Buying Process

PROPERTY BUYING PROCESS IN SPAIN

Monarch Estates has a wealth of local real estate experience and provide a complete service helping you find, negotiate and manage the purchase of your Costa del Sol property.

It is important that you appoint a good local lawyer to represent your interests throughout the purchase process and to assist with on-going property and personal obligations. For overseas owners it is usual and practical to grant your lawyer a power of attorney. If you do not already have a lawyer appointed we would be more than happy to put you in contact with a good local lawyer that can assist you on all relevant matters going forward.

We offer a full spectrum of property related services, working with trusted partners to ensure you get the best on-going care, during and after your property purchase. Whatever you need, the Monarch Estates team is always there to give on-going help and advice.

Reservation Contract

Once you have found your property and have decided to move forward with the purchase, the first step would be for Monarch Estates to draw up a “Reservation Contract” representing your offer and the proposed terms of the purchase. This is presented to the vendor to sign and return if they agree to the terms. In case of negotiation, a final reservation document is produced and signed once final terms are agreed.

A reservation contract is used in Spain as a standard mechanism to take a property off market for a specified period whilst all necessary legal checks are completed by your lawyer. The reservation contract details the basic terms and conditions of the proposed purchase, any special conditions and the terms surrounding the return or payment of the deposit. It should be approved and signed by both the buyer and the vendor and presented to both lawyers as an agreement in principle and include –

  • Details of both buyer and vendor
  • Price of the property
  • Property address
  • Proposed dates to sign a Private Purchase Contract (PPC)
  • Proposed dates to complete the purchase
  • Any special conditions
  • Terms of deposit payment or return

A €6,000 deposit holds the property officially “off market “while searches and due diligence are completed by your lawyer.

This deposit is fully refundable in case any irregularities are uncovered during the due diligence process. This deposit is held by your lawyer or in the client account of Monarch Estates and can be paid by credit card or bank transfer.

If you are applying for a mortgage it may be possible to reserve your property, subject to mortgage ensuring the return of your deposit should you be unable to successfully arrange finance.

Next steps

Your lawyer will complete a thorough due diligence on the intended property and provide you with a detailed report informing you of their findings and a complete overview of all costs and purchase expenses.

Subject to everything being in good order, your lawyer will arrange for the signing of a Private Purchase Contract (PPC) and 10% of the purchase price to the vendor. This officially secures your purchase and a Notary date will also be agreed for completion and handover.

Private Purchase Contract (PPC)

A private purchase contract is a contract between the consumer and the vendor setting out the terms and conditions of the purchase. The contract will be prepared by your lawyer and will contain –

  • A legal declaration from the vendor that he/she has the legal title required to sell the property.
  • The exact address and dimensions of the property and its features as set out in the “ referencia Catastral ”, the Government registration of the property.
  • The proposed completion date and terms and conditions as agreed by all parties.

Purchase Costs & Taxation

The costs of buying a property on the Costa del Sol vary from 10% to 13.5%

New and Off Plan Properties

Purchase expenses of approximately 13.5%

IVA (VAT) is charged at 10% of the full sales price

Stamp Duty is charged at 1.5%

Lawyers fee of 1% of the purchase price. If you are making a substantial purchase, it may be possible to reduce this fee.

Notary and other expenses approximately 1 to 1.5%.

Resale Properties

Transfer Tax: The ITP (Impuesto de Transmisiones Patrimoniales) is a tax depending on the autonomous community in Spain. In Andalusia the ITP is 7% regardless of the purchase price.

Notary fees: all notaries charge the same fees for transactions as these fees are determined by the authorities and depend on the nature of the purchase and the number of sheets present in the deed of purchase. This fee usually ranges between 500 and 1,800 EUR.

Legal fees: 1% of the property purchase price + 21% VAT.

Lawyers fee of 1% of the purchase price. If you are making a substantial purchase, it may be possible to reduce this fee.

Notary and other expenses approximately 1 to 1.5%.

Taking Finance?

