THE PEOPLE INVOLVED IN BUYING

The agent

• A good agent is one who can offer a wide variety of properties for sale.
• Greater security is offered by dealing with an agent who is professionally qualified or belongs to a professional organisation.
• For first-time buyers, uncertain of the laws and customs of the country, a good agent will give additional assistance during the difficult moving-in stage.

Agents dealing in Spanish property do take a high commission. The lowest start at around 3% but the average is 10%. When selling a finca it can be 25%. How do they justify such exorbitant charges? Their answer is ambiguous, making reference to high advertising costs, commissions due in two countries and complex transactions involving different nationalities.

The commission rate for selling a new house on behalf of a builder is usually fixed at around 10%. If a number of agents are selling the same properties they may compete with each other discounting their commission by offering furniture packages to prospective purchasers.

A different commission structure operates for the sale of a second-hand property, commonly termed a resale property. In some cases the agent operates on a fixed commission, but it is more customary for the following arrangement:

• The agent asks the seller the price he wishes for the property.
• He advertises and negotiates the sale of the property at another, higher price.
• The difference between the two prices is the agent’s commission, which is rarely less than 10%, more likely to be 15% and can in special cases reach 25%.
• This pricing structure gives rise to considerable animosity. It is compounded when buyer and seller seldom meet, creating an atmosphere of mistrust in relation to the commercial motives of the agent.

The abogado (solicitor)

It is important to remember that the appointment of a legal representative is principally to protect the buyer. The agent is working for the seller. Rather like many other aspects of daily life, it is a system of checks and balances. But let us be clear at the outset. The Spanish system of house conveyancing is different. You are not dealing with solicitors who draw up and exchange contracts on completion.

So what does the abogado do? The abogado:

• draws up a contract should they be asked to do so;
• helps complete the conveyance of the property;
• provides help and guidance on legal matters, principally the content of the contract and payment methods;
• makes arrangements to obtain and receive a power of attorney should this be necessary if the parties will not be available to sign the escritura (see below);
• obtains an NIE number so that a client’s personal identification is by name and also number.
• makes arrangements for signing the escritura and final property payments.

The bank

A bank may be recommended by a friend, an agent or the abogado, or be linked with a bank back home. Here are some recommended criteria for selecting a bank.

• Some staff, preferably the manager, should speak English.
• In order to have access to major services such as mortgages and investments, the bank should be a major player in the Spanish marketplace.
• Money transferred into Spain for the purchase of a property will come through the clearing bank system. The bank back home and the Spanish bank should both be main branches to prevent delays in money transfer.

Need a mortgage? The Spanish bank is a provider. Need a short-term bridging loan? Forget it. These two statements demonstrate a difference in attitude towards borrowing money. A loan is seen for business and a mortgage for home finance, with the two kept strictly separate.

The notario

In Spain all deeds for properties are drawn up by public notaries who are appointed by the government. They are qualified lawyers who have additionally studied to become notaries. They are very important people in the Spanish community, responsible for legalising many documents including the power of attorney, drawing up wills, certifying copies of passports and, most importantly, approving the deed of a property, known in Spain as the escritura.

The escritura is signed and witnessed by the notario in the presence of the seller(s) and the purchaser(s) unless any party has utilised the power of attorney to excuse their own presence. The notario’s duty is to:

• check the name of the titleholder and whether there are any charges or encumbrances against the property;
• check the contents of the escritura;
• ensure the escritura is read to the purchaser(s) prior to signing;
• check that both parties have been advised of their legal obligations;
• certify the escritura has been signed and the money paid.

The notario represents the state. He does not guarantee or verify statements or check the contractual terms. He protects the interests of the buyer or seller by pointing out any pitfalls, by offering advice on legal points and volunteering information.

The end product of a visit to the notario is the escritura. It is a hard-backed copy of the deed, which is covered in official stamps, signatures and writing. It is typed on thick, numbered paper. It is an impressive document produced to a standard format.

The gestor

A gestor acts as an intermediary between Spanish officialdom and the general public being a registered agent dealing with government departments. It says much about the Spanish way of life that such a person is necessary to deal with its wearisome bureaucracy. What do they do? For the Spanish they simply deal with the complicated mass of paperwork. For foreigners they do the same, in a country where the language barrier, a new culture and different procedures can cause additional problems. The tasks covered by the gestor are:

• application for residency;
• entry into the Spanish health system;
• dealing with the payment of car tax, car transfer tax and other car related matters;
• payment of income and wealth taxes;
• if required, help in setting up a new business.

