Legal Process

Deposit Agreement or Contrato de Arras

A simple contract that involves a deposit paid by the buyer to the seller. The contract should specify that if the buyer withdraws from the transaction the deposit is lost, and if the seller withdraws from the transaction double the deposit has to be returned to the buyer. This agreement is not mandatory but is very common.

Option To Buy Agreement or Contrato de Opcion de Compra

This type of agreement gives the buyer the exclusive right to buy a property within an agreed time frame. The option does not have to be exercised, but it is usually agreed that if the option is not exercised the buyer looses the money paid for the option.

Advanced Stage Payments For a New Build Property or Pagos Adelantados

Under Spanish law it is only acceptable for a builder to include stage payments as part of the sale contract, providing he also provides the guarantee (legal requirement) for the return of any money paid in the event of non-completion plus interest of 6% if the builder goes bust.

The guarantee is normally through a bank guarantee backed by a bond, which the builder has deposited, or an insurance policy. Your lawyer should check that the bond or policy is in force, and that it covers all foreseeable problems.

Private Sales Contract or Contrato Privado de Compraventa

A contract that specifies, in as much detail as possible (price, dates, contents, etc.), the terms under which the transaction will take place. A number of stipulations can be made in the private sale contracts, such as the payment of an initial deposit of 10% at the time of signing of the private sale contract, with the balance payment at completion.

Public Deed of Sale or Escritura Publica de Compraventa

The Escritura de Compraventa is a mandatory contract if the sale is to be registered publicly in the land registry. By law this document must be authorised by a Spanish Notary (Notario) and must also be signed by the buyer and seller (or their representatives with power of attorney) in front of the Notary. The Notary guarantees, by virtue of his public office, the legality of the transaction, and explains to both parties the terms of the transaction. At this moment the full price, or any remaining payments (should any exist) on the purchase price are made. Effectively this is the moment when the new owner takes possession of the property.

This act is known in Spanish as the Escritura Publica and results in the Escritura Publica de Compraventa, or title deeds, which state who the new owners of the property are. It is impossible to inscribe property in the land registry without the Escritura Publica de Compraventa, and inscription with the land registry is the most secure form of ownership.

Certain documents should be provided by the seller, at the very latest, at the time of the Escritura. The precise documents required vary case by case, and your lawyer will be able to advise you on the documents required in your case. However documents could include, amongst others:

  • Original title deeds
  • Proof of payment of the most recent local property tax (IBI)
  • Proof of up to date payment of utilities
  • Certificate from the administrator of the community of owners showing that payments are up to date

The title deeds will be in Spanish. Always have a legal representative with you to confirm that the final deeds you sign are what you are expecting to sign, and be sure to check the details of the property and the names of the parties just before you sign. Your lawyer will need to be there with you to confirm, in your own language, what you are signing.

After signing, the Notary will give your lawyer the original title deeds and simple copies of the deeds. These documents are required to pay the appropriate taxes and for inscription in the land registry.

Registering the property

Once signed, the Notary will fax a copy of the Title Deeds to the local Land Registry (Registro) and will arrange payment of all the relevant transfer taxes and fees associated with the purchase. It is very important to ensure that Notary faxes the escritura to the Registro the same day so it can be entered into the daily journal in order to prevent any other charges being registered on the property before yours - final registration of the deed is dealt with in Madrid and may take up to two months before the original deeds are returned, however simple copies will be available after a few weeks if you should need or desire to have them.