(N.B. This brief explanation is for guidance purposes only and professional advice should always be sought.)
It is extremely important that people planning to purchase property seek professional advice and guidance. This is never more so when the property is in another country with a different culture and language.
In Spain the buying and selling process is considerably different to that found in England, or elsewhere for that matter, but whilst it might seem daunting at first remember that it has been used quite satisfactorily by thousands of others who have done and continue to invest in property in Spain. So having decided to ‘take the plunge’, what next…….?
Having decided upon where, when, and which property it is imperative that you acquire an N.I.E. number, (Identity number for foreigner) which is needed to do many things, not least, open a Spanish bank account, which is the next important thing that’s needed in order to buy your chosen property.
It is equally important that you find yourself in independent, and ideally, English speaking lawyer to guide you and carry out the necessary checks and searches. This is particularly important as all outstanding debts are sold along with the house.
Having found a property that you like, in an area that you like that is an acceptable distance from things you need like shops or schools, an offer is made and a purchase price agreed. From here on increasing degrees of commitment are made which involve significant sums of money so care and consideration are paramount.
It is quite a common practice in Spain to make an initial deposit of €3,000. This is often described as necessary in order to ‘reserve’ the property by showing that the buyer is serious about purchasing by making what is perhaps best described as a ‘payment of intent’ – but beware! This is more often than not ‘non-refundable, and in many instances fails to prevent the vendor from considering or even accepting other, more attractive offers presented during the interim. Usually the best course of action where such a sum is committed is, if at all possible, to get assurance that it will be held by the agent and ‘not’ the seller.
A far more secure method is to opt to pay a 10% deposit with a proper legal contract which affords much more security for your money, and is arranged by your solicitor and carries much more in the way of legally binding sureties insomuch that it is conditional to everything being legal and above board with the property involved. This is something that your solicitor does. However, here again beware, for penalties exist. If you, the buyer, pull out of the contract you forfeit your 10% deposit. Conversely, should the vendor withdraw then they are liable for 20% or double the 10% deposit paid. It’s also worth noting that where the €3,000 initial payment has been made this constitutes part of the 10% deposit when it is paid, which obviously represents part of the total purchase price.
The timescale for events is also important. Unless specifically mutually agreed, fourteen days following the paying of the 10% deposit the sale is completed at the office and in the presence of a Notary. The balance is paid, as are taxes, outstanding mortgages (if there should be one), agents fees, your solicitor, and of course the Notary. You get the keys and a document called a Nota Simple (a temporary title deed) and you leave the proud owner of your new Spanish home.