Essential advice on buying property in Spain. The article that you cannot miss.

Once you have chosen a property, you should request a Copy of the Seller’s Title Deed or Deed of Sale. It is possible that the Seller (owner) acquired the property by Sale, Inheritance, Sale by Judicial Auction, Dation in Payment, Exchange, Donation, Marriage Settlement, etc. so it is necessary to make sure that the seller’s title deed is a Public Record, i.e. a Notarial Deed. In Spain, only those documents signed before a Notary may be registered in the Land Register.
If the seller gives you a Private Document you should be particularly careful as it is possible that the person who is offering the property for sale is not the same as the one in whose name the property is registered in the Land Registry. Furthermore, as long as the seller does not register the property in his/her name in the Land Registry it remains open for the enforcement of any type of charges, embargoes, mortgages and even in favour of other people.

Having said that, if you don’t know Spanish you should take the Public Title Deed to a lawyer so that he/she can study it in detail and check the current legal situation of the the property being sold in the Land Registry, i.e. if there are any Charges, Attachments, Mortgages or anything which affects either the value of the property or the ownership of the person who is offering the property for sale.
If the seller gives you a copy of his/her public title deed, you should check whether this title deed has been submitted for registration in the Land Registry. Make sure that the corresponding Capital Transfer Tax (Impuesto de Trasmisiones Patrimoniales) has been paid. Look through the last page of the title deed and see if it has been signed by the Registrar and read any comments.

You should also ask the Seller for a photocopy of the Property Tax (Impuesto sobre Bienes Inmuebles) receipt. Remember that you must provide a copy of this receipt at the Notary’s Office when you go to sign your Public Deed of Sale. The Property Tax is a small Municipal Tax that is paid each year to the Town Hall where the Property is located. The quantity of this Tax varies according to the Rateable Value of the Property which appears on the receipt. The Rateable Reference or Number is also very important. The Notary who authorises the Public Deed of Sale and also later the Town Hall once the public title deed has been signed at the Notary’s Office must both be informed of this reference.
You should also ask the Seller for the last electricity bill, water bill and the Municipal Refuse Collection Tax. If you are buying a house rather than an apartment, you should also ask the Seller for a copy of the First Occupation Licence and the Certificate of Fitness for Habitation for the property.
When the dwelling is located in a building, it is also a good idea to ask the seller or even the administrator of the Owners’ Association for the official building documents, i.e. the Municipal First Occupation Licence (Licencia Municipal de Primera Ocupación), the Architect’s Certificate for Termination of Work (Certificado de Terminación de Obras del Arquitecto) and the Certificate of Fitness for Habitation (Cédula de Habitabilidad).

FOREIGNER’S IDENTITY NUMBER (N.I.E.):
The N.I.E. is a document issued by the Spanish Home Office, and should be applied for at the “Oficinas de Extranjeros” of any National Police Station.
The N.I.E only identifies those foreigners who pay taxes in Spain. For this reason, obtaining the Foreigner’s Identification Number does not mean that you have been granted Legal Residence in Spain; nor does it prove your identity to the National Police. Only the residence card and the work permit prove legal residence in Spain.
To obtain the Foreigner’s Identity Number you must go to the nearest National Police Station and ask for the Oficina de Extranjeros where you will be given a very simple form to fill in. Once you have completed it, you must take your passport, a photocopy of your passport to the Police Station.
You will need to submit your application and you will normally be asked to return within a month to collect the original document. Once you have been given the original document, i.e. the Foreigner’s Identity Number Certificate issued by the Home Office, you will have to go to your local Tax Office to register your Foreigner’s Identity Number so that you can be given your Fiscal Identity Card.
Useful advice: when you go to the National Police Station for the first time, you should take a photocopy of your Passport, your Original passport, . This way, you won’t have to go back and you can fill in the form on the spot and hand it in immediately.
The NIE must either be collected by the applicant in person or by a duly authorised representative. If you want to appoint someone to collect the NIE for you, this should be recorded on your official application when you submit it at the police station. If you want someone else to process your application for you, you can confer Power of Attorney before a Notary or a Spanish Consul abroad. The person who goes to collect your Identity Number for you must show this Authorisation or Power to the staff at the police station.
THE LAND REGISTRY:
In order to be able to buy a property safely and to avoid any type of risk there are certain things which you should understand:
How Land Registries operate in Spain.
First of all, they are open from 9.00am to 2.00pm for the presentation of any public document so that it may be registered.
In the Registries, there is a book called the daybook (libro diario) in which a note is made of the date, the time, the person presenting the document and the type of document, and it is given a number. This book is very important since it establishes the order of priority for those presenting documents at the Land Registry according to chronological order.
Time and Date. If the seller’s creditor presents an attachment order before you present your Title Deed or Public Deed when you go to register the property in your name, the Land Registrar will make a note that the property has been purchased with an attachment order although there is no mention of any attachment in your title deed.
In which case, you should be extremely careful and ask for information about the property you wish to purchase before making any payment. In general, there are three ways to get information from the Land Registry:

a)  Simple Information Note (Nota Simple Informativa).
b)  Certification of Ownership and Charges.
c)    Access to Books.

