Guide for buying properties in Spain
INTRODUCTION
Buying a house is an act of a greater economical importance for the family or personally, Spain is one of the countries with the highest percentage of the population which owns their housings in the European Union (making effective the constitutional right of a decent housing). Meanwhile mortgage has acquired great social significance because of the spread of its use as a means to secure repayments of loans through which citizens finance their homes purchases, so it is essential to provide adequate legal protection, and provide them with appropriate mechanisms of information about their rights and obligations and their choices.
Here are some questions that can occur :
1. BEFORE THE PURCHASE OF THE HOUSING
What prior information should I get to make a secure purchase? Who should provide me with that information?
1. Promoters and regular sellers of housings are legally required to provide certain information to the buyers being bound by the advertising they do, and this is so even though it might not be expressly stated in the contract (advertising obliges ).
In particular, developers should have certain information publicly available with documents relating to:
§ The name or the company's name of the Promoter , address and registration information at the Merchant Registry EL;
§ The plans and the location of the Housings , with description of the util surfaces in the building, services and supplies, Common areas and safety measures against fire, etc ...;
§ Data from Land Registry;
§ The damage Insurance and hidden defects foreseen in the New Building Law (Law 38/1999 of November 5).
§ Copies of licenses for the accurate construction and the type of housing;
§ The Statutes of the Community;
§ The total sale price and the manners of payment;
§ If subrogation of mortgage is expected ,total data of it;
§ The way it is intended to document the Agreement with General and Special Conditions, making it known and clear:
A) THE BUYER (Consumer) will not be responsbile for The Pre costs that by law correspond to the seller;
B) The provisions of Articles 1279 and 1280 of the Civil Code, which establishes the buyer's right to demand execution of the public deed ;
C) The right to choose the Notary which corresponds, in these cases, with the BUYER, this decision can be taken by the bank or the funding mean that granted or subrogated the Mortgage.
Along with these datas , the seller must provide the following documents: certificate of occupancy, receipt of payment of the last installment of the Property Tax, (if the plot where new development is located), registration information of the farm ( owner and loads) and a technical plan containing the surface and distribution of the housings.
2. In the event that the purchase is made to a particular (second-hand properties), the particular vendor is not subject to the rules and obligations described above. However, we must also obtain from the seller in these cases, at least the following documentation:
§ Property registration information from the seller or transferor (only certification of FE content Registry);
§ The receipt of the last payment of PROPERTY TAX ("urban contribution") ;
§ A certificate of the Secretary of the Owners, with the "approval" of the president, stating that he is the seller and he have paid all the corresponding community payments of the housing (otherwise, the Community may require the purchaser to pay the amount up to a certain limit, without losing the right to claim form the seller );
§ Copy of the statutes of the Community, registered in the Property Registry EL, and where appropriate, regulations of the Community..
What Professionals can I go to advise me for the Purchase?
In the phase previous to finalizing the contract - in addition to the seller or developer - also can be involved, although this intervention is not required, the real estate agent, which helped us find a house adapted to our needs and possibilities; ,HE will assist in the collection and processing of the above documentation and the subsequent processing of the documents of sale and formalizing them ; Advocate, whose intervention is especially recommended in cases where the seller is a whole family property and the buyer, or when the property or estate to be acquired has special problems from the point of town planning, fiscal, and a translator when the buyer is a foreigner and does not speak spanish.
Separate chapter on sale of real property requires the mention of the involvement of notaries and property registrars. Safety in legal property transactions is based on our legislation on two institutions, public faith notarial and Land Registry. The Notary not only advises independently the Contractors in relation to the current civil, administrative and fiscal law, but through his intervention as a public notary gives validity to the contents of the contract.
Indeed, in our law for the transfer of ownership, the system of freedom of form, so that a private document, followed by the delivery of housing, it is sufficient to transfer the ownership if it is followed. However, there are clear advantages of the public deed: greater legal security, prevention of litigation (avoiding conflicts over property) given the advisory role and the notary public trust and close coordination with the Register of Deeds that tells on ownership and housing charges.
