Legal steps to buy property in Spain

To become a homeowner in Spain you will need to tackle the legal steps of purchasing a property in Spain, which likely differ from those in your current country of residence.

The legal steps do not differ much by your intended use of the property, be that for living in permanently, as a holiday home or as a rental property.

Legal process of buying property in Spain

The legal process of buying in Spain may be quite different to what you are used to perhaps in the UK. However, it can be broken down into simple steps:

Signing a reservation contract

Once you’ve found a property you like and agreed on a price with the vendor (or developer), your agent or developer will ask you to sign a reservation agreement (contrato de reserva). This will take the property off the market at the agreed for price for around 15–30 days.

At this stage, you will be asked for a deposit of between €3,000 and €10,000. Depending on the terms, the deposit may be refundable, it may not. Often, if you are unsure of the state of the property and want to protect yourself from a commitment at this stage you could negotiate this initial deposit to be refundable, subject to preliminary legal checks, mortgage loan availability or building survey results.

Your lawyer will then check all of the legalities for the property. This will include ensuring that the owner (or developer if the property is a new-build or off-plan property) is correctly registered to sell the property and checking with the townhall that there are no other encumbrances or pending charges on the property, or land.

If you are planning to do significant renovations to your property, it is a good idea to ask your lawyer to check if there will be any legal restrictions to your plans. It is not common for Spanish properties to be surveyed but you can request this.

Note: If you’re ready to go make an offer and go ahead, then your deposit and full payment for a property might be subject to cross-border currency transactions. You should, therefore, appoint a reputable currency exchange provider and discuss your payment for the property purchase with them. They can assist you with protecting the price of property from fluctuating exchange rate with a forward contract. Your bank is unlikely to offer this service.

Property Guides recommends Smart Currency Exchange for all your international payments. Smart Currency Exchange has been helping international property buyers for several years and is recommended by UK property portals such as Zoopla and Rightmove, as well as having an “Excellent” Trustpilot rating.

Signing a deposit contract

This step is a key part of the legal process of buying a property in Spain. It is signed once the cooling off period from you signing the reservation contract runs out. Signing this contract, contrato de arras commits you to buying and paying for the property in full and binds the seller to selling it to you.

Note: There is no chance of gazumping like in the UK. For most British buyers the process will involve a deposit contract (contrato de arras), sometimes translated as the ‘earnest money contract’.

The contrato de arras sets out the exact details of the property, what it is and what the sale includes, where it is and who owns it. It sets out the price, payment method and when the purchase will be completed.

Paying a deposit – the important bits

With the signing of the deposit contract, the buyer normally pays a deposit of 10% of the sale price at this stage. Although the parties can agree not to include these conditions, the law says that if the buyer now pulls out (breaches the agreement), they lose the 10% deposit. But, if the seller is in breach, they must return the deposit doubled.

The deposit should be kept in a separate account controlled by the lawyers and not passed to the seller until the final agreement.

Notary process and escritura

The final step of the process is signing the contract of sale (escritura pública) which completes the legal process of buying a property in Spain.

This step involves the notary, who is a public official who ensures that the transaction complies with the law. The notary verifies the identities of those involved, confirms the details of the property, and guarantees that all taxes have been paid.

After these checks, the notary drafts the deed of sale which is then signed by both parties. However, you can give your lawyer Power of Attorney if you can’t be present at the signing of the deed of sale. This is the legal proof of the sale and marks the official transfer of ownership.

The buyer must pay the balance of the sale price on the day of completion and money must be received before the deed of sale can be signed by both parties. Once all the money is received, the deed of sale is signed, and the buyer takes ownership of the property.

Understanding property ownership laws

In Spain, property ownership laws allow for residents and non-residents alike to purchase there. There is no limit to how many people can own a property. Therefore, if you are keen to buy with your spouse, family or friends, this is possible.

If you are from a country outside of the EU, including the UK, owning a Spanish property gives you no automatic right to live in Spain permanently. Without a visa, you are limited to no more than 90 days out of every 180. To live or reside in Spain for longer than you are permitted, you will need a visa. While there has been a ‘golden visa’ scheme, allowing non-EU citizens to gain a visa buying property (valued at over €500,000), this is being phased out as of May 2024.

What documentation will be required for property transactions

You will need several documents to purchase a property in Spain. These include a valid passport, an NIE (similar to a national insurance number in the UK), and a bank certificate proving financial capability. In addition, you will need to provide proof of address and a Spanish bank account number.

Compliance with local zoning regulations

Before purchasing a property, it is crucial to ensure that it complies with local zoning regulations. This includes confirming that the property’s usage (residential or commercial) aligns with these regulations. Non-compliance can result in legal complications and fines. A local solicitor or your chosen lawyer will assist with verifying this information with the local town hall and other relevant authorities.

Title searches and property liens

A vital step in buying a property in Spain involves conducting a title search. This ensures that the property is free from liens or encumbrances, such as outstanding mortgages or debts. This can be done through the Property Registry. Additionally, it’s crucial to confirm that the seller is the legal owner of the property and has the authority to sell it. This step is done by your legal representative, lawyer, or solicitor.

English-speaking Spanish property lawyer

Dealing with a different legal system, in a foreign language, in an unfamiliar country can be daunting. That’s why it is strongly recommended that you engage an English-speaking property lawyer early on in your buying journey.

They will be able to take the stress out of the purchase, help you complete all the legal steps of buying a property in Spain and offer expert advice. As a bare minimum they must ensure that the property complies with local laws, that your contracts are sound and represent you through the legal parts of the buying process. Many lawyers in Spain often offer help with visa and NIE number applications.

They also negotiate contracts, perform property checks, arrange for payment of taxes, and assist with the notary process. Their role is crucial to ensure a smooth and secure property purchase in Spain.

Taxes

The taxes you will pay vary on the region you are buying in and the property type. For example, at this time, property tax for a resale in Andalucía is at 7%, one of the lowest regions. Valencia taxes at 10%, however property tends to be more affordable.