a) The most common of these is the Information Note, although as it is not very expensive and is given to anyone interested in purchasing a property, the information contained in the Simple Information Note is not complete since it might not mention documents which have since been included in the register or which are waiting to be registered.
b) The safest system is to request a CERTIFICATE OF FREEEHOLD OWNERSHIP AND CHARGES. The Certificates of Ownership and Charges are signed by the Land Registrar and they state who is the owner, if there are any charges on the property and in whose name these charges appear and finally, if any documents have been submitted to the Land Registry from the date of issue of the Certificate which could affect the ownership or the charges on the Property.
c) EXHIBITION OF THE LAND REGISTRY BOOKS is not possible in all the Registries. It is necessary to submit an official application beforehand, and the person in charge of the Land Registry at the time will then show you the book where the property is registered so that you can examine it and take any notes you consider relevant from the page where the registered property appears.
In order to access the information services of the Land Registries in Spain you must fill in an official application with the REGISTER DETAILS OF THE PROPERTY. If the Property does not have any Register Details or if you do not know them, you can request a Certificate of Ownership and Charges specifying the name of the person claiming to be the owner of the Property and National Identity Document or NIF, or in the case of foreigners the Foreigner’s Identity Number or NIE.
Official applications for the Certificates are available for anyone who wishes to request information at the Land Registry. The staff at the Land Registry will help you to fill in the official application if they can, time permitting. Interpreting the information from the Land Register can be extremely complicated and we therefore advise you to consult a lawyer whenever you obtain information since the legal terminology used is quite complicated for anyone who is not an expert in Spanish Law.
If you have decided to purchase a property in the country, a plot of land to build a house on or even an apartment in a building, it is always a good idea, although not essential, to consult the technicians at the Town Hall where the Property is located. In general, the Certification or the consultation at the Town Hall is essential when buying Plots and Pieces of Land to build on, and also when you are buying apartments, flats or houses under construction. This consultation is not necessary for old buildings in urban areas which have already been developed although it is advisable. The consultation is also essential for those houses which are very close to the coast as there may be regulations which affect or restrict the purchasers’ rights. There are two ways to request information at the Town Hall:
- The first is to ask for an Urban Development Certificate (Certificado Urbanístico) to see if there are any problems or charges which might affect the property.
- The second is to meet the technicians from the Town Hall (Architect) in person.

OWNERS’ ASSOCIATION:

In Spain, under the Regime of Owners’ Associations, an association is created for any building consisting of more than two dwellings with different owners. The Owners’ Association exists when there are common areas or elements within a Building which are shared by the Owners living there. Common expenses arising from these Common areas must be shared on the basis of a percentage quota which appears in the Property Deed between all the members of the association.
Law 8/1999 recently altered the Legal Regime of Owners’ Associations and established important new features. One of these makes it necessary, when signing the Deed of Sale, to provide a Certificate signed by the Administrator Secretary of the Owners’ Association which has been approved by the President to prove that the property is up to date with all the common expenses mentioned above.
Without this document, the Notary will not authorise the Public Deed of Sale except in the case of the purchaser relinquishing his right to be informed of the debts weighing on the property.
You must bear in mind that if you purchase the property without checking with the Owners’ Association, you will be responsible for the previous owner’s debts until the end of the current year and for the one immediately prior to the purchase date .
For his/her part, the Seller is obliged to inform the owners’ association of the sale of the Property and failure to do so may lead to joint responsibility for the quotas of the Owners’ Association which have been accrued after the transfer of the property, in such a way that the Owners’ Association can judicially claim these expenses both from the new purchaser as well as from the previous owner who did not inform the Owners’ Association of the sale of the property.
It is also advisable to ask for a copy of the Statutes of the Owners’ Association and to read them very carefully to see if there are any regulations which restrict your rights as an owner or which may negatively affect you in any way. You should also make sure that the property which you are purchasing and all its elements or annexes (terraces, courtyards) are exclusive areas which belong to the property and which do not have any type of restrictions or belong to the Owners’ Association. You should also examine the Deed of the Horizontal Division of the Complex.
PRIVATE CONTRACT OF SALE OR PUBLIC DEED
When you have decided to purchase a property, you need to ask yourself how long will it take to raise the money necessary to pay the purchase price in full.
Once you have thought about this and if you consider that you may need one or two months or even more, it may be necessary to draw up and sign a Private Contract of Sale in order to Reserve the Property and avoid it being offered to others. This document will fix a definitive price for the property which cannot be changed by the Seller at a later date. In general, there are three ways to purchase a property by means of a Private Document:
a)  The Precontract or Promise of Sale/Purchase
b)  The Call Option
c)    The Private Contract of Sale/Purchase

