a first residence or as a permanent place for their holidays.

It is not necessarily a complicated matter, but it is important to take into account some details to avoid unnecessary risks, so we recommend consulting a lawyer before going to the notary.

Below, we explain the essential aspects to consider:

Reservation

The first step in all cases is always the reservation document, which is essentially a legal document by which the seller or, where appropriate, his real estate agent, agrees not to show the property to other potential buyers for a certain period.

Private Sale and Purchase Agreement (“Contrato de Arras“)

If the buyer and the seller finally agree to carry out the sale, generally the next step is the signing of the so-called “Contrato de Arras“. It is a private contract by virtue of which the parties express their willingness to formalize the sale of the property, with a price, term and other conditions agreed between them. When signing the contract, the buyer must pay 10% of the final purchase price, a deposit called “Arras” that gives the contract its name in the original Spanish. There are various types of Arras , but according to the usually preferred form (Arras Penitenciales), if the buyer finally withdraws from the purchase, he will lose the deposited money (10% of the purchase price); and if it is the seller who withdraws, he must pay the buyer the deposit in duplicate (return of the 10% already paid by the buyer and an additional 10% as a penalty).

The reason for this private agreement is to allow the parties to carry out the procedures and steps necessary to formalize the sale, on the basis of a commitment that is already firm and can only be voided in the cases mentioned (i.e., by paying the penalty mentioned in the previous paragraph).

Public Deed of Sale

The procedure finally culminates on the day of the public deed of sale, for which the parties must appear before a Notary of the buyer’s choice and grant the deed. Before being able to formalize the deed, it is important that the seller provides the following documentation:

• Habitability Certificate (Certificado de Habitabilidad): The habitability certificate is the document that proves that a home meets the legally established requirements of habitability and solidity.
• Payment of the real estate tax (Impuesto de Bienes Inmuebles): It is important that the seller proves payment of the IBI in the last 5 years, since the property will be liable for said debts if they are outstanding.
• Certificate from the Owners’ Association (Comunidad de Propietarios): If the property is part of a owners’ association or urbanization, it will be necessary to prove through a certificate from the property administration that the seller is up to date with the payment of ordinary and extraordinary fees.
• Energy Efficiency Certificate (Certificado de Eficiencia Energética): The Energy Efficiency Certificate is a technical document that contains information about the consumption of electronic devices, or the CO2 emissions they emit into the atmosphere, without which the sale cannot be formalised.
• Status of the Technical Inspection of Buildings (Inspección Técnica de Edificios): It is very important to request information about the year of construction of the building of which the property is part, as well as the status of the ITE, since depending on the case it can cause significant costs for the buyer if the building is not up to date with legal regulations and adaptation works must be carried out.
• Cadastral and registry data: The cadastral and registry data must also be reviewed to find out the legal and urban situation of the property to be acquired.
• Possible previous mortgages: It is not uncommon for the property to be encumbered by a mortgage that the seller took out at the time for the acquisition of the property. Therefore, it will be necessary for the selling party to provide a certificate of zero balance and to grant the deed of cancellation of the previous mortgage at the same time as the sale so that the buyer can acquire the property free of encumbrances.