Mj Carrillo Lawyers. Spain

Second Hand
Properties

Second Hand Properties

Before signing anything

Once you have decided which property really suits you, it is essential you check the following documentation before signing the contract or making a deposit to reserve the property:

  1. You should ask for a simple note at the Property Registry, so that you can get the full details of the owner, the exact size of the property, and whether the property is free of charges or is otherwise subjected to mortgages, restrictions on use, court orders for seizure...In case of existence of a mortgage on the property, make sure than the seller justifies that the payments are updated, otherwise the bank could seize the property.
  2. Check whether the house is rented out as the Spanish rental law protects the tenants. For that purpose, make sure that the purchase contract states that the house is not rented out.
  3. If you are thinking of buying an apartment, you may ask the President or Administrator of the Community of Property Owners, whether the monthly community fees are paid or not, since the buyer should pay any pending fees. Indeed, the seller must provide you with a certification with all the payments updated.
  4. You should also check on the paid up of the IBI (Impuesto sobre Bienes Inmuebles) a municipal real estate tax, to make sure that its payment is up-to-date, otherwise the buyer should pay the back tax penalties.
  5. It is necessary to request the Tax identification code (Codigo de Identificación Fiscal- CIF) and the Spanish Company Register, in case the seller is a private developer. In case the seller is an Estate Agent, they must provide you with its number of estate agent professional Association.

Taxes to pay

If you are willing to purchase a second hand property in Spain, take into account the taxes you should pay:

  1. Plusvalía (Capital Gains tax on land): this is the tax on the increase in the value of the property since the last sale. Nowadays both parties usually agree that the buyer pays it, but according to the law it must be paid by the seller.
  2. The Transfer Tax (Impuesto de Transmisiones Patrimoniales).The purchaser must pay this upon signature of the sales contract. Its value is 6% of the purchasing price.

The purchase contract. Signature of the tittle deeds

The sales contract should be signed before a Notary, and shall contain the mortgage contingency, and the specifics of it: amount, rate and term, where applicable.The contract must accurately describe the property being sold, identify the seller and buyer, and state that the property is free of charges.

The Notary would certify that the parties sign the contract properly, and he would keep the original document in his files in case any problem could arise later. You should also know that the Notary does not certify that all the statements are true only that the parties have sworn to them.

The purchase deed must be registered with the Spanish Property Registry, thus making it an escritura publica (public deed). That registered contract makes you the owner of the property. You shall receive the keys of your property upon signature of the contract, in the presence of the Notary.

In case you cannot be present to sign the contract, you can make a Power of Attorney allowing your lawyer to sign it for you, if necessary.

The "Arras Agreement". Reservation of your second hand property.

Imagine you are willing to purchase a property in Spain but you need some more time to assemble the money, or even to obtain the mortgage to pay it; what you can do in that case is make a reservation of the property by signing an “arras agreement”.

When you sign this kind of agreement, you are putting down a deposit to keep the property, the other side of the coin is that you will lose it if you don not complete the sale on the date stated, or that the vendor shall return double the amount deposited, was he finally not to honour the contract in the stated date.

This deposit should not take part of the total purchase price, but it is the price that the buyer gives to the seller for paying the purchase option, since the seller could demand the full amount of the purchasing price in case the deposit took part of it and we renounced to buying the house.

Builder's responsability for construction defects

In case of construction defects with your newly bought property, remember that you may take the builder, developer and the architect to court within 10 years of substantial completion of the home. If your home was built more than 10 years ago, you only have 6 months, after signature of the deed, to claim against the seller for the defects arisen.

The terms of guarantee for construction defects applicable to new houses, are also applicable to second hand properties where construction defects had arisen.




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