REAL ESTATE PURCHASES AND SALES (SPAIN)

Contents:

• Do I need to hire a lawyer to buy or sell a property?
• What due diligence should the buyer’s lawyer carry out?
• If you need a mortgage, you can negotiate its terms.
• Reservation agreement.
• Private purchase contract.
• Taxes, Land Registry and Cadastre.
• Points to consider after completion.
• How long does it take to buy a home in Spain?
• How much cash do I need for a property in Spain?
• Costs of buying a property in Spain.
• What bills do I pay in Spain?
• Annual taxes once you become a property owner in Spain.
• What is an NIE and how do I get one?
• Do I have to be present at every stage of the purchase?
• What is a power of attorney?
• Do I need a Spanish bank account to buy property in Spain?
• I’m not currently in Spain and would like to open a bank account—how can I do this?
• Can I obtain financing in Spain? Mortgages in Spain.
• What checks should the seller’s lawyer carry out?
• What taxes must the seller pay on completion?

Do I need to hire a lawyer to buy or sell a property?

It is not strictly mandatory, but it is highly advisable. There are numerous checks and tasks that must be performed to ensure the property complies with the law.

Beyond that, it is important that your lawyer protects your interests whether you are the buyer or the seller. Many commercial and legal points can be agreed in the private purchase contract, and your lawyer must assess them depending on your position (buyer or seller). For example: documentation for the transaction, legal status of the property, its physical condition, as well as costs and other obligations to be allocated between the parties.

Note that not everything is set by statute; there are many matters that must be negotiated or clarified by the buyer or seller which you may not be aware of—your lawyer will ensure you are protected.

A lawyer will protect their client—buyer or seller—and I strongly recommend instructing one.

What due diligence should the buyer’s lawyer carry out?

The buyer’s lawyer should verify that:

• The seller is the true and registered owner of the dwelling/land.
• If the seller is a company, that it is duly registered at the Spanish Companies Registry and that the signatory has authority to bind the company.
• There are no legal proceedings affecting the property, or, if any exist (e.g., an embargo/attachment), that they will be resolved prior to completion.
• The built area and physical condition of the property are properly recorded at the Land Registry and match the Cadastre; if not, determine why.
• The seller’s representatives have full capacity/authority to act.
• Any buildings/works were carried out with the corresponding building licence and certificate of final works where applicable.
• There is a first occupation licence or certificate of habitability.
• There are no fines or sanctions recorded against the property at the Town Hall’s planning department.
• The property fits within the provisions of the Municipal Urban Plan.
• There are no future planning projects that may affect the property.
• The property is free of charges, liens or limitations, or that any existing ones will be cleared before completion.
• The property is up to date with taxes, maintenance, community fees, and utility bills.
• There are no planned disbursements affecting the property (e.g., the community may have decided to install a lift; there are co‑owner debts and legal action is impending; necessary works to preserve the building, etc.).
• The Energy Performance Certificate (EPC / C.E.E.) has been issued prior to sale.
• If the property is part of a homeowners’ association (building/estate/complex) with common elements (pool, garden, lift, patio, etc.), it is strongly advisable to review the latest meeting minutes. Minutes reflect agreements and decisions, reveal potential significant debts, approved expenditures, pending litigation and other issues. They may also indicate permitted activities (e.g., running a business, short‑term lets/Airbnb) and what alterations you can make.
• The community insurance is in force and the coverage. Obtain a copy of the policy and check whether you can be included if needed.
• The community accounts are sound and the seller is up to date. Confirm the amount and frequency of community fees.
• Whether the community has approved any special levies (e.g., lift installation, façade works) that may affect you.
• Local property tax (IBI) implications, as the property itself can be liable for these debts.
• Tourist rental licence: If there is no licence and you intend to obtain one, verify suitability under municipal planning (not just community rules). If a licence exists and you intend to continue the activity, check whether the licence can be transferred to the new owner.

If you need a mortgage, you can negotiate its terms

We can help you find the best mortgage for your needs.

We can also negotiate with the bank to avoid fees for issuing bank drafts (to pay the seller and, if applicable, to redeem the seller’s mortgage), and to reduce account fees (maintenance, closure, etc.).

Of course, you are free to contact multiple banks to negotiate mortgage and banking terms. Don’t simply accept the first offer—compare.

