Buying Off Plan Property in Spain
Many people choose to buy a new property. Not one that is standing empty, completely finished, for these are rare occurrences, but a property that has yet to be built. It may be identical to a show house or built to an individual design to be constructed from a builder's plans. We will now follow this standard legal and administrative trail. It starts with the decision to purchase and follows clear steps to a conclusion in the notario's office.
The Steps
1. A plan of the house
2. Locating the plot
3. The agent's agreement
4. The nota simple
5. The contract
6. Community charges - a share of the costs
7. The Certificado Final de la Direction de la Obra
8. The Licencia de Primera Ocupacion
9. Insurances
10. The escritura
11. Registro de la Propiedad
If a mortgage is required, or small building alterations are necessary, these will involve further steps.
What are the Important Documents?
All documents are important. Failure to complete one may have serious consequences. But we must also be practical. What documents are the most important? What can we do without?
The core documentation consists of the nota simple, the contract, the community rules and the escritura . Of these the contract, signed soon after the start of the buying process, is the most important. A good contract, correctly worded, is of benefit to both the buyer and seller. Altering a contract is almost impossible. A bad contract creates unnecessary difficulties. Reneging on a contract involves losing the deposit.
Reservation Contract
This document represents the first step in the buying process. It is an outline agreement to reserve the property. It should contain as a minimum the following:
- Name, address, telephone number and passport number of the purchaser.
- Name, address, telephone number and the business or personal identification of the agent.
- House type, plot number and address of the property.
- The price in Euros. This should clearly state if IVA (Value Added Tax) is included in the price.
- The reservation, deposit and payment formulae. Initially this normally involves a non-returnable deposit.
- Signed and dated by both parties.
The Nota Simple
This document, which translated means a 'simple note', is issued by the Land Registry Office and is a copy of the Property Registration details. For a property yet to be constructed, it will show proof that the person selling the property is the registered owner of the land and that there are no debts on the land.
Obtaining a copy of the nota simple is straightforward. Firstly locate the Registry Office with jurisdiction over the property or land. This is not always in the nearest town or village. Secondly complete a request for information form and pay a small fee, then return in a few days to collect the nota simple.
The All Important Contract
While conveyancing procedures end with the notary, if there is anything commercially wrong it is too late for alteration. For this reason the purchase contract is the most important document in the Spanish buying process. The signing of the contract signifies the following:
- The plan of the house and the location of the plot is satisfactory.
- The nota simple has been checked and is in order.
- The contract has been read and understood.
- Signing the contract triggers the release of a normally non-returnable cash deposit.
- The purchaser has the necessary monies, or mortgage, available to complete the transaction.
Community Charges - A Share of the Costs
Buying a property in Spain on an urbanisation invariably means becoming a member of a community of property owners. The payment of community charges every year entitles the co-owner to the use of communal facilities, and if so desired the right to discuss with neighbours at the annual general meeting matters of common concern.
With a new property on a new urbanisation, the organization of the community, the drafting of its rules, electing a president, appointing an administrator and the fixing of fees, all need to be settled.
The Certificado Final de la Direccion de la Obra
Translated this simply means 'Certificate of the Termination of the Building'. It is a certificate produced by the architect when the house is finally complete. It enables a declaration of a new building to be made at the notary's office and is used to obtain the detailed below.
The Licencia de Primera Ocupacion
'The Licence of First Occupation' is obtained from the town hall on production of the Cerificado Final de la Direction de la Obra. It is a licence to inhabit the property, registers it for the purpose of local taxes and the connection of services.
The Escritura
The escritura is the deed for the property. It is a record of the property at a point in time.
- Copia simple (not to be confused with the nota simple) is a simple copy of the escritura, less the signatures which is sufficient to prove ownership. It is available on the day of signing at the notary and recognised as suitable for most legal purposes. It is normal for the purchaser to hold a copy of this document.
- Escritura de compraventa is the document signed in the notary's office.
- Escritura publica is the escritura de compraventa, complete with many official stamps from the Property Register, converting it into a public document.
The Registro de la Propiedad.
This is the last piece of paper in the buying cycle. Strangely it is not the escritura that is the final step. The escritura de compraventa has to be registered with the Property Register making it an escritura publica and being over-stamped Registro de la propiedad
This simple one page document simply closes the loop to the nota simple which was considered at the commencement of the buying cycle. What does all this mean? It registers:
- details of the property in a public place
- who has the title
- which notary was responsible for the escritura
- details of mortgages.