The Registerer of the property, meanwhile, is responsible for providing, pre-professional treatment and effect so that it is easily understandable, information containing seats of the Land Registry, which is an element of information absolutely essential prior to acquisition of the property, since the value of this information, as for example, the certification is the only way to conclusively prove ownership and state charges of the estate or property,is to say , if the seller is actually the owner ,if the property is mortgaged or not, if it is valued about the same or there are no claims or liens, if it is subject to any prohibition on disposal or any other ownership limitation, urban or administrative, etc. This information may be provided in the form of simple information or by a certified notice. This, unlike that which is for information only, is considered a public document providing a presumption of legality to the acts and contracts entered into it reflected, and are under the protection and defense of the Courts.
In the case which the applicant of the information has any doubt about the content of the information he may seek the professional advice of the Registrar, and when the case is complicated he can advise , a registration opinion on the legal status of the property or the way to overcome the legal problems that are present. Should be verbal, this advice is free.
How the legality of the construction of housing is credited?
It is convenient to ensure prior to the purchase of housing for the legality of their construction and usage as such it was intended to be. These two topics can be accredited by the following documents:
1. Works license and the certification form of the competent technician who has the same finish as the project approved by the City;
2. license of first occupation of the building, related to habitability, certifies compliance with the Legal Regulations;
3. certificate of occupancy;
4. Registration in the Land Registry of the building (New work), as previously the Registrar verifies the license qualifies and adequacy of work that you must provide A formal declaration, From the Building law, the accreditation of the existence of insurance taxes or defects of construction.
Consequently, if the property is registered,visit it , just to check its habitability. The Registrar should have done the rest of aquiring information and the actions taken by the council, declaring illegal the work.
What should I do before signing the contract? What precautions should I take?
a) direct inspection of the physical state of the housing
The physical and direct verification by the future purchaser is a basic action which should not be disregarded. It is even more convenient when it comes to a farm or a second-hand housing that the checking be assisted by a professional (architect or quantity surveyor).
While performing this checking carefully the possibility exists that (although rare) the housing has "hidden defects", meaning defects that could cause damage on the medium or long term. In these cases there is a seller's liability for such hidden defects, liability also applies to the contractor during the next ten years of finishing the work when such defects provoked ruining the building and were caused by construction(time requirement of the compensation is extended to fifteen years when the cause of defect was triggered by a breach in the contract of work). When the defect is not attributable to the construction but the technical direction of the work the claim for compensation has to be directed against the architect who took part in it. The new Building Law (Act 38/1999 of November 5) requires that these defects or liability are insured.
b) Checking the documents of the juridical status of the housing
The most important document to check the legal status of a housing is the certificate of ownership and the charges of the Property Registry. This certificate must prove that the building to which the housing belongs is complete,free of charges and limitations and that the seller is the true owner of the housing. If you have applied for this certificate several days prior to the signing of the contract is appropriate to seek the certification of the Registrar which is requested as a matter of "continuous information"certification, in which case it will transmit for a period of thirty calendar days to the address indicated information about any alteration produced on the property (new charges or changes in ownership, if any). This immediate feedback to the date of the transaction is obtained. In any case, the Notary who will prepare the writing of the contract, unless expressly waives the acquirer, will officially request via fax fromthe Registrar information on the description, ownership and housing charges within the following ten days of signing the deed, at which time interval Registrar shall submit without further request information on any alteration or document submitted on the same property, thereby eliminating any risk of fraud or double sales.
It is also advisable to check the documents of the tax situation of the housing compared with the receipt that proves that the last taxation of the Property has been paid (commonly called "urban contribution") as well as the situation of the community charges, by a certificate from the secretary of the homeowners, with the approval of the president, justifying that the seller is always paying the expenses of community. Otherwise it should require the seller prior to signing the contract to catch up on those payments, or deduct the amount of the sale price, since in both cases such debts responds to the housing itself, so that the buyer will be obliged to pay if not settled.
2. REGARDING THE SIGNING OF THE CONTRACT AND FUNDING IT
TO WHOM I MUST SIGN THE CONTRACT?