It is important to understand the differences between these three ways so that you can choose the one which best suits you. In order to avoid confusing technical explanations, we will provide a simple definition of each of the types of contract, together with the advantages and disadvantages of each one when compared with the others.
A)  The Precontract or Promise of Sale/Purchase. In this contract, the parties have agreed on the essential elements of the sale such as the object (house, garage, etc.), the purchase price and the date on which the Public Deed of Sale will be signed. In order to reserve the property, a quantity of money is handed over and this is called the deposit or down payment, and the signing of the Deed of Sale is postponed until a later date. The Contract or Operation of Sale will only be complete once the Purchase Price has been paid in full and this normally takes place when the corresponding Public Deed of Sale is signed before a Notary.  You should remember that the Spanish Civil Code establishes that once the deposit or down payment for the contract has been handed over, the parties are bound in the following way: if the Seller sells to a third person or refuses to sign the Public Deed of Sale, he/she must return the deposit plus compensation for damages which is the same as the amount which the Purchaser handed over as the deposit or down payment If on the other hand, the Purchaser decides not to go ahead with the Purchase, he/she will lose the sum handed over which will be kept by the Seller as compensation for damages.
B)  The Call Option. In the call option, a sum of money is handed over. However this is not considered as payment towards the price of the purchase nor as a deposit. In the Call Option the payment is called the Call Option Premium and establishes a preferential right of purchase before any other person for a certain period of time. The parties are completely free to agree the quantity of the premium to be paid and this document can even be signed before a Notary Public and registered in the Land Registry, which is advisable when the Premium is high and the time period for the Call Option is quite long. In this way, when someone is interested in purchasing the property, if they request a Simple Information Note from the Land Registry they will see that someone has a preemptive right to purchase. In practice, people who sign a Call Option never submit it as a Public Document nor register it with the Land Registry since this requires a considerable sum to be paid for the Capital Transfer Tax. In general, the Call Option can be an interesting option when fairly large property operations are carried out on plots of land or in buildings and some time is needed to raise the necessary money to complete the Contract of Sale. The Call Option Contract should establish very clearly how the notification is to be made by the optant of his/her of his preemptive right to purchase since once the Seller has been notified of the Purchaser’s Call Option, the Contract becomes a Contract of Sale, since there is full agreement between the parties.
C)  Private Contract of Sale. By means of this contract the parties have reached full agreement about the object, the price and the method of payment. There are no further discussions or promises since there is a strong intention to buy the property. In this case, if the money is available, the most advisable thing is to sign the Public Deed of Sale before a Notary without delay so that it can be submitted to the Land Registry. However, in certain circumstances, it may be necessary or convenient for it to remain as a Private Document for a certain period of time. The Contract of Sale must be perfectly drawn up placing special emphasis on how the Contract of Sale can be rescinded in the case of nonpayment, sale to a third party, charges or encumbrances existing on the property which prevent it being freely purchased. It is a good idea for the subsequent conditions of the Contracts of Sale to be drawn up by legal professionals who should consider the circumstances of this operation. The Private Deed of Sale must always be settled of the Capital Transfer Tax although most people prefer not to do this until they have signed the Public Deed of Sale. However, you should be aware that nonpayment of the Capital Transfer Tax and keeping a sale as a Private Document for too long a period of time can lead to problems which in certain cases may be irremediable since as long as the Land Register continues to be open and the property registered in the name of the Seller, charges and encumbrances may be registered which could affect the Property. If any problems arise during the sale and the Capital Transfer Tax has not been paid, it will be very difficult to prove both that the date of the private document is as it states in this document and also the authenticity of the signatures of the intervening parties, and it will be necessary to resort to the Courts and Judicial System of this country requiring additional proof as to the identity of the parties, the signatures, the payment of the price and the date of the contract. The advantage of the Private Contract of Sale between two parties over the two previous ways is that any dispute will be resolved in a Court of Justice whereas this is not necessary in the other two cases.

Lawyers are the only qualified professionals in our country who can defend the interests of others in Courts of Law.
However, the Lawyer’s ability to defend his/her clients in a Court of Law does not restrict him/her to solely offering advice services but of no lesser importance are his/her powers to prevent risks; this is one of the lawyer’s main jobs. When you contact the lawyer, you should value this professional’s experience, your ability to communicate with your lawyer in your own language is essential.
Before asking the lawyer to do anything, you should agree to the price for the lawyer’s professional services. Once you have reached an agreement with the lawyer, you will be asked to provide a certain sum of money to cover the fees and charges which the lawyer will have to pay as a result of the professional job which you have asked the lawyer to undertake.
Once you have paid the lawyer this sum of money and so formally contracted the lawyer’s professional services, your lawyer will deal with all the formalities relating to the sale thereby ensuring that as a result of the lawyer’s professional experience and ability the sale will go through as satisfactorily as possible for the purchaser and without any risk. Lawyers who badly advise clients or who do not foresee any risk which is obvious or evident in any Public Register are liable for any damages which the client may encumber.
Your lawyer will be responsible for drawing up the Private Contracts of Sale, obtaining Certificates and Information Notes from the Land Registries, checking the Seller’s documentation and giving advice when it comes to signing the Public Deed of Sale. They can even intervene on your behalf with Power of Attorney.

Jose Escobedo
Abogado - Lawyer

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C.C San Eugenio local 81
Playa de las Américas, Tenerife

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