Deposit & Reservation agreement
Paying a deposit is the first step to buying a property, and to remove it off the market. Deposit amount is min 6.000 € and up to 10% of the property value, when buying a property in Spain. It should be paid either to the developer, your agency, agency of the buyer, or your lawyer. A reservation agreement always follows with the deposit, and will stipulate the conditions. The deposit to reserve a property is normally non-refundable. Exceptions can be made for example if a mortgage needs approval or if there are unresolved legal questions.
We will always scrutinise any reservation document, and verify the conditions are reasonable. You can pay the deposit by bank transfer, with a credit card, or in some cases with cash. Sellers representative (agency) and you sign the reservation agreement, which is then valid with proof of payment. With the reservation agreement signed, and deposit in place, the property is yours for now. Next step is either a private purchase contract (PPC), or directly to notary to sign the deeds!
Due diligence is a process your lawyer carries out, and is a very important aspect of buying a property. The Spanish administration system for debt, property ownership and construction licenses is very complex. As a consequence, it takes experience to thoroughly check all aspects of the property. Outstanding tax, community fees, irregularities in size, and existing mortgages will all show up during due diligence. Your lawyer will inform you about the consequence of any irregularities, and include it in the private purchase contract (PPC). It is also possible to uphold the PPC until these matters are in place. It is possible to carry out the due diligence your self, but it is not something we advice to do. When buying a property in Spain, the lawyer fee by far outweighs the problems and complications which can arise.
Private purchase contract (PPC)
The private purchase contract is a legal binding document, outlines the conditions for the property purchase you are about to do. It stipulates any special conditions agreed between you and the seller, and replaces the reservation agreement entirely. The contract is typically signed within 1 month of deposit payment, and will be uphold until the day of signing of the property purchase at the notary. It is important to study the private purchase contract (PPC) in detail, especially when buying an off-plan property. The reason for this is any stipulation regarding selling the property before completion, delays and so on.
The seller and you signs the private purchase contract, when both parties agree on the terms. With the private purchase contract (PPC) in place, it is common to pay 10%, minus the already paid deposit. If the seller fulfil their responsibilities, this payment is not refundable, are you are on your way to purchase a property in Spain.
Signing at the notary
When all the steps above have been carried out, the big day is finally arriving. At the Notary, the new deed will be signed, and you have officially purchased a property in Spain! At the notary, the lawyers and the Notar will go through all documents, and ensure everything is correct. The Notar will also explain to you direct or through a translator, what is the process. With everyone in agreement, the new deed will be formally signed and stamped. From this point on, you can now call your self property owner in Spain! Remember to bring your passport or personal identification card, as without you can not sign the deed.