Legal advice/Buyer's guide
The early stages of the property purchase are essential.
Millenium Estates Marbella, besides finding your dream home, offers you legal advice with financial and legal professionals.
Lawyers have a very important role in investigating and gathering information to avoid future problems. Through this due diligence, they will ensure that the property is free of any liens, stating also the legality of the planning situation and checking that the property is free of debts, either IBI (Property tax) or Community charges, for which the vendor is responsible before the sale.
The reservation contract sets out the agreed price along with the terms and conditions of the sale. Once agreed and signed by both the buyer and the seller, a security deposit is paid to reserve the property and effectively remove it from the market. This deposit varies between 6.000 and 12.000 euros depending on the price of the property.
At this stage, no further viewings can take place with other interested parties until the sale has taken place or the reservation has been canceled.
At the point of reservation it is usual for buyers to instruct a lawyer to carry out the due diligence to ascertain the legal status of the property:
• Are there any unpaid debts against the property
• Is the property being leased and if so are there any unpaid tenants fees
• Costs associated with buying and running the property including taxes, community fees, etc.
• The legality of the planning situation
Private Purchase Contract:
Once the legal researches have been completed, a Private Purchase Contract can be finalized. The PPC will reflect all the terms and sales conditions such as price, time frames, and penalties.
Upon signing the PPC a second payment is due, in value of usually 10% of the purchase price minus the reservation already paid. In the case of an off-plan property this payment can vary, however is usually between 20 – 40% of the purchase price.
Once both buyer and seller have signed the PPC, the final step is to sign the public deed at the Notary’s office. At this point, the balance of the acquisition price has to be paid and property keys will be handed over. This stage represents the transfer of the possession of the property.
In case the buyers are non-Spanish residents, they will also need to have a Spanish bank account and N.I.E number (Foreigners Identification Number) before meeting with the Notary.
Finally, to inscribe the transaction in the Land Registry, acquisition taxes will be paid, ensuring full legal protection.
This is one of the most important subjects for buyers.
With regards to taxes, the base to calculate the amount to pay will be the price stated in the title deed. If this price is below the real value, the tax authorities will issue a supplementary declaration to cover the difference.
In Andalucía, if the property is not new construction, the buyer has to pay Property Transfer Tax, which is 8% on the sale price up to 400.000 Euros, 9% from 400.001 to 700.000 Euros, and 10% from 700.001 Euros. The seller is responsible to pay the tax on the increase in the value of the land and the amount will depend on the cadastral value of the land and the time since the seller bought the property.
For new constructions, the buyer will pay VAT, which is 10% for homes and 1.5% Stamp duties.
The buyer will pay Notary fees and registration expenses, and each party will pay their respective lawyers.
Once the purchase is concluded, the new owner will be responsible for the Property Tax (I.B.I.), municipal and service charges, and non-resident tax in case they do not reside in Spain.
If you need more information, do not hesitate to contact us.