Are you thinking of buying property in Spain? Perhaps you have already found a Spanish property you like and you’ve decided to take the plunge and buy it. Before you continue with the process, there are some checks you need to make. Andalucía Lawyers’ article on due diligence when buying property in Spain tells you what you need to know before signing on the dotted line.
What is due diligence?
Once you’ve found a property you want to buy in Spain, there are some legal checks that need to be made – we call these due diligence. Due diligence is extremely important; it is essential to know exactly what you are agreeing to buy to avoid potential problems later.
Due Diligence Check-list
Before signing a property purchase agreement you should answer the following questions:
- Who owns the property?
- Are there are any unpaid debts against the property (e.g. mortgages or injunctions)?
- Is the property being leased to a tenant?
- Are there any unpaid Tenants’ Association fees or property taxes on the property?
- What kind of taxes would apply in your particular case?
- What’s the cost of buying the property and also maintaining the property?
- What’s the property’s annual running cost, including taxes, community fees and insurance?
This last point is not just for your information when calculating future maintenance costs, is it also essential as it is usual to divide the annual running costs for the year of purchase between the buyer and the seller upon purchase.
If you wanted to find this information yourself then you could obtain the majority of it from the property registry (registro de propiedad) where the property is located, either in person or via the Internet. However, we would strongly suggest employing an experienced Spanish lawyer to find and check this information for you, not just to save you time but also to guarantee that everything is in order. If you’d like to enquire about our property buying services, you can contact us via phone or email.
Check-list for What the Vendor Should Provide You with:
- An authorised copy of their deed of purchase.
- A tax receipt stating that all property taxes are paid.
- A certificate from the president or secretary of the Tenants’ Association confirming there are no amounts due on the property.
- A formal statement stating that there are no leases on the property.
Check-list for What You Need before You Can Buy Property in Spain:
- NIE number.
- Spanish bank account.
What is an NIE number?
NIE stands for Número de Identificación de Extranjero and it’s essentially an identification number for foreigners (both EU and non-EU citizens). It is used to confirm your identity when carrying out fiscal or legal procedures such as opening a bank account, buying a house or car, and setting up phone and amenities contracts.
How to Get Your NIE Number
You need to go in person to the relevant Spanish national police station for your location in order to apply for your NIE number. Alternatively, it can be done through your solicitor with your passport or a notarized copy of your passport if you grant them a power of attorney.
Am I obliged to open a Spanish bank account to buy property in Spain?
In a word, yes! Even if you have bank accounts overseas you must open a Spanish bank account in order to buy property in Spain. When contracting services such as water, electricity and telecommunications you are required to provide both your NIE number and a Spanish bank account to which they can charge you.
How do I apply for a mortgage on a Spanish property?
In order to qualify for a mortgage, the bank will require the property to be registered in your name. However, this is taken care of during the buying process. In short, when you attend the notary’s office to sign the sale deeds a representative from the bank will also be present in order to sign the money over to the vendor.
Do I have to take over the property’s existing mortgage?
If the vendors of the property you wish to purchase already have a mortgage on that property, you don’t have to take it over from them, although you can if you wish. You have two options:
- You can agree to take over the vendor’s mortgage. In this case, you must request a certificate from the vendor issued by the bank stating how much of the mortgage has been paid off and how much remains outstanding. Don’t be afraid to negotiate a more favourable rate and improved terms with the lending bank. If they don’t want to give you a better deal you can shop around other banks for better conditions.
- Request the cancellation of the seller’s mortgage. You apply for another mortgage with better conditions for you.
Consult with Andalucía Lawyers
Buying property in Spain can be a relatively straightforward process, when you have the right legal representative. If not, it is possible to fall into traps or simply to miss something that may end up costing you dearly in the future. Due diligence is an imperative part of avoiding these kinds of pitfalls and ensuring you know exactly what you are buying. Our English-speaking team at Andalucía Lawyers has over twenty years’ experience buying property in Andalusia, don’t hesitate to contact us to enquire about our property buying services.