Practical guide · Buying
How does the standard process of buying a property in Spain work? Part 1: the reservation
Buying in Spain is quite straightforward. This is the general case, starting from the moment the price and conditions are agreed.
SHORT ANSWER
The standard purchase in Spain has four steps: the reservation (the property is taken off the market with a deposit while the due diligence is carried out), the private purchase contract, the public deed signed before a notary, and the registration of the property in the buyer's name at the Land Registry. In the reservation, if everything checks out the buyer proceeds; if something is not legal or an unsalable defect appears, the deposit is returned.
IN THIS ARTICLE
This is the general case, written in 2016. Special cases can vary a lot, so check your own details with your lawyer.
What are the steps of a standard purchase?
The starting point is when the price and the additional conditions (time frames, furniture, etc.) have been agreed between the parties. From there the process includes:
- The reservation: taking the property off the market while the due diligence is carried out.
- The private purchase contract.
- The public purchase deed, signed in front of a notary.
- The Land Registration of the property in the buyer's name.
Although the steps are simple, there is a lot to cover in each one. This article deals with the first.
Step 1: how does the reservation work?
Usually the first step is to take the property off the market with a deposit while the due diligence is performed. In most cases that deposit is held in an escrow account by the real estate agency or by the lawyer representing the seller. In general, the document establishes that if the legal and physical situation of the property is correct for the sale, the buyer must proceed to the next step or lose the deposit.
If something is not fully legal, or a physical defect appears during the due diligence that makes the property unsalable, the party holding the deposit must return it to the buyer.
What documentation is checked during the due diligence?
- Nota simple (Land Registry extract): it states who the owner is, the description of the property and the liens on it.
- Owners: if the property is in the name of more than one person, all owners must agree to the sale and sign the documentation. If it is in the name of a company, a proper official of the company must sign everything.
- Description: the description in the nota simple (address, sizes, neighbours and so on) has to match what the buyer has been told they are buying.
- Liens: properties are in general sold free of liens. If any appears in the nota simple (mortgages, embargos, planning liens, etc.), the seller must remove it from the Land Registry before the closing. We explain how in cancelling a mortgage when you sell.
- Planning permission: it should be checked, especially in Marbella, where the planning situation is not always clear, to see whether the property complies with the regulations of the area, urbanisation or complex. This is not an easy step and should be handled by an expert such as a lawyer, an architect or an experienced real estate agent. See planning infringement certificate.
- Taxes and community fees: mainly the council tax (IBI) and rubbish collection, plus community fees. They are charged against the property, so check they are up to date.
Why is a physical check needed too?
An expert technician or an experienced real estate agent should check whether the property has defects, and whether they can be corrected or compensated. In the case of major defects, such as serious structural damage, the deal will be broken.
Written in 2016 as the first of a series on the standard purchase process. Each case is different: check your own details with your lawyer.
Frequently asked questions
What are the steps to buy a property in Spain?
In the general case: the reservation with a deposit, the private purchase contract, the public deed signed before a notary, and the registration of the property in the buyer's name at the Land Registry.
Who holds the reservation deposit?
In most cases the real estate agency or the lawyer representing the seller, in an escrow account.
When do you get the deposit back?
If something is not fully legal, or a physical defect that makes the property unsalable appears during the due diligence, the party holding the deposit must return it to the buyer.
What does the nota simple show?
Who the owner is, the description of the property and the liens on it, such as mortgages or embargos.
About the author
Alfonso Lacruz
Naval engineer and market analyst. Over 25 years advising owners in Marbella and Benahavís. Publishes a monthly market analysis with Land Registry data.
Every case is different: before you sign or decide, confirm your situation with your own lawyer, notary or tax adviser.
Sources: Own analysis, based on the general case of the purchase process in Spain; check your own case with your lawyer. Last updated: 23 November 2016.
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