The process to buy a property in Spain is quite straight forward and, although it may vary, even a lot, for special cases, the idea of these articles is to establish the general case. The starting point would be when the price and additional conditions (time frames, furniture, etc.) for a purchase are agreed between the parties. The process includes the reservation (or taking the property out of the market while the due diligence is performed), a Private Purchase Contract, the signature of a Public Purchase Deed in front of a Notary and the Land Registration of the property on the buyers name. Although the steps are simple, I am going to dedicate an article to each one of those to try to cover as many general aspects as possible.
1.– RESERVATION OF THE PROPERTY
Usually the first step is to take the property off the market with a deposit while the due diligence on it is performed. That deposit is in most of the cases held by the real estate agency or the lawyer representing the seller on a escrow account. In general, the document establishes that if the legal and physical situation of the property is correct for the sale, the buyers should proceed to the following step or they will lose that deposit. If something is not fully legal or a physical defect that makes the property unsalable appears during the due diligence process, the party holding the deposit should released back to the buyers.
a) What documentation is checked during the due diligence process:
- Nota Simple: it states who is the owner, the description of the property and the liens on the property.
- The property can be in the name of more than one individual or in the name of a company so in the first case, all owners should agree with the sale and sign the proper documentation or for the second case, a proper official of the company should be the one signing all documentation for the sale.
- The description of the property at the Nota Simple (including and not limited to address, sizes and neighbors) has to match with what the buyer is has been told it is buying.
- The properties are sold, in general, free of liens. If any lien appears on the Nota Simple, the seller is liable to remove it from the record of the property at the Land Registry prior to the closing (that may include mortgages, embargos, urbanistic liens, etc.)
- Planning permission: that should be checked, specially in Marbella where the planning situation is not fully clear, to see if the property complies with the planning regulations of the area/urbanization/complex. This is not an easy step and should be dealed by a an expert on this issues like a lawyer, an architect or an experience real estate agent.
- Payment of the taxes (mainly council tax—IBI—and rubbish collection) and community fees: those expenses are charged against the property and should be checked that are up to date on payments.
b) A physical check by an expert technician or an experienced real estate agent to establish if the property has any defects that can or not be corrected or, or not, compensated. In case of major defects, like serious structural damage, the deal will be broken.
* Since each particular case is different, it is fully recommended that you check your own details with your lawyer.