Legal information

Legal Information

The Purchase Contract

Lhe purchase of a property and its financing are two of the most important decisions that we have to make during our lifetime. For this reason it is vital to gather the correct information and support in order to make the right decision.

We have used our long experience of over 40 years arranging the purchase and financing of properties for our clients, to create this detailed guide on the process and documents needed in arranging a mortgage in Spain.

Once the reservation of the property has been finalized by means of the signing of a reservation contract, the next step is the signing of the purchase contract for the property and/or garage. A few days before the signing of the contract, you can view all the details of your purchase in the “Documents” section of this client area using your personalised login information.

While checking the information regarding your purchase, should you have any query or question you can contact us directly by sending an email to clientes@tmgrupoinmobiliario.com. Our administration department work to ensure that on the day you need to sign, you have all the necessary information.

Here is a list of the various documents you will sign during the Purchase Contract stage:

2 copies of the Purchase Contract
2 sets of plans of the property being purchased
2 equipment lists (if you have selected the property with equipment included)
2 kitchen utensils lists (if you have selected the property with this included)

New financing service for clients of TM Real Estate Group

TM Real Estate Group is committed to supporting you in all aspects of the home-buying process. So much so, in addition to having a real estate advisor, who will help and inform you throughout the process of buying your home, we are now putting in place a multidisciplinary team of experts to help you obtain any financing you may need.

New financing service for clients of TM Real Estate Group

Taxes and obligations

The purchase of a property generates a series of costs for the buyer, and in many cases the buyer doesn’t fully understand who he is paying or even why, and which can increase notably the total cost of the purchase. In order to clarify this situation and help you to answer your queries, we have compiled a general list of your obligations as a buyer of a property in Spain:

Who and what do you need to pay as the buyer of a new property in Spain?

To the seller: the price of the property and the IVA (Impuesto sobre el Valor Añadido – Spanish Value Added Tax -VAT)
To the notary: the fees, depending on the corresponding tariff, for the authorisation of the purchase contract, title deeds and mortgage (if applicable).
To the Tax Liquidation Office: the IAJD (Stamp Duty), which consists of 1,2% of the total amount declared on the title deeds in the Balearic Islands, 2% in Murcia and 1,5% in Valencian Community and Andalusia. In the event of a mortgage being necessary an extra 1,2% will be added in the Balearics by way of mortgage responsibility, 1,5% extra in Murcia, Valencian Community and Andalusia.
To the Property Land Registry: The fees corresponding to the inscription of your rights to the property (and mortgage if one exists). The amount to be paid is established by a tariff or set price list.
To the solicitor: the cost of their administration services (depending on what services are required) for the transmission of the signing of the title deeds and the payment of the IAJD (Impuesto de Actos Jurídicos Documentados or Stamp Duty)
The translator: in the event that the buyer is a non-resident of Spain, he or she will require the services of a translator during the signing of the title deeds before the notary.

In the event that the buyer is a non-resident of Spain, legal representation will be required in order to comply with the fiscal obligations of owning a property in Spain (IRNR, IBI, etc.). Amongst these is the application for an NIE Number (Numero de Indentificación de Extranjeros or Foreigner´s Identification Number).

Signing the title deeds

Title Deeds can be thought of as the “Identity Card” for your property, as it is the title which secures your property. It should always be issued by a notary and inscribed in the Civil Registry. On the day of signing, the notary will have to solve any possible doubts that you may have. To help with this, we have created this section to cover the necessary information you will need so that you can deal with the signing of the title deeds with the upmost security and confidence.

The general rule is that the purchase contract for properties is formalised in a “public deed”. This is a public document authorised by the notary, who acts on behalf of both parties, and delivers a judgement on identity and capacity of the parties and draws up the document in accordance with the needs and agreements presented by both parties, in line with current legal requirements and informing both parties of their corresponding obligations on signing of the contract.

The intervention of a notary lends authenticity to the content of the document, to the point that before the notary are declared all the transactions of the buyer, the seller and, in the event of a purchase through financing, of the bank granting the mortgage, and all this is put in writing on the deeds, which will serve as official proof and with the date and signature of each party protecting everyone from future problems if one of the parties decides to neglect their obligations as stated in the document.

