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Buying Property from a Developer

What should I check if I am buying property in Spain from a developer?

  • Ensure that there is either a building licence, a first occupation licence or ten year inherent defects insurance (seguro decenal).
  • Check that the developer owns the property and that there are no charges or encumbrances against the property.
  • Check descriptions of the plans with the land registry office and the local council.
  • Check that the certificates from the utility companies are provided.

What are my rights in the private contract?

  • There is a legal requirement for builders to be covered by an insurance policy or bankers’ guarantee, protecting the buyer’s payments against the risk of the builder going bankrupt.
  • There must be a full contract containing all the clauses of the purchase with building specification, planning consent, plans etc.
  • It is a legal requirement, set out in specific regulations, for the buyer of a property to be given clear information about the purchase process and building specifications of dwellings bought in Andalusia.
  • The regulations specify the required information to be given to the purchasers or lessees of a property in Andalusia. The regulations are applicable to developers and any intermediaries relating to any kind of publicity made by a company or individual towards the sale or lease of dwellings.
  • The regulations demand that accredited estate agents, developers or any other intermediary, make available to the purchaser a document with clear and sufficient information about the characteristics of the house and economic condition of the offer. For infringement of the law fines range from €5000 up to €400,000, depending on the case.

It is hoped that the regulations will increase confidence in the real estate sector. The Andalusian government wishes to enforce the new law by improving purchaser information, in addition to carrying out inspections of estate agents and developers in Andalusia. It is the first time the second hand housing market has been regulated in this way.

  • Anyone interested in buying an off plan house will receive an AID (Abbreviated Information Document).
  • If you are buying a second hand house, you must receive a document called the Information File.

Both documents specify the physical and legal characteristics of the dwelling as well as its price and method of payment. The new law clearly forbids the agents, developer and intermediaries to keep silent about the AID or the Information File or to give false information to the buyer. Finally, all estate agents offices (including virtual ones) should display a sign saying “the buyer has the right to receive a copy of the corresponding Abbreviated Information Document for the property”.

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What is a Power of Attorney?

Why might I want a power of attorney?

As soon as you have found the right property for you in Spain, you will want to get things moving to make it your own as quickly as possible. Buying a property in Spain is a complicated process involving lots of paperwork to be signed before final completion at the notary’s office. This can soon become impractical and stressful, even more so if you are not based locally. This is where a power of attorney comes in handy.

What is a power of attorney?

A power of attorney is a legal document that must be signed in front of a notary in which you nominate a trustworthy person of your choice to act on your behalf in certain transactions. It means the legal process of purchasing a property in Spain can continue without you being present. A further upside is that the power of attorney does not have to be obtained in Spain, you can also get it in your home country. If you want to save yourself a trip to Spain, you can obtain the power of attorney at home by visiting either the Spanish Embassy or a public notary local to you. Following this step, the power of attorney must be stamped with the Apostille of the Hague by the Foreign Office, thus making it valid.

What is the Apostille of the Hague?

Good question! The Apostille stamp forms part of a standardised legalisation procedure valid between certain countries. It stems from an agreement made as part of The Hague Convention of 1961. Thanks to this international treaty, documents stamped with the Apostille are guaranteed as legal and valid, thus allowing them to be transferred across borders and transactions to take place from abroad.

The Next Step: A Sworn Translation

After you have had the power of attorney stamped with the seal of the Apostle of the Hague, and if the power of attorney is in English, you only have one step left: have it translated into Spanish. It is essential that this is done by a sworn translator as they are specifically qualified for translating legal documents. They will stamp and sign their translation as proof of its accuracy. Once your chosen representative has the power of attorney, they can take care of all of the steps of the property purchase on your behalf. Much less hassle for you!

How do I choose the right representative?

It is clear that having a power of attorney can be a lifesaver if you live far away and save you a lot of hassle in general. It might seem daunting at first to hand over so much responsibility to another person but there is no need to worry. It is usual for clear limits to be included in the power of attorney document, for example limiting the representative to acting on your behalf only in the purchase of a specific property and nothing more. Even so, you must choose your representative carefully. The norm, and by far the best option, is to choose an experienced and trustworthy official representative such as ourselves at Andalucía Lawyers. Our ample experience in buying property in Andalusia means we know what to expect, how to pre-emptively avoid or resolve any possible issues and exactly what steps need to be taken to make your chosen property your own.

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Appointing a Representative

Costs Involved in Selling a Property

If you are planning to sell your house it is advisable to get legal advice from a qualified and experienced solicitor in order to protect your interests when preparing the transaction.

We have a lot of experience in selling property throughout Andalusia in places such as the following:

  • Inland Andalusia (Alhama de Granada, Loja, Algarinejo, Valle de Lecrín and the Alpujarra).
  • Rural and inland Jaen.
  • Costa Tropical de Granada (Almuñecar, Motril, La Herradura and Nerja).
  • Axarquia de Malaga (Torrox, Competa and Frigiliana).
  • Costa del Sol (Marbella, Estepona and Sotogrande).

Costs Involved in Selling a Property

When selling your property you need to take into account what costs you will need to budget for. These include:

  • Notary fees: the scale is fixed by law and ranges from €300 to €1,000.
  • Capital gains tax: according to all the international treaties regarding double taxation signed by Spain and other countries, capital gains on the sale of properties are taxable incomes where the asset is located. Therefore, by selling your property in Spain you are subject to personal income tax in Spain.
  • Plusvalía tax: a local tax based on the increase of the value of the land the property is located on from the date the owner acquired the property to the time of the present sale.
  • Conveyance fee: we will prepare a personalised no-obligation quote for your particular situation.

The Essential Check-list

  • Purchase title deed and receipts of associated costs when buying.
  • Mortgage title deed, if applicable.
  • Receipt of the IBI (Council Tax).
  • Receipts of water, electricity and community fees.
  • NIE (foreigners identity number).
  • Wealth and income tax declarations from the last 4 years.

Obtaining a Licence

If the property has been subject to any structural changes without the corresponding building licence from the local council, the sale will not be able to go through. However, if the structural change is classed as minor building work (obra menor) then you will be able to proceed with the sale if you obtain the appropriate licence from the local council’s urban department.

On the other hand, if the building work carried out is deemed to be major (obra mayor), it is not so straightforward. Increasing the property in size, making changes to the exterior and the usage of any newly built or expanded area must all be considered. In cases of this kind, it is necessary to sign a new title deed in order to update the description of the property in the land registry. It is worth noting that it is particularly important this is done in situations in which the buyer of the property requires a mortgage. The bank will refuse to issue a mortgage on an incorrectly registered property.

In order to alter the title deed, you need a building licence and a certificate from the community of owners giving their consent to the building work in cases in which the property in located within a community. Once you have these documents, it is a fairly simple process to sign the new title deed and change the details in the land registry. If for some reason you cannot provide these documents, the particular case must be looked at to establish how a building licence can be given after the building work has been completed. It is worth pointing out that all of this can be avoided by obtaining the appropriate building licence for any changes you want to make to your property prior to beginning the work.

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