Buying Property in Spain - Contract Issues

Contracts




Here's a brief summary and the problems you can get.



The 3 usual stages during the purchase process are:



1. The reservation fee Often the estate agent or seller will ask for a reservation fee of anything up to 5% of the price.



In my experience, both as a buyer and a seller, this is a complete waste of time. The only instance it's necessary and useful is when you're buying off-plan.



If you're buying, then unless you have a proper contract it's too easy for someone else to come along and beat your offer. You've then got the hassle of trying to get your money back. If you're selling it's the same; without a formal signed contract and at least a 10% deposit you've got nothing.



2. The private contract (contrato privado). This is drawn up by your lawyer, if you've any sense (some estate agents will offer to do this for you - forget it, you don't ask your lawyer to sell your house, do you?) Basically it states who is buying what; from whom; for how much; what the timescale is; what conditions are attached; what deposit is to be paid.



When the seller and buyer sign this contract the buyer hands over the agreed deposit. Spanish law is good here in that if the seller drops out of the sale they have to pay you back double the deposit.



3. The Sale Contract (escritura de compraventa) This is the important one which both buyer and seller sign together in front of the Notary. This then gets covered in loads of official stamps and stickers, becomes your public title deed (escritura pública), and is registered as such at the Land Registry...eventually. I've just got mine back, one year and 10 months after buying!



You don't have to go through all the stages. Sometimes you can go straight to the Notary; a lot of sales don't even do this, they're just private sales completely bypassing officialdom and therefore saving money. The problem here is the property won't be officially registered in the new owner's name.



People do this to avoid tax, lawyer's fees and Notary fees, but it comes back to haunt them when they want to sell on, because they can't prove officially and publicly that they own the property.



Most land and village houses are like this. The ones with proper deeds and clean title are the exception not the rule, which is why you need a lawyer to sort it all out for you.



The author moved to Spain in 2003. He has built his own villa, bought and sold land, and refurbished a village house. He knows only too well the perils and pitfalls of buying property in Spain.



http://buying-property-in-spain.com



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