This is meant as a useful guide to familiarize you with the wording you will be hearing during the purchase and sale of your property in Spain.

Property Registry Report

Obtained from the Property Registry (Registro de Propiedad) for a small fee this certificate - know as a Nota Simple Informativa - states who owns the property and indicates if there are any debts and/or charges, such as a mortgage, attached to the property.

Title Deeds

Know as the Escritura Publica.

Official Plan of the Property

It may be prudent to confirm exactly what is included in the property, and the urban classification of the land. An official plan of the property is contained in the zoning plans (plan urbanistico) which can be obtained from the planning department (Departamento de Urbanismo) of the town hall. The plan urbanistico also shows the development plans for the land around a property. When buying out of town property that is not part of a planned residential estate (urbanizacion) it is important to know what will be built around you in the coming years.

Property Survey

There is always the option of having a chartered surveyor evaluate the property. This is advisable if there are any doubts as to the condition of the property. A survey can also be carried out on new build property to confirm that it is delivered in the condition promised.

Tax Check

The seller can be asked for the latest municipal tax certificate to demonstrate that there are no unpaid municipal taxes associated with the property which would become a problem for the buyer. The municipal tax is known as the Impuesto sobre Bienes Inmuebles, or IBI for short. For resale property a check can also be made on the local capital gains tax (Plusvalía) that will become due when the property changes hands. In theory this tax is paid by the seller, however sometimes it is assumed by the buyer. It is important to know how much it is and who will pay it before committing.

Utilities

Such as Electric - Recibo de Luz, Community Fees Recibo de la Comunidad , Water ( Recibo de Agua ) Rubbish Collection Basura, Rates ( I.B.I ). When buying resale property it may be prudent to ask the seller to demonstrate that all utility bills are up to date, and to specify in the deposit or private contract (if you enter into any such contracts) that they will be up to date at the time of granting of the public deed of sale.

Community by-laws and fees

When buying property that is part of a community of owners (Comunidad de Propietarios) it is important to know what the by-laws governing the workings of the community are, and what the financial obligations are per period. A copy of the community by-laws can be obtained from the land registry. It may also be necessary, in the case of resale, to obtain confirmation from the president or secretary of the community that the previous owner is up to date with community bills.

Developer Insurance ( Seguro de Credito y Caucion y Decenal )

Developers that sell property under construction are legally required to have a bank guarantee or insurance policy that protects any payments you make to the developer before the property is completed. This ensures that you get your money back if for whatever reason the developer fails before completion. If there are any doubts about the developer it may be necessary to see proof that the appropriate insurance is in place. Note that developers are also required by law to hold an insurance policy which guarantees for 10 years eventual damages occurring due to defects affecting ground work, supports, beams, reinforcement bars, retaining walls, or other structural elements. As has already been stated, each due diligence should be considered on a case by case basis, and should be managed by a lawyer. Depending upon the circumstances some or all of the checks may be required, along with further checks in special cases. Your lawyer will advise you as to what is appropriate in your case.

Legal formalities concerning Spanish property

When purchasing property in Spain certain steps are required by law. There are also steps you can take which are legally recognised and binding, but are not mandatory. The following list explains some of the usual steps that are followed.

Pre-agreement or Promesa de Compraventa

A simple agreement between buyer and seller that does not involve any deposit and is not mandatory. It is not a sales contract, but a commitment by one or both parties to buy or to sell. This contract is rarely used, but is possible.

Deposit Agreement or Contrato de Arras

A simple contract that involves a deposit paid by the buyer to the seller. The contract can specify, and it is strongly recommended that it does, 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.

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. Several scenarios can be foreseen in private sale contracts. For instance the payment of an initial deposit of 10% of the price at the moment of signing of the private sale contract, and payment of the remainder at the moment of signing the public deed of sale. In this scenario the parties may agree that the deposit of 10% is lost if the buyer fails to grant the public deed. This contract should specify when the public granting of deeds - known as Escritura - will take place. This contract is common but not mandatory.

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, know in Spanish as the Escritura Publica 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 you 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 the buyer both 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. Your lawyer should help you carry out these formalities.

Registering the property

Your lawyer should help you to register your new property with the land registry IMMEDIATELY after the Escritura. Once you have submitted the Escritura for registration, it may take 1 - 2 months for the process to be completed. Your lawyer should also register you as new owner of property with the Catastro which is the local government's registry of property and owners. This will ensure that you receive all correspondence relating to the local property tax.