Purchase guidelines
We know you will have questions with regards to the procedures. Buying a property in Spain will differ from buying a property in your home country. Below you will find the purchase guidelines of buying a house in Ibiza. Once you have found the property you have been looking for the following steps will be taken:
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Negotiation
Placing an offer on the property. If the offer gets accepted it needs to be confirmed in writing by both parties.
Reservation of the property or public deed
Once the offer has been accepted, the process continues. Now either a reservation contract ("prior agreement") or public deed ("document from the notary") will be set up.
The Spanish Civil Code distinguish in a crystal-clear way between public and private document.
– The public document (the one who comes from a public employee with the legal authority to attest documents).
– The official document (which originates in a public employee without the legal authority to attest documents).
– The private document.
Usually the buyer and seller agree to a reservation contract which can be either a official document or private document. The reservation contract states that the seller will take the property off the market, not allowing any other potential clients to view as it has been reserved for the buyer. The reservation contract is an useful tool to have reserved the property and to buy time, in order to check all of the documents or get possible finances done. The contract will state a date in which all documents and finances need to be in order, to proceed to the public deed. The costs of this contract vary. In some cases the seller requires a downpayment of 10% other cases the downpayment varies between 3.000€ and 10.000€. This payment will be deducted from the total price of the property. It is not mandatory to set up a reservation contract, however highly advised.
Jurriaan de Reijer
There are four types of reservation contracts:
1. Private purchase contract (documento de reserva) payment between 3.000€ and 10.000€
2. Earnest money contract (arras penetenciales) payment of 10%
3. Down payment contract (contrato de paga y señal) payment of 10% and cannot be unbound unless both parties agree
4. Private purchase contract (contrato privado de compraventa) full sales amount needs to be paid before signing at the notary
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Due diligence
In Spain, the contracts have to provide unambiguous detail on the buyer, the vendor, the property, the price agreed, the deadline for signing the deeds, vacant possession, debt-free title, how the transaction costs will be paid, clauses that allocate responsibilities, conditional clauses that need to be met for the contract to be valid, and how disputes will be resolved.
If you are buying any furniture or other items from the vendor these should be included in an inventory attached to the contract.
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Legal aspects of the property that need to be checked before signing the public deed are the following:
- The title deed (public instrument)
- The real property registry (no liabilities or mortgages)
- The land registry (cadastro)
- Planning charges (any urban development plans)
- Building permission (is the property legal)
- Certificate of occupancy (does the property meet the requirements and legislation for human occupancy)
- Energy performance certificate (energy efficiency rating of the property)
- Payment of the property tax (no outstanding payments of previous years)
- Rental agreements (no current lease or rental agreements on the property)
- Proprietors association contributions (monthly fee)
- Status of the proprietors association (any restrictions to the use of the property)
The public deed will be signed at the notary on the date that has either been stated in the reservation contract or that has been agreed upon by the buyer and the seller. The full payment will either be done by a bank cheque or online transfer. The contract will only be valid once the money has been received by the seller.