For this, before authorising the title deeds, the notary will request from the Property Registry (Registro de la Propiedad) a Nota Simple or Land Registry Certificate – a document which states that the property is debt free and without charges. As soon as the title deeds are signed, and if the parties request this, the notary will send a communication to the Property Registry informing them that the title deeds have been authorised, avoiding in this way that the buyer is liable for any costs or problems relating to the seller lodged at the Registry before the sale.

Frequently Asked Questions

The purchase of a property and its financing are two of the most important decisions that we have to make during our lifetime. For this reason it is vital to gather the correct information and support in order to make the right decision.

Repayment: Full or partial repayment of a loan.
Early repayment: This is the full or partial repayment of a loan before the agreed date. A fee is usually payable, varying depending on the loan’s interest rate. Generally speaking, the fee is normally higher if you have a fixed interest rate and lower if you have a variable rate.
Deposit: The sum of money that the future purchaser hands to vendor as a guarantee that he will buy the property by a certain deadline. If the purchaser fails to purchase the property within the deadline s/he loses this money. If the vendor does not respect the agreed schedule and sells the property to another person s/he must reimburse double the deposit to the person who paid it. If the transaction is completed successfully the deposit is counted against the purchase price.
Register certificate: A document issued and legitimised by the Property Register setting out any charges due on a property.
Regular repayment: Each monthly, quarterly or half-yearly repayment made throughout the lifetime of the loan. If the loan has reached an exclusion period, repayments are interest only. However, if the loan is in the amortisation period the repayments are interest and capital amortisation.
Differential: The percentage added to the reference interest rate at each review to reach the applicable interest rate.
Deed: As regards property, the most important deeds are the purchase deed, the mortgage and new building certificate. These are public documents signed and authorised by a notary public. These deeds are then registered in the Property Register.
EURIBOR: Average interest rate used by Europe’s major financial institutions to lend each other funds on the money market. More specifically, it is the monthly average of the daily one year rate.
Management and processing expenses: These are the expenses derived from processing the deeds, paying taxes to the Spain’s Inland Revenue Service and the Property Register fees.
Notary public expenses: As per the law, these expenses are calculated based on the total mortgage amount, the number of pages of notary paper used and the number of copies issued. They also vary depending on the complexity of the deed.
Property Register expenses: These are the expenses derived from registering the mortgage or the purchase deed in the Property Register. They are calculated based on the total mortgage amount and a percentage fee established by law.
Tax on Documented Legal Acts (IAJD): This taxi s applied to acts formalised with public documents. In the case of mortgages, it is calculated on the total mortgage amount, which is around 1.4 times the loan’s capital. The IAJD can vary from region to region.
Property Tax (I.B.I.): This is a local authority property tax. It is an annual charge and is calculated using a percentage applied to the property’s assessed value.
Interest or interest rate: The percentage applied to the outstanding capital due on a loan to calculate the interest to be paid by the borrower and included in the repayment.
Mortgage loan: This is a loan guaranteed personally by the borrower and collateralised against a dwelling, property or asset. In addition to repayment of the borrowed capital, it guarantees the payment of ordinary interest, late fees, costs and expenses derived from possible legal claims filed as a result of non-payment. It is formalised by a deed and then registered in the Property Register.
Variable interest mortgage loan: This is a mortgage loan whose interest rate is reviewed every six or twelve months based on market conditions. The revision takes the EURIBOR or the savings bank IRPH as its basis.
Fixed interest mortgage loan: This variety of mortgage uses a pre-established interest rate for the duration of the operation. This means you know exactly how much you will pay every month.
Property Register: A local, public office that keeps the official books stating all of the circumstances affecting the plots in its catchment area: charges, transactions, marginal notes, etc.
Built surface: The full surface area of the property, in square meters, including the thickness of the walls and, sometimes, the patios and ventilation conducts.
Useable surface: The full surface area of the property, in square meters, including balconies but excluding the walls. Roof terraces and patios are usually indicated separately, although they are sometimes included in the useable surface.
Equivalent Annual Rate (TAE): This is the result of a mathematical, financial formula supervised by the Spanish Central Bank. It is used to compare the real cost of different offers. In particular, it should be noted that, in the case of variable rate loans, the TAE is calculated under the presumption that the successive interest rates will be the rate at the first review, calculated on the last reference index published.
Valuation value: Real value of the property calculated and certified by legally constituted valuation companies registered in the Spanish Central Bank’s register for valuation companies.