A sale contract of a housing can de done, under the principle of freedom of form, either in private document or in a public document, ie authorized by a notary, but the buyer has the right to require the public form (the Civil Code mentioned that it should be recorded in a public deed). It is very convenient to make use of this right because only the sales contract stated in a public deed, in turn,and is registered in the Land Registry provides buyers with the legal assurance that they will not be be attacked -defended- on his property (ie is ensured and invulnerable against any claims or demands arising from vices or defects in the ownership of the seller or against the existence of other unregistered share holders because of the existence of debts that incurred by the previous owner). It is a system of legal assurance "preventive", ie that intercepts the conflict, avoiding litigation. Given the large financial outlay that represents the sale of the home itself, you should not run any risk in this area, and therefore the state was conscious of this situation that might occur thats why it has assigned for the serving this purpose two bodies of the most professional higher education level (notaries and property registrars), which respond personally and directly, with its own patrimony, potential liability in case of error in its action that incurred damage to the buyer. The rigor of this responsibility makes diligence in the performance of public duties by these professionals very high and on the other hand very low percentage of errors or cases of negligence .
This is a concurrent action, because in our system the public deed is essential for registration in the Land Registry requirement. The requirement that this institution with high credibility count must be excluded from access to the same private documents, where the legitimacy of the parties is not guaranteed, nor its ability to finalize the contract, nor is asserted in any way freedom and consciousness of the declaration of willingness to buy and sell, not sure of the date, and where consent has been formed without proper advice. All these extremes are guaranteed with the public deed. The notary who is involved in writing is required to conduct a neutral advice between both parties and always give advices (weaker party), unlike the intervention of a lawyer, acting in defense of the interests of the party that hired him.
Finally the full legal security of the transmission is obtained with the registration in the Land Registry, where the Registrar eliminates null pacts, abusive and those with personal aspects (those which bind only the parties, but are unrelated to who in the future buys shares in the property). Particular importance has been rated by the Registrar of certain clauses as abusive when they are considered as such by the consumer protection rules. Consumer protection is automatic. It is within his function.
Some of the most important unfair terms are:
1. in any way that entitles the seller to increase the price during the term of the Contract , or the exempt from liability;
2. where a price increase imposed by service accessories, financing, deferments, surcharges or penalties that do not correspond to actual additional benefits that can be freely accepted or rejected by BUYER. Moreover, reforms of work must be expressly approved by the purchaser;
Which share a repercussion of expenses that correspond to the seller by law (for example, the cost of completing of the declaration of a new work and a horizontal division).
WHEN AND HOW DO I PAY THE PRICE?
The price is the consideration paid to the seller, and as such is an essential requirement of the sale. Do not be satisfied in full without having performed the aforementioned documentary check. As for the method of payment we must distinguish several possibilities:
a) The advance payment by the arras or sign.
Often before signing the contract, upon agreement on price, it is intended to give immediate fixity commitment by paying a partial amount of money by way of "arras or sign." In these cases, assuming withdraw from the contract the buyer, loses that amount, whereas if the seller pulls out he is obliged to return the amount doubled .
b) Payment simultaneous or subsequent to the signing of the contract.
Three cases must be differentiated,cash payment , postponed payments and subrogation on pre-existing charges:
§ Cash payment. Only in the event that the property is totally free of charges in the registry (no mortgage or tax conditions, or seizures, etc), must fully pay the price agreed upon when signing the contract,if there exist charges on the property the amount must be discounted from the money. Even it is advisable that the full payment be done when signing the contract is made directly in public deed, then the buyer can enjoy immediate protection telematics referral by the Notary and the Registrar of Property with a communication authorizing the contract.
When a partial payment is made as a part of the price in the case of "Buy on plans", ie when the building is not yet built, the law obliges the developer to ensure the buyer for a full refund of the amount he paid in case of an unfulfilled contract, including legal interests,by insurance and subject to fines (that can reach 25% of the amounts to be refunded).
§ Postponed price. If part of the price is postponed despite the absence of any charges or interests, then it is the seller who must take certain precautions. In particular it is advisable to ensure that part of the price for which postponed ,by any condition subsequent (so that if the buyer does not pay within the agreed time, housing returns to be owned by the seller), or by mortgage, so that in case of non-payment the property is auctioned to pay the seller.
