This article is updated by Nick Snelling author of How to Move Safely to Spain.

It is no secret that Spain has a poor reputation when it comes to its property industry. Indeed, it is probably fair to ask the question: Is it safe to buy property in Spain? The answer to this is: Yes - so long as you are very careful, use common sense and abide by the guidelines below.

Certainly, one of the problems with Spain is that you cannot take it for granted that an existing building (even an old one) is either fully legal or without potentially significant future liabilities. In short, some properties in Spain are legal and completely safe to buy - whilst others can be completely illegal and a disaster to purchase. In between these two extremes are properties that are legal but that have innate characteristics that could be ruinous to you (or, just occasionally, make you a fortune!).

Undoubtedly, as a buyer, your priority must always be to buy safely. Spain (like any country in the world) is not somewhere in which to take risks. Nor is it somewhere in which you should be careless or credulous. You must be knowledgeable (before you start looking for Spanish property) and then make certain that you employ the right professionals to ensure that the property you buy is ‘sound’ in every regard.

1. Know the basic elements of Spanish land law. For most property buyers, this means understanding the fundamental differences between the two main categorisations of Spanish property: Urbanizado and Rural. If you do not know about these in detail or understand their significance and implications - then you should not even be looking at Spanish property.
2.  Always use a specialist conveyancing lawyer for your legal work and make sure that your lawyer:
   a.    Speaks your language fluently.
   b.    Is completely independent of the seller or any estate agent.
   c.    Fully insured (check this and the amount of his liability).
   d.    Places all advice in writing to you (often this does not happen - and buyers neglect to insist upon it!).
3. Always employ a fully-qualified, independent building surveyor to survey your proposed property – irrespective of whether it is brand new or old.
4. Only buy a property that will be easy to re-sell. So, know the market and the re-saleable characteristics of the type of property that you wish to purchase. There are known and accepted guidelines to re-saleability that are just as apposite in a market crash as a boom. A simple (foreshortened) example would be those for a town house – does it have:
   
   a.    Dedicated parking and
   
   b.    A courtyard/useable garage?
   
   If a Spanish town house lacks both these features then it is likely to be difficult to re-sell, however lovely it is.
   
   Each sector of the Spanish property market, from villas and fincas to beach apartments and town flats has vital aspects that effect re-saleability – and therefore, by definition, a property’s intrinsic (objective) investment value.
5. Never ever be rushed by anyone. The absolute rule of buying property (anywhere in the world) is that mistakes are so potentially costly that it is always better to lose a property - than be rushed and find that your property has a flaw that could have been revealed with more time and investigation...
6. Be exceptionally wary of any property that has been built within 100 metres of the end of the sea shoreline. The whole building (in the case of a block of apartments) may be illegal.
7. If a Spanish property lacks mains electricity, a landline telephone, mains drainage or mains water then it may be illegal – or, almost certainly, you will have to pay (sometimes very significant amounts) to have any of these services connected. In some cases, no connection (regardless of the money you have) - will ever be possible.
8. Finally, never confuse a bargain priced property for a sound purchase for reasonable money – the two elements rarely collide! Indeed, the sale price of a Spanish property is only one of the many different criteria that make a purchase sound and worthwhile.

THE BUYING PROCESS

Buying in Spain can be very quick if you have found the property that you want and you can agree terms with a seller. It is possible and frequently done by the Spanish (when no mortgage is involved) to see a property, pay a small initial deposit then go to the Notario to complete the Escritura (‘Completion’) within a couple of days. The property will then be theirs and they can take immediate possession.

However, in practice, this is not a safe way for a foreigner to buy property in Spain for the first time. It is better to operate on a slower ‘escalator’ of risk and commitment that allows you to follow a measured buying process. Certainly, given the stakes, it is never worth rushing a purchase. This can place both your lawyer and yourself under stress. This is also when mistakes are made that may have terrible long term implications.  

There are several ways that the signing of the Escritura (‘Completion’ in UK terms) can be reached:



 
The best way of reaching the signing of the Escritura (the UK equivalent of ‘Completion’) is route ‘A’ and this should be followed unless there are compelling reasons for doing otherwise. Route ‘B’ is workable but may involve you in losing your deposit with no possible recompense. Route ‘C’ is workable but provides you with little protection should your seller wish to ‘gazump’ you. Meanwhile, route ‘D’ needs to be treated with considerable caution.

