Buying and Selling Property on the Costa del Sol
The guide below gives you an insight in to the standard Costa del Sol property purchasing procedure.

*Important* When purchasing a property in any country, it is essential that you seek independent professional advice.

Standard Purchase Procedure:

Reservation Agreement/Private Contract of Purchase and Sale
Normally the purchase is initiated with a reservation agreement, which takes the property off the market. The deposit to pay at this stage is anything between 600 euros and 10% of the purchase price. Now your lawyer will begin to check the registration of the property, which will show if there are any charges against it, and the correct ownership of the vendor.

When buying ''off-plan'', a client could expect to pay between 3000e & 6000e deposit.Within 30 days the client will be required to sign a purchase contract with the developers and would normally pay between 30% to 50% of the purchase price + the corresponding VAT or IVA (in Spain). On completion the client would pay the balance, generally available in the form of a mortgage.

Prior to paying across funds to the developer, the buyers lawyer will ascertain that projects are properly licensed and the developers own the land.

When buying a resale property, a client could expect to pay between 3000€ & 6000€ deposit to secure a particular property. Within 20 days, it is required that a private contract between the vendor & buyer is signed by both parties. Upon the signing of the private contract, a payment of 10% of the purchase price will be paid to the vendor. The contract will be binding and will specify a date for completion, whereby the balance is paid over to the vendor on signing the Title Deeds.

Prior to paying across funds to the vendor, the buyers lawyer will ascertain that the Deeds are in order and the property is free of any debts or encumbrances.

Bank Bonds / Insurance Certificates
It is compulsory by law in Spain that when the property is under construction, the vendor must give a bank bond or insurance certificate to all the purchasers as guarantee of the sums paid during the construction period. In the case of the property not being finalized or something happening during the construction, the bank or insurance company will refund the monies paid by the purchasers up to date, plus 6% interest. By this way the purchasers are absolutely guaranteed by a bank or insurance company.

Title Deed
When the house is finished according to the contract and the law, the completion takes place in front of a Public Notary, who issues the Title Deed "escritura". If the purchase is financed with a mortgage, the bank representatives are present in order to pay and sign the mortgage. The Title Deed should then be registered by the lawyer at its corresponding Land Registry.

The Title Deed to an apartment will transfer not only the freehold of the apartment but also the freehold to a prefixed percentage on the common elements of the complex such as staircase, gardens, swimming pools, etc. which also governs your duties towards the general maintenance of the property.

What are the costs on top of the purchase price?
The law states that the seller should pay what is known as "plus valía municipal", all other costs are to be paid by the buyer, as Notary fees, Land Registry fees, Transfer tax, Lawyer fees. However, in most sales it is agreed that also "plus valía municipal" are paid by the buyer, which is also legal. The lawyers normally charge 1% of the purchase price.

Notary & Registry
The cost for Notary and Registry together for a property of;
€60,000 is approximately €660
€150,000 is approximately €810
€300,000 is approximately €1,100

Plus valia municipal
This is a Municipal tax that is paid each time a property changes hand. It is a bit complicated to calculate. Basically it depends on the property's tax value and how long the property has been owned by the seller, it usually is between €300 and €1,800.

Stamp Duties or V.A.T (I.V.A.)
Depending on the party's juridical status and the type of property, there is 6% Stamp Duties or 7% or 16% V.A.T. (I.V.A.). This means; first hand homes, you pay 7% V.A.T. + 0,5% Stamp Duties. Second hand homes, you pay 6% Stamp Duties and not V.A.T.. Villa plots from the promoter, you pay 16% V.A.T. + 0,5% Stamp Duties.

Holding Company
For some purchasers there might be an advantage to form a holding company. Earlier it was popular to form Gibraltarian or other tax exempt companies, now it is mostly Spanish limited companies that cost around €1,800 in fees to constitute and an additional 1% of the desired capital as stamp duty. This is most likely only an option for the purchasers of houses more than €600,000 or up as running the company costs around €1,800 a year.

Wills
It is very advisable to grant a will in Spain regarding the assets in this country in order to avoid any kind of problems arising from the differences between the Spanish and the purchasers' law in succession matters and the execution of a will from one country to another through the Courts.

The Spanish law states that the assets must be left to the children, or parents, and the person is only free to leave a third part of their assets to anybody. So that it is advisable to grant a will in Spain, in which the foreign people state that the applicable law is the law of their country, and they can decide to leave their assets in Spain to whom they would like.