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Once, in England and Wales, the monopolistic preserve of Solicitors, “Conveyancing” is defined as “the branch of law concerned with the preparation of documents for the conveyance (the process of transferring a property from one owner to another) of property.”
You may have had some experience, in the British or Irish markets, of the process of conveying a property from seller to buyer but the process in the Marbella region will be a little more alien.
For many the involvement of the Notary Public – and the respect for his/her position among the legal profession in Marbella – being the officer of the State who witnesses and signs all important documents, which are then registered, may come as a surprise. For an introduction to the Public Notary please see our previous post here At the Notary’s Office
In preparation for your purchase you would be well advised to set in motion the process of acquiring an NIE (Numero de Identificacion de Extrajero) number. All parties wanting to comprise the Buyer of a chosen property will need an NIE number. These numbers are issued by the National Police and your Abogado (Spanish Lawyer) should be able to assist you with your application. They may also have a collaborator who can, for a modest fee, handle this process for you. Should you purchase via a Spanish company identity (see below) the company will need a CIF (Certificado de Identificacion Fiscal) to make the purchase. This is obtained by your Abogado from the Registrar of Companies.
Alternatively, you may decide to issue a Power of Attorney to your Abogado – which ideally should be signed before a Notary in Spain – to enable him/her to handle all manner of elements of your purchase to free you from the need to travel to Marbella to handle.
Once a Power of Attorney has been property drafted and executed your chosen Abogado will act on your specific instructions to progress with your purchase, handle your NIE application(s) and open bank accounts, for example. Do not be surprised, when acting at a distance, that your Abogado, acting under a Power of Attorney, may ask you to evidence your instructions. This is usually done by way of him/her sending you the document to be signed, for you to sign, scan and return as conclusive proof that you’ve agreed to a document being signed by your Abogado. This may be very important when signing a Mortgage Deed or the Public Purchase Deed to enable the purchase of your property.
Once you have chosen your property – a new apartment, an older villa, a rustic cortijo or similar – the relevant searches undertaken, by your carefully chosen Abogado, will depend precisely on the property chosen. It is outside the scope of this general note, but the usual checks that your advisor should undertake, as a minimum, include:
- The position of the property with the Land Registry, its currently recorded ownership status and the existence, or not, of Legal Charges, that may include, for instance, that the property is the subject of an existing mortgage, a tax debt or an embargo as a result of, say, cumulative and unpaid Community Fees.
- It is important to establish that the property complies in all respects with the required Building Permits and Licenses for a property of the type chosen and whether, for example, it has the benefit of a valid Licence of First Occupation.
- An investigation to assure the Buyer that the Seller has the legal capacity – the absolute right – to sell the property whether alone or in combination with co-owners. This is particularly important when the property is an Executor Sale or where one of a couple of co-owners has passed away.
- To establish that the usual costs arising from property ownership have been paid in full including the payment of Taxes, Local Authority Rates – called “IBI” and “Basura” – household rubbish collection costs, Community Fees and utility – such as water, WiFi and electricity – expenses.
It is important to determine who will be buying the property. Your Abogado will advise you on these matters. He/she will need to understand your precise circumstances and your proposed use of the property to enable their advise to address alternatives. It is very usual for a property to be purchased in the name of an individual – a person or group of persons. It may be that an acquisition should be made in the name of a Spanish company (usually a Sociedad Limitada (SL)). Less usually today, but it is also possible for a property to be acquired by a Non-Resident company. Bear in mind that the purchase in the name of a company carried annual running costs but for certain types of investment this route may be preferred.
The documents usually associated with the purchase of a property in the Marbella region include the following:
Reservation Contract – Having selected your chosen property it is the usual practice for the Seller or their agent to present you with this document which, when signed, confirms your intention to buy the property. It should mean that the property is removed from the market to allow the conveyancing process to begin. There will usually be a payment, by way of a deposit against the final purchase price, due upon signature. The amount of this reservation deposit may vary but its seems that €6,000 is usual for a modestly priced property. This deposit should be expressed as being entirely refundable in the event that your Abogado’s subsequent searches disclose that the property is legally defective. If you pull out – in most other circumstances – it is likely that this deposit will be forfeited.
Private Sale/Purchase Contract (“PPC” – in Spanish a “Compraventa”) Generally, when signed, this is the equivalent to “Exchange of Contracts” stage in the English system. Following some negotiation as to its terms, it locks the Buyer into purchasing the property as their deposit, paid upon signing the PPC, is at risk of being lost if you fail to complete the purchase. The deposit due on PPC varies from 10% to 40% of the final purchase price. The pre-contractual searches, referred to above, should be conducted prior to the signing of the PPC .
Public Deed of Purchase and Sale: Signed before Notary Public, this Deed features all of the terms and conditions that have been previously negotiated and comprise the PPC. However, as the PPC is a private contract, it needs to be converted into a Public Deed of Purchase and Sale to enable its registration in the Land Registry. Usually this Deed when executed, requires the purchaser to pay over the funds due on completion of the purchase of the property. This Deed effectively transfers the ownership of the property to the purchaser.
Should mortgage funds be required for completion a Mortgage Deed, which results in a Legal Charge being registered against the property, is signed before the Notary at the same time as the Public Deed of Purchase and Sale. This will follow from a previous visit to the Notary to sign a memorandum (called a “Fein”) confirming that you have understood the terms of the mortgage loan being advanced and this is followed by a “cooling-off period”.
At the completion meeting at the Notary the balance of the purchase price due to the Seller – less any agreed retentions for payments that need to be made in respect of the property or retained as the Seller (or any one of the group comprising the Seller) is non-resident in Spain – will be made – often in the form of cheques. Where mortgage funds are used, these cheques will often be supplied by the purchaser’s bank having made the deductions for the purchase taxes due – as the same will have been advised by your Abogado.
Registration at the Land Registry: Following signature and the payment of all taxes due as a result, the notarised Deeds are submitted to the local Land Registry for registration in the official records of Andalucia.
In other blog posts we have dealt with the Costs of Purchasing a Property in the Marbella region – see here – The buying costs of a property purchase in the Marbella region? Here Andalucia’s “Property Transfer Tax and Stamp Duty holiday” have been made permanent. and here – An ITP Tax change that you should not ignore!
It is advisable (and in some cases compulsory) for a Non-Resident property buyer to appoint a Fiscal Representative in Spain in order to deal with any matters relating to the Spanish Tax Office. This is highly recommended as the Tax Office wields great power.
Following your purchase, it is recommended that those parties comprising “the Buyer” should each complete, formally execute before a Notary Public and file, a Spanish Will dealing solely with their Spanish assets including the property purchased. This will bring substantial comfort to their family as and when the time comes to deal with their interests in the property. This can be drafted and co-ordinated by your Abogado for a modest fee.
Should you be interested in discussing the legal process involved in buying a property in the Marbella region, we would be delighted to assist you. Our multi-disciplinary team of bi-lingual, highly experienced and wholly independent Abogados and Asesores Fiscales are ready to help you.
Please call me, Mark FR Wilkins, during usual business hours on +34 600 343 917 or, if you prefer, or e-mail me at mark@roslegal.es
Please note that our posts are for general interest. There is no substitute for proper legal advice tailored to your specific circumstances as provided by a qualified Abogado who is experienced in the application of the Spanish Law.
Nothing contained in this article should be seen or taken as the writer or the publisher providing legal or financial advice.
All details have been reasonably fact-checked and all efforts have been taken to ensure that facts are accurate as at the date of publication.
© Mark FR Wilkins 2022. All rights reserved.