Avoiding problems

Problems associated with purchasing a property abroad have been highlighted many times in the popular press. From a legal viewpoint Spain has not always been the safest place to buy. Most horror stories come at the start of the buying process. It is at the contract and deposit stage where things go wrong, where insufficient checks have been made or inadequate procedures followed.

It cannot be emphasised too strongly that anyone planning to buy a property in Spain must take independent legal advice in a language in which they are fluent from a lawyer experienced in Spanish property law. Always deal with professionals and do not assume that because you may be dealing with a fellow countryman that the advice is better, cheaper or even unbiased.

Do not sign anything, or pay a deposit, until you have sought legal advice. One of the most common phrases heard in Spain is about buyers ‘leaving their brains behind at the airport’. It is true! The rush to buy a dream home or a pressurised selling trip or even the euphoria of the moment often make people do incredibly stupid things, literally handing over cash deposits to agents or owners with little or no security.

UNDERSTANDING THE LEGAL DOCUMENTS

Many people choose to buy a new property – not one that is standing empty, completely finished, for these are rare occurrences, but a property that has yet to be built. It may be identical to a show house or built to an individual design to be constructed from a builder’s plans. The documentary procedure below should be followed.

• A plan of the house. A three-dimensional line drawing, or an architect’s plan which shows the dimensions of each floor and each room in square metres.
• Locating the plot. A line drawing locating the plot which is called plan parcial, a Spanish term meaning a plan of parcels or plots of land.
• The reservation contract. This document represents the first step in the buying process. It is an outline agreement to reserve the property.
• The nota simple. This document, which translated means a ‘simple note’, is issued by the Land Registry Office and is a copy of the property registration details. It will show proof that the person selling the land or property is the registered owner and there are no debts.
• The purchase contract. This signifies that the plan of the house and the location of the plot are satisfactory, the nota simple has been checked and is in order, and the contract has been read and understood. It releases a non-returnable deposit and signifies the purchaser has the necessary monies to complete the transaction.
• Details of the community charge. Buying a property in Spain on an urbanisation invariably means becoming a member of a community of property owners. The annual payment and communal facilities should be stated.
• The certificado final de la direction de la obra. Translated this simply means ‘certificate of the termination of the building’. It is a certificate produced by the architect when the house is finally complete. It enables a declaration of a new building to be made at the notary’s office.
• The licencia de primer a ocupación is obtained from the town hall on production of the cerificado final de la direction de la obra. It is a licence to inhabit the property and registers it for the purpose of local taxes and the connection of services.
• Insurance. A copy of the policy for the property during construction should be available stating the insured value.
• The escritura is the deed for the property. The copia simple (not to be confused with the nota simple) is a simple copy of the escritura, less the signatures, which is sufficient to prove ownership. It is available on the day of signing at the notary and recognised as suitable for most legal purposes. It is normal for the purchaser to hold a copy of this document. The escritura de compraventa is the document signed in the notary’s office. The escritura publica is the escritura de compraventa complete with many official stamps from the Property Register, converting it into a public document.
• Registro de la propiedad. This is the last piece of paper in the buying cycle. The escritura de compraventa has to be registered with the Property Register making it an escritura publica and being over-stamped registro dela propiedad. This simple one page document simply closes the loop to the nota simple that was considered at the commencement of the buying cycle.

The documentation for a resale property is slightly different:

• Obtain a copy of the seller’s escitura.
• Obtain a copy of the nota simple.
• Obtain a copy of the seller’s passport or residencia.
• Obtain a copy of the seller’s empadronamiento certificate, which will have been issued by the town hall and which simply states the names of those residing at the address.
• Although not always possible, try to obtain a copy of a scale drawing of the property.
• If sold furnished, obtain a signed copy of the furniture inventory.
• Obtain the last copy of the paid bills for utilities such as water, electricity and telephone, together with rates and community charges.
• Sign the contract and pay the deposit.
• Sign the escritura. Make the final payment. Obtain the copia simple.
• Arrange insurances.
• Ensure service and utility supply accounts are changed into the new owner’s name.
• Obtain a final copy of the escritura and the registro de la propiedad.

The first four steps are simply to ensure the person who is selling the house has the right to do so. The name(s) on all the documents should be the same. If not, it is important to find out why. The dimensions of the property in the escritura should agree with the dimensions in a scale drawing. If not, this requires investigating as building alteration may have taken place. The seller’s escritura, the nota simple and the financial checks will give details of mortgages and encumbrances on the property. The copia simple is the necessary identification required by utility suppliers in order to change the ownership.