There aremany ways of buying property in Spain. The type of contract will depend on thetype of property, whether new build or resale, the nationality of the buyer. Ifall the due diligence can be completed quickly it is possible to buy a propertyin Spain in a few days.

RESERVATIONAGREEMENT

Reservationagreement is signed to take the specified property off the market for usually15-30 days, at the stated price. It is quite normal to pay a deposit of between€ 3,000 and € 10,000, which will be taken off the final purchase price, makingthe agreement subject to preliminary legal checks, mortgage loan availabilityon the property and a building survey, the deposit should be returned if thereare problems.

NIE

Propertybuyers arriving from outside Spain, will need to get NIE stands for foreigneridentification number and is essential for buying property, obtaining mortgagesand getting utilities connected.

You canapply in person in immigration office within a specially designated policestation. But you can also apply via a Spanish embassy or consulate in yourcountry.

You musttake the following documents:

• Original and one copy of your current passport. If you provide only one copy, it should be notarized

• Officialformfilled out.

When youhave paid the small fee you will be given a date to come back and collect it(or there is a process for a representative to collect it for you).

You willalso need the NIE to open a bank account.

Ouragent will assist you in all these procedures.

THINGSYOUR ESTATE AGENT WILL BE CHECKING

1. Who ownsthe property, and therefore who has the right to sell it.

2. If there are debts against it. For example, a mortgage or court judgment.

3. If thereare sitting tenants in the property.

4. If it issubject to any special rules such as subsidized housing.

5. In caseof an urbanization, whether the seller is up-to-date with the community fees.

6. If theannual real estate tax (the former “urban contribution”) has been paid. If ithas not been paid within the last five years, the new owner will be responsiblefor payment.

7. For newor off-plan homes, if insurance is in place to cover any damage that may resultfrom structural defects of the building.

8. ForSubsidized Housing (VPO) ​​if there is any prohibition against selling it orany rights of first refusal from the authorities.

Our estateagentwill get all this information fromtheSpanish Land Registry.

Either way,do not hand over any money other than a reservation deposit or sign any contractother than a reservation agreement until you have checked this information.

The arras /earnest money contract is a private legal agreement which reserves the right topurchase the property at a set price at a set timetable and penalties the buyeror seller if they break the agreement.

• It setsout the exact details of the housing to be sold - location, owner, basicfeatures and known encumbrances. If there is furniture included, it will alsohave a detailed list of those items, ideally with photos.

• It should also fix the final price, payment method and the maximum time for completing the sale.

• It will mention the amount that has been already delivered as a deposit, specifying that the money is on account of the sale and will be deducted from the final price when the deed is constituted.

Usually it will range between 10% and 20% of the final price. Ideally it will be held in an escrow account, and the money will not be transferred to the owner until the day of sale.

Althoughthe parties can agree not to include these conditions, the law establishescertain penalties for either party who breaches it:

• If it is the buyer who breaches the agreement, he or she will lose the amount already paid.

• If the seller is in breach they must return the deposit DOUBLED.

The buyersign the contractwitn the owner (or their representatives)- there is no notary at this stage.

MONEYLAUNDERING REGULATIONS

Money laundering regulations limit how much you can pay in cash and set out the choice of payment methods as part of the sale agreement. Payment will normally be by bank transfer or bank check, so it is sensible to open a Spanish bank account and transfer funds.

PAYINGFROM A TAX HAVEN

If yourmoney comes from a territory considered as a tax haven, you must inform andexplain the projected investment to the Spanish Government at least six monthsin advance, using form DP2. Once the purchase has been formalized, you informthe Spanish Tax Office if the money comes from a tax haven, or if the amountexceeds € 3,005,060, whatever the provenance of the invested capital might be.

THE SALECONTRACT (ESCRITURA)- PUBLIC DEED

It issigned in front of the notary. The payment process has been agreed (a bankguaranteed check from their Spanish bank or bank transfer already made).Signing the escritura - full name- Escritura publica - involves the formal handover of the property through the delivery of its keys and payment of the purchase price balance, either from the buyer or the mortgage company / bank.After this point, neither side can turn back.

The publicdeed is a document authorized by the notary, reflecting the will of theparties, listing their identities and responsibilities and including these onthe document as they intended, but also in accordance with legal requirements.It warns the parties about the obligations and duties arising from the agreedcontract for each of them.