Route ‘A’
Agreement ‘in Principle’
Private contract with (normally) 10 percent deposit
Sign Escritura

Agreement in Principle

Once you have reached an agreement with a seller ‘in principle’ you should go to your lawyer and take his express advice upon what has been discussed. Subject to his comments, you can then ask him to draw up a legally binding private contract. You must, obviously, provide him with details of your seller, the seller’s estate agent (if there is one) and the seller’s lawyer (if he intends using one). It is always a good idea to ask your lawyer to communicate immediately with the seller or his lawyer to ensure that your understanding of the agreement ‘in principle’ matches that of the seller.

As with any legal matter, make sure that you provide your lawyer with written instructions. These should set out clearly the deal that you believe is acceptable to you and the seller. It is important to place this is in writing as it starts a ‘formal’ paper trail and prevents miscommunication or misunderstandings. Certainly, oral instructions are rarely precise and, when they involve dates and numbers, can be confused easily.
 
Private contract (Contrato Privado) with main deposit

1. The sale price of the property
2.  Details of what is included in the sale price (this should be clarified by a formal Schedule with precise details)
3.  Fixtures and fittings etc.
4. Furniture, tools, car, dog etc.
5. The date to sign the Escritura (‘Completion’).
   Wherever possible allow yourself a date for signing the Escritura that is further away than you would like ideally. Invariably, some problem arises and it is vital that you do not allow yourself to be ‘boxed in’ to a date that becomes too tight subsequently and adds unnecessary stress. Whilst you can bring forward the date for the signing of the Escritura (with the consent of the seller) with relative ease - to do the reverse and delay it can be extremely difficult and endanger your main deposit. Certainly, for understandable reasons, most sellers will want the signing of the Escritura as soon as possible!
6. The date for receipt of the main deposit (generally 10 percent of the purchase price). There is no legal requirement for the main deposit to be 10 percent and it can be any amount.
7. The date and amount of any reserve deposit (normally payable immediately). This reserve deposit will usually be small and around 1 percent of the purchase price. Its primary function is to ensure that your seller removes his property from the marketplace until the date for the main deposit. This allows your lawyer time to undertake his legal enquiries and provides you with some protection against being ‘gazumped’. Equally, if your lawyer finds out that there are ‘problems’ with the property or you decide not to go ahead with its purchase, you will lose only your reserve deposit.
   
   Gradually escalate your risk during the buying process and never rush or be rushed

It is wise also to insist that the terms below are inserted within the private contract. They are not obligatory but are commonly used and rarely contentious:

You must have your original passport and original NIE number with you when you go to sign the Escritura in front of the notario.

You should attend the notario always with your lawyer. Usually the latter will find somewhere for you to sit down whilst he makes sure that the seller or his lawyer are present and ready and that there are no last minute glitches. In particular, your lawyer will:

As soon as your lawyer is content that everything is correct he will lead you into the notario’s office together with the seller and his lawyer (if he has one). The notario will then:

1.  A full description of the buyers and sellers with their passport/identity card details and NIE numbers
2. A complete description of the property – the m2 of any buildings and the m2 of any land.
3. A description of the boundaries
4. The sale price of the property
5. Details of any encumbrances or rights of way etc.
6. Check the details of the Escritura against the Nota Simple

Now you own your property and have an immediate right to access! Normally, you will go straight to your bank to make sure that all the services contracts are changed into your name and placed upon direct debit.

The signing of the Escritura can happen quite quickly. Much depends upon how busy is the notario’s office on the day of signing and if any last minute problems transpire. Certainly, it would not be unusual for the actual signing process to be finished within twenty minutes to half an hour.

The buying a house process is an extract from ‘How to Move Safely to Spain’ copyright Nick Snelling www.nicholassnelling.com

MORTGAGES

Obviously, the ease of obtaining a mortgage depends upon the economic climate at the time. However, mortgages are available in a range of different packages, some aimed specifically at expatriate buyers.

You should know, though, that lending on some types of property can be difficult to obtain. This can be particularly true of properties in Rural designated areas. So before committing yourself to a Rural property, make sure that your lender will grant a mortgage, in principle, on this type of property.
 
Should you need to apply for a mortgage then be prepared to supply the following information:

•    Passport or NIE number.
•    Work contract.
•    Last three payslips.
•    Latest income tax return.
•    Pre-agreement with the seller.
•    Proof that the property tax (IBI) on the house is paid up.
•    Details of other mortgages or loans that you may have.
•    All property titles, both in Spain and overseas.
•    Certificate from work authorities (vida laboral), showing your past work history records of your assets (bank/mutual fund statements, etc.).
•    Prenuptial agreements, if applicable.
•    Certificate of non-residency if applicable (form available from the bank).
•    Details of tax paid in the past year, if self-employed.

Expatica / Nick Snelling

Nick Snelling is also the author of Taking the Heat and How to Sell your Spanish Property in a Crisis.