Do you want to buy or sell a property in Ibiza or Formentera?
Then you should definitely read this report by tax adviser Kathrin Thedens.
From ignorance serious mistakes are still made by the contracting parties when buying property in Spain. Often they listen to wrong advisors or refrain from cost reasons on professional advice. Forwarded: Each purchase is regulated differently. In this respect, it always depends on a consultation in each case and not on how perhaps with acquaintances or friends, the settlement took place.
Therefore, below are the main points to be considered in general, without knowing the specific circumstances in each case:
1. Agreement between the contracting parties and the establishment of a contractual basis between the parties
If the desired property has been discovered and buyers and sellers agree on the purchase price, the contracting parties should consider how the settlement should be carried out. Each party must find the most favorable arrangement for them - especially with regard to the tax aspects of the purchase. The advice of a lawyer should be obtained with the assistance of a tax adviser. Beware of hasty agreements on the purchase of the property or even contract signing!
2. The review of the contractual object and the data of contractors and property owners
- The seller has to hand over to the buyer the following documents of the real estate:
- Last property tax receipt ,
- Copy of the "Escrituras" deed,
- Building declaration and building license,
- Construction guarantees and acceptance
- Habitability certificate,
- Confirmation of the town hall that there is no construction infringement, as well as at the coastal real estate a certificate of "Demarcación de costas en Islas Baleares".
With these documents you can make the necessary review of the property.
A) The first step is to inspect the land register and cadastre of the property in question. The land register describes the ownership, encumbrances and components of the property.
It often happens that the entries in the land register do not correspond to the current state of the real estate or cadastral data. In order to save taxes, cases of succession may not be regulated. The deceased owner is still registered in the relevant land register. The notarial transfer of the property to the buyer can take place only when the heirs are registered in the land register as the current owners. Because they have to sign the notarial deed.
B) It is also conceivable that in the land register as the owner of a property the long-divorced spouses are registered. Then it must be ensured that both of them sign the notarized deed of sale or the property was transferred to one of the spouses, who then signs the deed of sale.
C) Not infrequently, conversions or additions have been made to the property. Or new components, such as a swimming pool, have been added without these changes being recorded in the land register. Then the prospective buyer should make sure that the seller first legalises the structural changes to the property and only then makes the notarial transfer of the property to the buyer. It should be guaranteed that there is a valid certificate of habitat (cedúla de habitabilidad) of the property or that the buyer can easily get it. Because it happens more and more often that the land registry without this certificate the real estate purchase is not completely entered in the land register.
D) It is more dramatic if the house does not exist in the land register. In this case, it must be ensured with the help of a lawyer that the house is entered in the land register with a notary new declaration (Escritura Pública de Declaracion de Obra Nueva). After all, the acquirer wants to acquire a built-up property that is correctly described in the property register and not just an undeveloped property.
E) More often it happens that the actual size of the plot does not correspond to the dimensions entered in the land register. Here it depends on the individual case, whether it is advisable to register per "expediente de dominio" procedure the actual plot size in the land register. If, given the planned development of the property, the square meters entered in the land register are insufficient, even though the land is larger, then a correction of the property register can not be avoided.
F) The property must be transferred to the buyer free of charge. Residential and rental rights, mortgages and liens with which the real estate may still be encumbered must be deleted when the notarised deed is signed.
G) It is also essential to check whether pre-emptive rights or sales restrictions exist, for example, the Spanish Coastal Act. There are cases where the ownership of real estate located directly on the coast can not be sold, but only a thirty-year right to use the property can be granted by the seller.
H) For prospective purchasers who are not members of the European Union, it is necessary to check whether they have to apply for a military license for the buyer. There is an agreement between Switzerland and Spain that equates Swiss citizens with those of the EU in the event of a real estate purchase. For example, in the case of an American who wants to purchase a property in a rural area (zona rústica) of the Balearic Islands, a time-consuming military approval procedure is inevitable. The Balearic Islands are part of Spain's military territory and are still subject to legal restrictions by the Spanish military authorities. The legal way out is the establishment of a Spanish company, such as an SL (sociedad limitada), which can then make the real estate purchase without military approval procedures.
I) It should be ensured that all contracting parties have a Spanish tax number and valid identity card, so that nothing stands in the way of notarial certification. The Spanish Embassy and Spanish consulates need almost three months to issue this tax number (the so-called NIE number).
3. Contractual determination of the date of the notarial purchase, the payment flow and the payment terms of the real estate purchase.
This should be well planned. The payments must, as they are an essential part of the future notarial contract, be documented and timed. The notary is obliged to include all payments, including the deposit of the notarial deed, which is why cash payments should be avoided. In addition, sellers and buyers should be clear about their tax obligations and contract costs before signing a contract.
4. Contractual determination of the costs to be borne by the buyer and the seller.
Upon signature of the notarial deed, the keys are handed over and the burden-free transfer of the property takes place. Therefore, the contractor determines who will be responsible for the costs and tax obligations before and after the notary's appointment. The seller, for example, has to provide the notarial signature for the payment documents of the community fees as well as community fees and to delete all burdens existing in the land registry at his expense.
Only after reviewing the above points, can and should a contractual regulation, which is legally binding for both parties, on the purchase by way of a preliminary contract (contrato de arras), a private contract (contrato de compraventa) or an option contract (contrato de opción de compra), depending on the current situation, to be signed by the contracting parties.
One more warning: Mistakes in buying or selling a property can be very expensive for both sides. Therefore: be sure to get advice from a competent source!