The notarywitnesses the authenticity of the document, so that, whatever the buyer, theseller, or where appropriate, the mortgage lender, declares before the notaryis included in the deed. This serves as proof for everyone and neither partycan deny the statements contained within it. Notarized records are the highestlegal standard of evidence among parties. The execution of the deed iseffectively the delivery of the property, and the balance of the purchase pricewill normally be delivered to the seller in the presence of the notary. Thenotary must identify in the deed the price, stating if it is received before orat the time of execution of the deed, the amount and payment methods - i.e.bank check made out to the seller or payable to the bearer, bank transfer,direct debit. If the price has been paid prior to the time of execution of thedeed, the notary shall state the date or dates on which it was made and thepayment method used in each. Before authorizing the deed the notary will askthe Land Registry for a simple note stating the ownership and charges of theestate. Immediately after it has been signed, if the parties request it, thenotary will let the Registry know that the deed has been authorized. Thisprevents the buyer from being affected by any lien or charge that the sellermay agree once the contract is concluded, but which are presented to theRegistry before the purchase deed is granted.

It isessential, once you have signed the deed, to complete the registration of yourrights in the Registry.

To registerproperty rights in the Land Registry, the following documents must be presentedat the local Registry Office:

• Acertified copy of the deed of sale.

• Printed tax self-assessment form, showing payment of taxes at a bank.

• The mostrecent property ownership tax (IBI), or a cadastral certificate showing thecadastral reference of the property. These documents should be incorporatedinto the deed and its copies.

• Proof ofsubmission of a copy of the deed to the local tax authority for the purposes ofthe Municipal Tax on Increase in Value of Land of Urban Nature (surplus value).

Thepresentation of these documents to the Land Registry can be done directly bythe buyer, the notary, the lawyer or a gestor. However you choose to do this,once these documents are at the Registry, registration must be completed within15 working days. The registrar will verify that the agreement has been madewith full legal effect and the property rights of the buyer will be recorded atthe Land Registry.

Thisregistration is necessary for the buyer’s newly acquired right to be fullyprotected:

• You willbe considered the only true owner unless judged otherwise.

• You areprotected against creditors of the seller.

• You areprotected from hidden charges against the property.

• You may obtain judicial protection of your rights.

• Once you have registered your rights, no one can effectively acquire any rights over your home without first obtaining your consent.

• You can obtain a mortgage loan to finance the purchase of housing. Only if the buyer registers his or her right of ownership may the bank register the mortgage that guarantees repayment.

The changeof ownership will be notified to the cadastre so they will know that theproperty taxes will now be paid by the buyer.

PROPERTYTAXES

Buying aproperty in Spain means paying property taxes at the time of completion, whichare based on the sale price as stated in the deed of sale. However, if the saleprice is judged to be lower than the real value then the tax office (Hacienda)will submit an additional bill for the difference.

- If thebuyer is not a Spanish resident, the seller will withhold 3% of the price andgive it to the tax authorities. - If the seller is not a Spanish resident, thebuyer will withhold the capital gains tax on the increase in value of urbanland - formerly known as surplus value

How muchtax is payable will depend on whether the purchase is a primary residence, abrand new property bought directly from the developer, or is a resale.

NEWHOMES: The buyerpays Value Added Tax (VAT) to the seller, this is 10% on residential property(different rate by the relevant Autonomy) The buyer pays IVA along with thepurchase price and the seller sends it on to the tax authority. The buyer alsopays Stamp Duty Tax (AJD) of 0.5% of the value declared on the deed (unless setat a different rate by the relevant Autonomy). This will be self-assessed on anofficial form and paid into the tax office via a cooperating bank.

RESALEHOMES: The buyer ofa resale pays Transfer Tax (ITP) rather than IVA, at a rate of 10 % of thevalue declared in the deed, but again can be set a different rate by theAutonomy. It is also paid via a selfassessment form at a cooperating bank.

PAYING PROPERTY TAXES.

To payproperty taxes you obtain printed self-assessment forms, calculate the amount,pay it to the relevant entity and give the form notifying that you have madepayment to the tax office. Your lawyer will normally pay the property tax, butit could be done by the purchaser, by an agency or by the notary who hasdrafted the deed.

A BUYERPAYING PERSONALLY NEEDS TO KNOW:

1. Where tosubmit the self-assessment form for ITP or AJD. For property in provincialcapitals it is paid to the Delegation of Finance of the Autonomous Community.For property outside the provincial capital it goes to the District LiquidationOffice, which takes in the Land Registry.

2. Payment of Property Transfer Tax and Stamp Duty Tax must be made within 30 working days from the date of execution of the deed. Delays will lead to a surtax being imposed.

3. Paymentof those taxes is required for you to take out the registration of rightsacquired in the Land Registry.

OUR REALESTATE AGENCY WITH THE NOTARY AND THE AGENCY WILL TAKE CARE OF ALL THENECESSARY PROCEDURES TO FINALIZE THE PURCHASE WITH ALL THE GUARANTEES ANDALWAYS IN ACCORDANCE WITH THE REGULATIONS AND LAWS IN FORCE.