If you are arranging a mortgage in Spain, you will have to allow for additional set up costs and notary fees, potentially another 2 to 3% of the loan amount. If you want to explore financing options, we have excellent contacts with local banks and independent mortgage advisers and would be happy to make an introduction.

New build or first owner properties attract VAT at 10% and a 1.5% stamp duty levy is payable on the full purchase price.

After Sales Service

We offer a full spectrum of additional services, working with trusted partners to ensure your every property related need is serviced to a high standard.

We are the only contact you ever need!

  • Legal and tax advice
  • Mortgages
  • Architects and planning
  • Construction and reform
  • Currency
  • Insurance
  • Furniture and interior design
  • Tradesmen
  • Home security
  • Property management
www.monarchestates.es

Our property specialists have a wealth of Real Estate experience on the coast and are dedicated to helping customers find their ideal property. In addition our professionals will be able to recommend you independent legal and financial advisors to help you feel comfortable with every phase.

Once you have found the ideal property on the Costa del Sol and have decided that you wish to move forward with the purchase, The next step would be for Monarch Estate Agents S.L. to draw up a “Reservation Contract”

A reservation contract is used in Spain as a standard procedure to reserve a property for a specified period of time whilst your lawyer conducts the *Due diligence

What is a reservation contract?

Typically, the reservation contract would set out the basic terms and conditions of the purchase and would then be approved and signed by both the buyer and the vendor. This is a temporary reservation document only. Such a document would include:

  • Full name of buyer and vendor
  • Price of the property
  • Property address
  • Date to sign a “private purchase contract”
  • Other special conditions (subject to finance)
  • Deposit amount placed to reserve the property

A 6,000 Euro deposit will secure the property while the “due diligence” is being conducted. This deposit can be paid by credit card, bank transfer or in cash, it can be held in the Monarch Estate Agents S.L. company client account or with a lawyer of your choice. The 6,000 Euros serves to reserve the property whilst your chosen lawyer conducts the due diligence and you may also want to arrange a mortgage during this time. This reservation deposit is fully refundable in the event that your lawyer should discover any legal impediments pertaining to the said property. Should you continue with your purchase after the due diligence the 6,000 Euros will be used towards the purchase price.

What happens next?

Once your lawyer has conducted a full and thorough *Due diligence, he/she will inform you of their findings and discuss moving to a private purchase contract if applicable.

  • What is a private purchase contract?
  • A private purchase contract is a contract between the consumer and the vendor, again typically setting out the terms and conditions of the contract. The contract will be prepared by your lawyer and will contain:
  • A legal declaration from the vendor that he/she is legally positioned to sell the property respectively
  • The exact address and dimensions of the property and its features as set out in the “referencia Catastral” Government registration of the property.
  • The completion date and hand over of the keys etc
  • The agreed terms and conditions as agreed by the consumer and the vendor
  • The buying costs in Spain vary from 10% to 13.5% of the purchase price, broken down as follows:
  • 10% IVA (VAT) on NEW properties, 8% to 10% IVA (VAT) on re-sales depending on price category
  • 1% Notary fee ( Notarization of property cost)
  • 1% Legal fees ( a fee charged by your selected lawyer to conduct the * Due diligence
  • 1.5% Stamp Duty Tax ( A tax charged to make all documents legally effective)

If you should require a mortgage, you should calculate an average of 1- 1.5% cost for the set-up fee of a mortgage with a local Spanish bank

For further assistance on buying a property in Spain please contact us directly:

Additional Services

Below we have compiled a list of the most commonly requested services. When moving or vacationing in a new country, there could be a learning curve to “how things work in Spain” We are here to assist you with any requests you may have and will direct you to only the most reputable of companies.

  • Property and Health insurance
  • Currency exchange
  • Builders
  • Furniture packages
  • Arrangement of NIE number
  • Interior design
  • Kitchen suppliers
  • Contracting water & electricity
  • Handymen
  • Advice on Schools and Banking
  • Property Management
  • Satellite/Internet services
  • Car rental
  • Home security