Steps to Buy a House in Spain as a Foreigner

So, you’ve decided to buy a property and invest in real estate in Spain. NOW WHAT?

Whether you are buying real estate in Spain as a primary residence, vacation home or an investment to obtain a Golden Visa, there are a few things you need to know and consider before closing the deal to avoid unsavory surprises along the way.

BUYING PROPERTY IN SPAIN AS A FOREIGNER

There are two requirements you must comply with in order to finalize a real estate purchase in Spain as a foreigner. You must have a:

NIE NUMBER (National Identification Number for Foreigners)

You can apply for it in your country of origin (at the local Spanish Consulate) or directly in Spain (at the local police station). It is usually easier, quicker and cheaper to get it done in your home country. When applying for it, it is important to let the officer processing it know that you are requesting the NIE for real estate purchasing purposes, as it will be a temporary one.

SPANISH BANK ACCOUNT from where the funds to pay for the property will be taken.

Some Spanish banks offer accounts for non-residents wishing to purchase real estate in Spain. After the purchase is complete, you can close the account or switch to a checking account to have your Spanish utility bills or house insurance on it, for example.

A NIE and a Spanish bank account are mandatory to sign the “Escritura Pública” (closing documents and title deed), i.e. the last step in the purchasing process.

However, you can still make an offer and “reserve” a property with a down payment before obtaining them. Talk to your REALTOR® to check your options and best ways to move forward if this is your case.

GOOD TO KNOW:

If you are buying a property in certain areas of Spain (the cities bordering France, for instance) like Hondarribia or Irún and you are a non-EU citizen, you will also need a special military permit granted by the Ministry of Defense as part of an antiterrorism program.

YOU HAVE FOUND THE HOUSE YOU WANT TO BUY IN SPAIN. WHAT’S NEXT?

The process of purchasing a property in the Spanish territory can be divided into three different stages:

DOWN PAYMENT(S): Procedures or diligence that arise prior to the purchasing of the property
PUBLIC DEED: formalizing the purchasing contract
AFTER-SALES: formalities and procedures that come after having purchased the property

Let’s look at them one at a time:

DOWN PAYMENT(S): Procedures or diligence that arise prior to the purchasing of the property.

Reservation Contract (“Señal”)
Offer Acceptance
Pre-Sales Agreement (“Contrato de Arras Penitenciales”)

RESERVATION CONTRACT: “SEÑAL”

When you have decided on a property to buy, you can “reserve” it by paying a small refundable amount (it could be as low as €1,000 or up to 1% of the property price).

This is called a “señal” and it serves two purposes: it means you are making an official offer on the property, and it also means the listing agent will stop showing it to other interested parties (with the agreement of the owner). The property is “reserved” for you for a short period of time, TBC with the homeowner/listing agent.

OFFER ACEPTANCE

You and the REALTOR® you are working with present your offer to the homeowner and/or their listing agent. Negotiations may take place until a price of sale is agreed upon by both parties and hence, your offer is formally accepted.

PRE-SALES AGREEMENT: “CONTRATO DE ARRAS PENITENCIALES”

Once your offer is accepted, you will sign a pre-sales agreement (“Contrato de Arras Penitenciales”) and you will pay 10% of the sales price. This amount is non-refundable*. This legally-binding contract between Buyer and Seller has the purpose of formalizing the transaction between both parties: the Buyer shows their clear intention to acquire the property, and the Seller their intention to sell.

The payment conditions will be defined in this contract: the purchase price will be established, the payment method defined, and the amount of the deposit (the 10% down payment). It will also include the estimated date for the Title Deed signature at the notary -i.e. the final step in the purchasing process.

*GOOD TO KNOW:

If after signing this contract, the homeowner decides to back out of the sale, they are obligated by law to refund your 10% down payment and pay you an additional 10% as a fine for breaching the contract. On the other hand, if it is the Buyer, who no longer wishes to buy the property in question, then they lose your 10% non-refundable down payment.