Reservation agreement

Once you select a property, estate agents often request a deposit and a reservation agreement. Signing one is not mandatory, though paying a deposit can be advisable to reserve the property for a set period.

The reservation deposit is usually a small amount and is preferably held by the seller’s lawyer or the estate agency, used to secure the purchase, withdraw the property from the market and fix the price.

Your lawyer must review the reservation agreement before signing. Although the detailed terms will be set out in the private purchase contract, some fundamental aspects should already appear in the reservation: deadlines, price, property description, costs, etc. Do not sign a reservation without legal review: you may commit to terms you don’t want, or the document may be so basic that the later private contract contains unexpected clauses you disagree with.

Private purchase contract

This is key to agree dates, allocate responsibilities, specify payments by buyer and seller, delivery condition, documentation to be provided by the seller, breach consequences for both parties, etc.

It is common to pay 10% of the price shortly after signing (this is negotiable).

If you are seeking a mortgage and are unsure whether it will be granted, it is highly advisable to negotiate a finance clause stating that you will not be in breach if the purchase does not complete due to mortgage refusal, and that you are entitled to a refund of the deposit/arras (note: sellers do not always accept this clause).

It is not strictly necessary to sign a private contract (you could go straight to the Notary for completion), but it is highly recommended to agree everything—rights, obligations and conditions—before signing the deed of sale.

The private purchase contract should include:

• Property description.
• Plans indicating built area and usable area. Avoid descriptions as “cuerpo cierto” (sold “as a whole” without specifying square meters).
• Description of the complex/building (e.g., number of pools, bar, tennis courts).
• Specific completion date and breach consequences.
• Price and exact payment method, including taxes and related costs, and who pays what.
• Parking space number and square meters (if any).
• Storage room number and square meters (if any).

Deed of sale (Escritura de compraventa)

You must sign the deed of sale before a Notary Public and pay the balance of the purchase price.

Upon signing, you will receive the keys and can enjoy the property. If you are taking a mortgage, you will usually sign the mortgage deed and the sale deed in sequence.

Ask your bank what fees they charge for issuing bank drafts (to the seller and, if a mortgage redemption is needed, to the lender), especially if you are non‑resident, as fees can be several hundred euros. In fact, when opening a Spanish bank account, this is one of the first questions you (or your lawyer) should ask to choose your bank.

Taxes, Land Registry and Cadastre

Once the deed is signed, your lawyer will pay the applicable taxes, file the deed at the Land Registry, and notify the Cadastre of the new ownership.

Points to consider after completion

We can also help with:

• Changing the locks, at least the main door, and/or furnishing the property.
• Contacting water and electricity providers and setting up direct debits from your Spanish bank account (your lawyer or agent can assist).
• Contacting the telephone and internet provider.
• Registering as owner with the homeowners’ association and arranging direct debit for community fees.
• Registering as a taxpayer with the Spanish Tax Agency for taxes deriving from the purchase and for your annual tax returns (resident or non‑resident).
• Contacting your insurer or arranging home insurance (building/contents). If you buy with a mortgage, your bank may offer home insurance in exchange for better terms.
• Considering an alarm system, especially if the property will be vacant for long periods.
• Signing a will at least for your Spanish assets. Do not rely solely on a will signed in your home country.

How long does it take to buy a home in Spain?

A purchase can be done in a few days. However, your lawyer’s due diligence can take several weeks. Don’t be discouraged if it takes longer—some issues take time and not everything depends on your lawyer (e.g., waiting for Town Hall responses).

Banks also take several weeks to grant a mortgage: they will assess your finances, value the property, and then issue a formal offer.

How much cash do I need for a property in Spain?

Typically, the maximum loan is up to 80% of the lender’s valuation. Therefore, you should have at least 20% of the price plus funds for other costs (lawyer, Notary, taxes, Land Registry fees). Depending on the bank, your age, country of residence, income, and other factors, some lenders may offer up to 100%.

Costs of buying a property in Spain

Taxes and costs vary; many are negotiable (e.g., no fixed statutory fees for lawyers or estate agents).
Buyers usually pay most costs:

• Transfer Tax (ITP): ~3% to 11.5% for resales, depending on the Autonomous Community.
  For new builds: VAT (IVA) 10% + Stamp Duty (AJD) of ~0.5%–2%, depending on the region.
• Notary fees: depend on property value, deed length, etc. Typically €400–€1,200.
• Land Registry fees: usually lower than Notary fees.
• Lawyer’s fees: vary with price/complexity. Get a written quotation, specifying scope of services and whether VAT is included, and who will handle the file (junior/senior/secretarial support).

