THE PURCHASE PROCESS

How does one go about purchasing a property in Spain ?

The process of purchasing a property in Spain is similar to that followed in most countries in continental Europe. Every single step of the way demands a commitment from all parties involved. As a result there are no “chains”, no “gazumping” and no time wasting. As you may be unfamiliar with the paperwork and the language, it is always advisable to use a lawyer to carry out all the searches, and save yourself any unnecessary hassle.

The offer

Once you have found a property in Spain, you need to agree on a price. This is done by placing an offer to the vendor through the agency. Should the offer be accepted, it is immediately formalised and is put in the form of a “pre-contract”. This document shows your intent to purchase the property at the agreed price and binds the vendor to take the property off the market. In order to show goodwill and commitment, you are required to cement the contract with a small reservation deposit (usually about 6,000 euros). This will freeze the price and at the same time buy you some time until the next stage.

The legal work

At this point you will appoint a lawyer to carry out your legal work. The lawyer will typically get in touch with the vendor’s lawyer and will initiate the necessary searches. In the unlikely event that a problem is discovered at this stage, your lawyer will inform you and attempt to find a solution. If a solution cannot be found, then the purchase cannot be carried out and the reservation deposit is returned to you. The more likely scenario though is that the lawyer will deem the paperwork to be in order, and a private purchase contract is drawn up. Your lawyer will make sure that your interests are protected and that everything is legally binding on both sides.

The private purchase contract

At this stage, you will be required to make a more substantial payment to the vendor. Also known as the "exchange of contracts", this is the stage where you are required to pay 10% of the full purchase price to the vendor in exchange for his agreement on a formal contract to sell you the property within a certain agreed timeframe. The private purchase contract contains every detail of the purchaser, vendor and the property in question. A completion date (the date you receive the keys) is also specified here.

The completion

On this date, all the parties meet at an official notary’s office. This legal body will once again check all the documentation and make sure that there are no irregularities. Usually the two parties are represented by their lawyers (through a power of attorney document) and do not need to be physically present. Once the notary is satisfied, the remainder of the monies due (the total purchase price minus the reservation deposit which you have already paid) is paid to the vendor and you (or your lawyer) will receive the keys to the property. The property will be registered in your name from this time forth.

The mortgage

If you are using a mortgage to finance your property, it is probably best to consult a financial advisor first and foremost. They will be able to advise you on the different products available by the lenders and will also give you a good idea of what you can expect to repay every month. There are various repayment options available from banks, and you must shop around to find the best one suited to your needs. The interest rate charged by the banks varies, but is always pegged to the EURIBOR, which is the rate set by the European Central Bank.

As soon as you have an offer accepted by the vendor, we will forward all the relevant documentation to your lender. They will carry out their own searches on the property and instruct a surveyor to look at the property. At the date of completion, the lender’s representative will be at the notary, and they will provide the necessary funding to finalise the purchase.

What are the benefits of this system?

Once your offer has been accepted, the property is taken off the market. The vendor has the assurance that you are indeed a serious client by virtue of having placed a reservation deposit along with your offer.