At this stage you will be provided with copies of several documents regarding the property’s financial and legal status (due diligence):

TITLE DEED: “Escrituras”

SIMPLE NOTE: the “Nota Simple” is a document where we can check that the property is free of liens and charges (such as mortgages, for example).

CADASTRE: the “Catastro” is a estate registry document with the description of the property’s metes-and-bounds

ENERGY EFFICIENCY CERTIFICATE: this document certifies that the property has an Energy Efficiency Certificate registered at the Register of Energy Efficiency Certificates of the Basque Country*. It indicates the level of energy efficiency rating of the property and its validity period.
*I work as a REALTOR® and Buyer’s Agent in Gipuzkoa, and some specific details on this article are only valid for the territory I cover.

REAL ESTATE TAX: a copy of the “Impuesto de Bienes Inmuebles” (IBI), which is to be paid on a yearly basis.

UTILITY BILLS

APPROVED/PENDING WORKS CERTIFICATE: a certificate stating what works/renovations have been approved/are pending approval by the Homeowner’s Association (HOA).

MINUTES OF THE LAST 2 HOA MEETINGS

After the Contrato de Arras is signed, there is usually a 1 to 3-month period in which you can find financing from a bank (if you need it), or just wait until the agreed Notary date. Once that period is over, you will go to the Notary to finalize the purchase: you will receive the new title deed under your name and the keys to you new home.

Remember: Buyers must pay the Notary fees that can be up to 2.5% of the property sales price.

2. PUBLIC DEED: formalizing the purchasing contract.

On the agreed date, you will sign the sales contract or Title Deed (“Escritura Pública”) under the supervision and approval of the Notary, who will attest that the Seller is the rightful owner of the property in question, that there is an actual agreement to sell, no inheritance or tax problems with the property, no debt with neighbours, etc.

A full check regarding any legal issue that could affect the sale will be done by the Notary and if everything is in order, you will pay the remaining 90% of the property price to the Seller (by way of a cashier’s check from you Spanish bank or by showing proof of a transfer to the Seller’s bank account that you would have done prior to the meeting). The last step of the transaction is completed when you, the new homeowners, sign the new Title Deed.

CONGRATULATIONS, YOU NOW OWN A HOUSE IN SPAIN!

But you are not done with bureaucracy just yet.

3. AFTER-SALES: formalities and procedures that come after having purchased the property.

You now own your house in Spain but you are not quite done yet. There are still three important steps you must take:

Register the property at your local Property Registry (“Registro de la Propiedad”), under its new ownership (you). You need to take the Title Deed and proof of ID with you plus the registration fee of approximatey 1.5% of the property price.

Pay the Property Transfer Taxes (“Impuesto sobre Transmisiones Patrimoniales”, ITP) to the Tax Authority (“Hacienda”) of the Autonomous Community in which the property is registered. In Gipuzkoa, for instance, it varies between 2.5% and 4% for second-hand properties depending on whether it is a first purchase, whether it will be a primary or secondary residence and the total m2. Brand-new developments (“Obra Nueva”) do not pay ITP, instead they pay a 10% VTA.

Transfer the ownership of utilities, such as gas, water, and electricity.

IMPORTANT TO REMEMBER:

On top of the property price (PP), as Buyers you will also have to pay*:

Notary fees: around 2.5% of PP
Property Transfer Taxes (ITP): 2.5% to 4% of PP
Property Registration: 1.5% – 2.5% of PP
First Occupancy (if brand new development): 10% of PP as VAT
Agency/REALTOR fees if applicable
Lawyer fees if applicable
Home Insurance, etc.

*estimated percentages to be paid in the province of Gipuzkoa.

NOW THAT YOU OWN A HOUSE IN SPAIN, WILL YOU NEED HELP WITH ITS UPKEEPING AND DAY-TO-DAY MANAGEMENT?

House Management & Conciergerie Services in San Sebastián & Hondarribia

If so, I can act as your House Manager and take care of your property when you are away. I offer Property Management Services in San Sebastián and Hondarribia. Contact me to discuss your needs and I will prepare a personalized quote for you.