We strongly recommended that you choose an independent lawyer who specialises in Spanish land law (urbanismo). Independent means that they work on your behalf only and are not also looking after the interests of the agent or developer.
The Spanish property conveyancing system is different to the UK system so you should ensure that those involved in the transaction are qualified and experienced in Spain.
Use extreme caution if an estate agent, promoter or lawyer urges you to cut corners to save money or time.
Do your homework: you should analyse and compare different products and services offered by lending companies. If you have any doubts about the terms and conditions, ask the lender to explain.
You should also check with the Bank of Spain that the lender is authorised to operate in Spain. There are a range of mortgages on offer and you should pay special attention to the interest rate and repayment period, fees for setting up the mortgage as well as early repayment and cancellation fees.
If you cannot keep up the mortgage repayments, the Spanish bank could repossess your property in Spain. If the value of the property is less than the total debt outstanding (you are in negative equity), the bank may pursue your UK assets to recover the mortgage shortfall using a European Enforcement Order.
Make sure you fully understand the mortgage agreement you sign. If you have any doubts check with the branch during the 10 working-day period after the binding offer has been provided. If for any reason you cannot keep up the mortgage repayments, you should speak to your bank immediately (before defaulting on repayments) to discuss the options available.
Before you complete your property purchase you should make sure that:
- you have seen the land registry extract (nota simple), available from the Colegio de Registradores (translations into English for an additional fee), and checked the following details
- the property and land for sale match the details registered and the sellers are the registered owner(s)
- there are no debts or charges, such as a mortgage, on the property
- there are no legal proceedings initiated against the property for contravention of land planning law
You should check that planning permissions are in order and the property is a legal build. This is particularly important when buying off-plan or direct from a developer. The town hall can tell you whether the building has all licences and permissions and what type of land it is. If the property is built on rural land or land that is not classified for construction, you should ask the regional government to confirm construction is authorised.
If you are buying an off-plan property, confirm that the property has been certified as finished by a registered architect and registered as a new build in the property register. The registration should also provide details of the developer’s insurance against structural and other defects in the construction. In the case of a private build (the previous owner built their own house and decided to sell before 10 years had lapsed) you will need to request these details separately
You should check the latest town plan to see whether or not the plot you wish to buy has any building restrictions, is in a green zone or includes a public pathway or similar. You can do this at to the town planning (urbanismo) department of the local town hall. You should have the property surveyed. This is not obligatory, but it is wise to get a chartered surveyor to check the property.
You should know the cadastral value of the property and how much purchase tax will be due. Tax is charged on the council’s valuation of the property as opposed to the amount of the sale. You can check this at the regional government’s online tax agency site using the cadastral reference number
Make sure you have seen the following documents:
- a paid-up receipt for the previous owner’s annual property tax (IBI). It is also wise to get a certificate from the town hall proving that there are no unpaid rates from previous years
- the cadastral certificate giving the exact boundaries and square metres of your land – this will be linked to the land register record by a cadastral reference number. You should ensure that the property and land description contained in both records matches
- the licence of first occupancy or habitation certificate issued by the town hall. You will need this document to connect to electricity and water companies. Developers cannot force you to complete without this licence
- receipt to prove all utility bills have been paid by the previous owner
- if applicable, a certificate signed by the President of the Community of Property Owners stating that there are no outstanding debts. You should be aware that if you later find that there are such debts outstanding, as the new owner, you assume the debts for the current and previous year (2years in total)
- as from 1 June 2013, all homes for sale or to let in Spain are required by law to have an energy efficiency certificate. If you are considering buying a property, the seller is obliged to show you this certificate
On completion, the public deed should contain an accurate description of the property. You should register the property in your name with the Land Registry as soon as possible to ensure full protection of your rights. The notary can even send advance notification to the Land Registry electronically once the public deed is signed.
Buying property off-plan
Buying off-plan property inevitably involves higher risk than buying re-sale property. If you are considering buying off-plan in Spain there are a number of points to consider.
Make sure you have a bank guarantee (aval bancario) to cover your stage payments. Developers of off-plan properties are legally obliged to secure all deposits with a bank guarantee. However, bear in mind that this obligation only comes into force once the developer has planning permission, so you should ask to see this before making any payments. You can also check this at the Land Registry, because if the description of the future building is registered, the registrar will have seen evidence that the licence exists and work has begun following the approved design.
You should ensure that the bank guarantee is individual and not a collective guarantee covering the whole development, which does not give the same protection. You should also request proof that your payments are deposited in a special escrow account, which can only be used for the construction of the specified development.
Make sure the developer is registered with the Mercantile Registry and the person who is going to sign on the developer’s behalf has the legal power to do so. You can visit any Mercantile Registry office or use the Land Registry website.
Check with the [Land Registry(]https://sede.registradores.org/contenido/buyingahouse/) to make sure the land which is going to be built on is registered to the developer you are doing business with.
Make sure you obtain a copy of the cadastral certificate giving the exact boundaries and square metres of your land.
Ensure the developer has insurance covering damage caused by structural defects to the building. This insurance should be included in the property manual (libro del edificio) that the developer gives you.
You should also get a planning certificate for the plot you wish to buy from the town planning (Urbanismo) department of the town hall. This will include information such as whether the plot has any building restrictions, is in a green zone, includes a public footpath or if there are any current plans to build a motorway etc.
Before you sign the title deed
Once construction has finished, and before you sign the title deed, ask for proof from the seller that the construction has been finished in accordance with the description given in the plans. This is issued as a certificate (certificado final de obra). You can also check this at the Land Registry.
Make sure you have the licence of first occupancy (licencia de primera occupación) which is issued by the town hall for new buildings and certifies that the property is habitable. You will need this document to connect to electricity and water companies. Developers cannot force you to complete without this licence.
Consider asking a chartered surveyor to check the property. This is not obligatory but it is wise to obtain a professional opinion on the property before you complete. The Royal Institute of Chartered Surveyors (RICS) exists in Spain and there are residential chartered surveyors working across the peninsula and the islands. Members of the RICS are qualified and experienced professionals offering independent and impartial advice.
Cancelling the contract
If the developer does not build your property by the deadline in the contract, or services and utilities are not completed and connected to standard, or the habitation certificate cannot be issued, you are legally entitled to:
- cancel the contract and have the deposits returned plus interest
- extend the deadline, allowing the developer to complete the property
If you want to cancel the contract, you should get independent legal advice. Once you have consulted a lawyer, the first step is to write to the developer to explain that due to non-compliance with the contract, you want to cancel the contract and request that the deposits paid so far are returned, as well as the accrued interest.
You should include any relevant documents (for example. a copy of the contract, copies of payments made, copy of the bank guarantee) and give a date by which you want the amount to be paid back. You should write to the developer using Burofax, so you can prove that you have sent the documents and that the developer received them.
If the developer does not respond to you within the specified timeframe, you should contact the claims department of the bank or savings bank responsible for the guarantee to request a refund of the payments made. Again, it is wise to make contact using Burofax and attach copies of all relevant documents, including a copy of the bank guarantee, a copy of the complaint submitted to the developer, a copy of the developer’s response (if any) and copies of any documents which indicate that the developer has not complied with the contract.
Should the bank not comply, the only remaining course of redress is to instruct a lawyer to take a civil case against the bank.
If you believe you have been a victim of fraud and you have neither a bank guarantee nor an insurance policy from the developer, you should seek independent legal advice regarding taking criminal legal action through the courts and register a statement with the police.