Buying Overseas Properties
Costa Del Sol, Spain:
Spanish property, carefully selected in the right location, could present a great opportunity in 2006 and for the foreseeable future. Predictions are that average prices for Coastal properties will rise 12% this year, and for the market as a whole by 15% There has been an increase of over 100% in the last 5 years on the Costa del Sol.
You probably use a lawyer in your home country when buying property and there is no reason why you should deviate from such common sense when buying property in Spain. Many Spanish lawyers speak excellent English, among other languages, and are accustomed to dealing with foreign purchasers. The lawyer will most likely charge you around 1% of the value of the transaction, unless there are some unusual complications.
Escritura Publica and Nota Simple:
The Escritura Publica is the registered Title Deed of the property. It is entered in the 'Registro de la Propiedad', the Property Registry, and is the only guarantee of title in Spain. It contains a description of the property, the details of the owner and any mortgages or legal claims that exist against the property. This document is important because it tells you if the seller is the owner of the property being sold. A nota simple contains further details of any mortgages or charges against the property and is also available from the Registry.
If you are buying a property in an urbanization, make sure that it is legal and registered by asking to see the approved 'plan parcial' at the town hall. If the property is on the beach, make sure the development is also approved by the Jefatura de Costas. For a new property, make sure that it has been declared for IBI and that the developer has made the 'declaracion de obra nueva'. Ensure the escritura mentions the house you are purchasing as well as the plot of land on which it stands. It is also wise to examine the town planning maps for the area around the property, called the Plan General de Ordenacion Urbana, or PGOU.
Power of Attorney:
If you are not likely to be in Spain to sign the contract or conclude the purchase, a general power of attorney is frequently used to appoint a legal representative in Spain. The document is in a standard format that lists the actions that can be carried out by the holder - including buying and selling property. A Notary can prepare the relevant forms and will keep original documents in his office. You will need copies authorised by the Notary to use the power of attorney at a bank or during a property sale. The only document required to establish power of attorney is a national identity document or passport of both the 'giver' and receiver'. The procedure will cost approximately 60 euros.
Escritura de Compraventa:
Assuming that the private contract is in order and that the buyer has secured the funds to complete the transaction, the sale is completed by signing the Escritura de Compraventa in the presence of the Notary. The Escritura de Compraventa does not guarantee your title to the property until it is registered at the Property Registry (making it an Escritura Publica, a public document). Once registered, the document is returned to the Notary, where it is kept on file. The deed should be registered within a few months and your lawyer will usually ask for a sum of money in advance to cover the estimated taxes and fees, and will either bill you for the remainder or refund you the overpayment once the deed is registered.
On average, the cost of buying a property in Spain will be in the region of 10% to 15% of the purchase price depending on the complexity of the procedure and the area of Spain in which you are buying.