§ Subrogation for preexisting loads. Especially if the sold property is mortgaged, subrogation may be useful in this pre-existing load. In these cases, the seller will have reduced the price in the amount of the part of the mortgage loan that is pending repayment or returning , while the buyer can be funded from the same mortgage. In this case it is advisable to seek the consent of the creditor (bank or savings) of this change, since otherwise the seller can not be disassociated from the debt and can be found with a claim if not paid by the buyer. However, in the cases concerning a mortgage that is under judicial enforcement an utmost precaution by the buyer is required , preferably prior release of the estate is required of such procedures.
How can I finance the purchase if I do not have the full amount of money needed to buy the property ? What is the minimum amount I need to to save before buying a property ?
The most advantageous and economical way to finance the purchase of housing is asking a mortgage loan from a financial entity that is documented in public and registered in the Land Registry script. The mortgage can only be realized if it has been registered .
This lower cost mortgage loan drifts from the fact that the most important consequence of the Constitution is clear from the Mortgage for breach of the obligation to repay the loan in The terms agreed, The Bank, Savings or financial institution creditor may by means of abbreviated judicial procedures (called judicial summary), or by a notary, proceed to sell at public auction the mortgaged property to collect the price amount that is owed, leaving the remaining available other creditors and, failing that, to the debtor.
It is precisely the fact that the Bank or Savings have a particularly effective guarantee, such as the mortgaged property, based on early intervention Notary and Property Registrar to the effect of giving it greater security possible legal (public control of the mutual independence), allowing those granting the loan with a longer repayment term with a lower interest rate than in the case of personal loans.
Overall financial institutions may grant mortgage loans for an amount equal to the appraised value of the home, those loans are limited by law to the maximum amount that can be granted of up to 70% of the value of the estate, or 80% when the purpose of loan is to finance the construction, rehabilitation or acquisition of housing and reducing this amount to a 50/60% if it is 2nd Residences, or foreigners.
Moreover, banks also consider that your monthly payments should not exceed 35 or 40% of your personal revenues when applying for the loan, as a criterion of the borrower, ie, to avoid the risk of non-payments.
Does the owner have limited powers over his mortgaged property?
The property, unless proceeded to be sold in case of non-payment, remains the property of the debtor, who can sell, rent, re-mortgage (provided that the sum of the two mortgages does not exceed the value of the property), and / or enjoy the property himself. In case of sale, the buyer will deduct the price agreed part of the loan that is not already returned (amortized). As for leases, sometimes banks do require leases over a certain annual income. This is because if sold in the auction in many cases the law recognizes the lessee's right to continue the lease, so it is logical to ask for a minimum income to avoid prejudicing the buyer at the auction .
3. REGARDING THE DUTIES AND THE RIGHTS AFTER SIGNING THE SALE CONTRACT
What should I do after signing the deed?
Sales in the registry. This presentation may be made directly to the competent registry because of the situation of the estate, or by fax from the registry in town whose writing has been granted in emergencies, or by a data communication sent from the notary that has been authorized deed.
After signing the deed you should request immediate registration in the Land Registry. This registration is voluntary (it is not obligatory by law), but it is highly recommended to do it to achieve the appropriate level of legal certainty and the guarantees that were previously explained.
Along with our request we must submit copy of the authentic deed to avoid any risk of fraud or double sale during the period of the five days that is given to the Notary for issuing a copy of the deed.
What taxes are due for buying a house?
For registration, in addition to passing the Registrar favorable rating in its prosecution of legality of the document, payment of transfer tax levied on the sale should be made. In determining the amount of this tax we must distinguish between purchasing from a promoter (new house) and buying from owners (second hand).
a) In the case of buying from a developer, transmission, as usual business transaction is subject to value added tax (VAT) payable by the buyer directly to the seller, which he have to subsequently add to his treasury taxes. The standard rate is 10%. If you buy a garage with the housing,you will also pay VAT at the same rate. If purchased separately, you will pay the standard rate of VAT at 21%.
You must also pay the Stamp Duty Tax at the rate of 1.5% (however there are different types in some regions - Basque Country and Navarre -). The settlement of this tax can be done individually or through the Notary or a referee manager.