Sellers usually pay the estate agency fees in Spain. Agents typically charge 3%–5% of the final sale price.

What bills will I have to pay in Spain?

• Homeowners’ association fees.
• Electricity, gas, telephone and internet.

Annual taxes once you become a property owner in Spain

Once you own a property in Spain, you must pay certain annual taxes:

• Non‑Resident Income Tax (if you rent the property or for personal use imputed income).
• Personal Income Tax (IRPF) if you are resident.
• Wealth Tax (if each taxpayer’s net assets exceed €700,000, regional rules may vary).
• Local Property Tax (IBI) and refuse collection fee.

What is an N.I.E. / T.I.E. and how do I get one?

The N.I.E. is simply the Foreigner Identification Number in Spain. Anyone buying property who is not a Spanish national must obtain an NIE or TIE.

For individuals, an NIE or TIE can be obtained:

1. Through the Spanish Consulate in your home country.
2. In person in Spain at designated National Police Stations.
3. Via your lawyer, by granting a power of attorney so they can obtain it for you.

Do I have to be present at every stage of the purchase?

No. You can authorise a representative to act on your behalf. The easiest way is to sign a power of attorney before a Notary.
That said, we like clients to visit the property as often as they wish and, in particular, to be present on completion day to discuss any last‑minute issues and even attend the Notary if possible.

What is a power of attorney?

A power of attorney is a legal document signed before a Notary Public by which you empower a person (e.g., your lawyer) to act on your behalf in transactions.
The powers can be broad or limited. Typical powers for a purchase/sale include: buying, selling, opening bank accounts, handling future inheritance formalities, etc. You may add clauses (e.g., litigation representation) or restrict powers (e.g., only to purchase a specific property).

Do I need a Spanish bank account to buy property in Spain?

You will need a Spanish bank account to pay utilities, community fees, and local taxes (IBI and refuse). If you take out a mortgage, you will also need an account for monthly repayments.

It is highly advisable to open a Spanish bank account early in the process.

I’m not currently in Spain and would like to open a bank account. How can I do this?

You can sign a power of attorney in favour of your lawyer to open the bank account and represent you throughout the process (including completion) if needed—although at some point you may need to attend in person. Alternatively, you can visit a bank in person when you travel to view the property.

Before opening an account, compare fees and charges for depositing funds, receiving/sending transfers, cashing cheques, maintenance fees, etc.—differences between banks can be significant.

Can I obtain financing in Spain? Mortgages in Spain

Yes. Requirements vary by bank and client profile. Offers can differ substantially, so I recommend comparing multiple banks and mortgage brokers. We can also help you find the best offer.

If you are financing with a mortgage, contact the lender and provide the necessary documentation as early as possible. Once the application is complete, the lender will arrange a valuation and then issue a formal offer.

It is important to have a formal offer/approval in principle before signing the private purchase contract. If the mortgage is later rejected, you could risk losing any money paid unless your lawyer includes a finance clause—and the seller accepts it—stating that if the loan is not approved, you will not be in breach and will be entitled to a refund of the deposit/arras.

What checks should the seller’s lawyer carry out?

As a seller, you must ensure the property is sold as described in the contract. Typically, the property should be fully legalised (e.g., any new works carried out with building permits and, where needed, community approval).

The property must match the Land Registry and Cadastre descriptions.

It should be free of charges and encumbrances and up to date on all payments.

The property should have a valid habitability certificate and energy performance certificate.

However, sometimes the contract can agree that the seller is exempt from certain responsibilities (e.g., registering a pool that is not recorded at the Land Registry). The contract negotiation stage is therefore critical.

• As the seller’s lawyer, we will try to negotiate that the seller performs as few tasks as possible, reducing expenses and liabilities.
• As the buyer’s lawyer, we will do the opposite, requiring as much as possible from the other party.

What taxes must the seller pay on completion?

• Municipal Capital Gains Tax (Plusvalía Municipal): levied on the increase in value of urban land from acquisition to sale (up to 20 years).
• Capital Gains Tax (IRPF for residents / IRNR for non‑residents): the gain is the difference between purchase price and sale price, minus allowable costs on both transfers and capital improvements duly evidenced. Current rates are ~19% to 24% on the gain (if any) since acquisition.