Buying property in Spain - Mortgage Solutions 4 Spain

Buying a property in Spain

There are no restrictions on non-residents owning a property in Spain. It is usally better to buy in a personal capacity and not via a company but this depends on a number of factors and should be discussed with your Spanish lawyer and home country tax adviser.

The buying process is usually relatively simple and usually involves payment of a holding deposit, payment of 10% of agreed purchase price, via a Private Purchase Contract and subsquently payment of outstanding balance on completion. Completion involves signing an Escritura de Compraventa (Exchange of Title Deeds) at the Notary.

If you require a mortgage to complete your purchase we recommend that:

the holding deposit be refundable in the event you are unable to obtain a mortgage; and
you do not sign a Private Purchase Contract or pay further sums until you have a formal mortgage offer.

Note that most Private Purchase Contracts call for the buyer to forfeit any sums paid if they withdraw from the sale while the seller must pay twice the sums paid if they withdraw.

In any event, it is strongly recommended that you use a local Spanish lawyer, preferably English speaking, to help you with your purchase. We do not recommend that you use a lawyer who represents the sellers' estate agent or the sellers themselves.

It has been relatively common practice in Spain to under declare the price being paid for the property and to make up the difference via a cash payment on completion. We do not recommend that you do this and the Spanish authorities have recently passed legislation which makes such practices more difficult and obliges banks, lawyers and notaries to advise the authorities if this is occurring.

In addition, as in other EU countries, Spanish banks are obliged to report any cash withdrawals over a certain amount (€3,000 at the time of writing) and also to report any transfers into an account of more than €12,000.

Since January 2007, the Notary will require proof of where the funds being used to purchase the property have come from, e.g. confirmation of bank transfer from bank sending the funds on your behalf.

Finally, it is important to note that anybody going on the title deed and/or mortgage must obtain an NIE number from the Spanish authorities BEFORE being able to complete the purchase. These must be applied for in person in Spain at a suitable police station. Please discuss this with your lawyer before you leave Spain. Click here to download the relevant form.