In the Canaries VAT does not exist , and the tax paid is the IGIC which is 7%, and 1.5% of documented legal act.
b) In the case of purchase from an individual, that is, when it comes to existing homes or second hand homes, you should pay the transfer tax at the rate of 10% on the actual value of the acquisition (10% in Catalonia Madrid), which in principle is the value stated in the deed, without prejudice to any checks from the Treasury. In case of differences between the declared value and the actual value, additional assessment will be done, and eventually, if the difference exceeds certain percentages, penalties can be imposed. The income tax assessment can be made using the same pathways mentioned above.
WHAT HAPPENS IF AFTER BUYING ,THE HOUSING OR THE BUILDING THAT EXISTS IN HAS VICES OR DEFECTS THAT WERE NOT VISIABLE ?FROM WHICH PART I SHOULD CLAIM THE DAMAGE ?
We said earlier that there is a responsibility for hidden defects (called "sanitation requirement") by the seller as well as the builder and architect who established the Civil Code for a period of ten years. Recently this topic has been covered in detail by The Law Of Building (which became effective on May 6, 2000), in which, besides the contract, the following responsibilities of those involved in the building process against the owners concernes:
§ For material Damages caused by faults or defects in the building foundation, beams, forged or load bearing walls for ten years;
§ For material damage caused by faults or defects in those facilities affecting Elements or the proper habitability of housing, for three years;
§ For the vices or defects affecting the termination elements or finishing works for a year.
In case you could not identify the cause of the damage, the promoter is jointly liable with the other agents who have intervened. The claim can be submited within two years from time the damage had occurred.
Furthermore, the law to ensure the effectiveness of the payment of compensation for each relevant case imposes the obligation to take out insurance bond by the contractor in the first case and promoter property damage insurance or the second and third cases, with an insured capital of 100 percent, 30 percent and 5 percent of the final cost of the material execution of the work, respectively, the insured own promoter and subsequent purchasers of homes or premises. The fulfillment of these obligations of contracting surety guaranteed by Notary and Property Registrar deed authorizing new construction or register, as prior to such authorization or registration monitor that the obligation has been fulfilled.
RIGHTS OF FOREIGNERS IN THE SALE.
Foreigners have the same rights and freedoms when purchasing a property in Spain, for identification they are given a NIE (Foreign Identification Number), consisting of a letter at the beginning starting with X / Y and the Final Random (X-0000000-R), which is assigned by the Ministry of Interior, and may be requested by an authorized person at sufficiently.
Regarding the mortgages, the banks grant between 50- 60% of the appraised value, providing similar documents to Spanish, income, rents, Heritage, or any document showing your financial situation.
The expenses and taxes will be the same.
In whos name should the deed be written?
It is a personal decision, since in Spain properties can be purchased on behalf of physical or legal persons resident or not in our territory, deed expenses do not vary.
The physical person, acquiring the properties follow the marital regime of his country, and although the married couple can buy without the presence of the two, but will not be able to mortgage or sell, unless one of the couple has a legal authorization of the other part.
The deed of purchase can be written on behalf of several people with the percentages they choose.
ALTERNATIVE MORTGAGES .
It is an alternative to the traditional mortgage loan that includes a multicurrency clause that allows you to borrow in any convertible currency.
The multicurrency clause allows free choice of the currency in which the loan is based.
Features.
It can finance up to 60% of the appraised value of the mortgaged property, the maximum financing term is 30 years.
The entire debt should be denominated in a single split being able to exchange this part of the debt, making it coincide with the date of payment of the fee.
Floating rate LIBOR in each currency:
Reference to BBA (Bristish Bankers Associaticón) if you choose British Pound.
Reference FBA (EBF) if you borrow in euros.
Type of interest referenced EURIBOR :
It is the average interest rate that financial institutions in the economic and monetary union lend money on the market.
example:
Loan in € with 5.75 % yearly interest (250.000 € loan would b 1,573 € / month over 25 years )
Loan in Yen 1.62 % yearly interest (250.000.-Yem Yen = 40,425,250 € 911 / month)