Signing the public deeds of sale before a Spanish Notary is the moment when you buy the property outright. Once this is done the property is yours and you can have your title inscribed in the land register – the most secure form of ownership. Once your title is inscribed in the land register no one can challenge your claim to the property. Furthermore, because private contracts are only binding on the parties to the agreement, and not on 3rd parties, you will find it impossible to get a mortgage unless you sign public deeds and inscribe them in the land register.
The private contract you have signed will state the date by which the public deeds must be signed. This is normally anything from 1 to 6 months later, depending upon what you agree with the vendor. You will find this time useful for preparing for signing the deeds.
Preparing for signing the deeds
To sign the deeds before Notary you must either be present in person or arrange a power of attorney for someone else – usually your lawyer – to sign on your behalf. If you are buying the property jointly with other people you must all be present or sign separate powers of attorney (the same applies on the vendor side). So if you cannot make it to the signing in person you must arrange a power of attorney in good time. You can authorise a power of attorney by signing one before a Spanish Notary, or through the Spanish consulates in the UK, or through a British Notary Public with a Hague Apostille.
There are some other issues you need to sort out in advance to ensure that the signing and aftermath proceeds smoothly.
- Select a Notary. It is your right as the buyer to choose the Notary. As you are unlikely to know any Spanish Notaries you will need to leave the decision to your lawyer. Find out from your lawyer what arrangements need to be made to pay the Notary.
- Fix the date and time for signing. As private contracts normally only give a deadline for the signing of the deeds you now need to agree an exact date and time with the vendor for signing the deeds, and confirm the appointment with the Notary. You also need to inform the vendor of the Notary’s name and address. Once the date has been agreed you need to make your travel arrangements if you are attending in person.
- Make sure you have the necessary funds in Spain. If you are using a mortgage you will also have to make sure that the funds required to pay all the taxes and inscribe the title in the property register have been transferred to your account with your mortgage lender. Your mortgage lender will explain what you need to do and when in this case.
- Agree payment method with vendor. In most cases you will be expected to produce a bank-guaranteed cheque (cheque bancaria) issued by a branch in Spain. Cheques without a bank guarantee will not be accepted, and cheques from branches abroad could cause problems. If you are bringing cheques, find out exactly to whom they should be made. Another convenient option is to transfer the money to the Notary’s escrow account, if the Notary allows this. Your lawyer should inform the Notary of whichever method you agree with the vendor. Make sure you have all the necessary details to arrange the payment (for instance the Notary’s escrow account details and the reference details you have to provide) in good time.
- Arrange a mortgage valuation. If you need a mortgage and have been unable to arrange a mortgage valuation by this stage then you must have one carried out now. You will not be granted a mortgage without a valuation. You will also have to inform your mortgage lender of the date, time and place of the signing of deeds, as their representative will need to be present.
- Withdraw cash if necessary. If you have agreed to pay a part of the price under the table you will have to withdraw cash before you go to the Notary. Depending upon the amount this can be quite a challenge. Be warned that there are restrictions on the amount of cash you can withdraw from your bank, even if you have the funds in your account. Always check in advance with your bank how much cash you can withdraw in one go without raising questions.
- Remind the vendor that a certificate from the president of the community of owners (signed by both the president and the administrator) is required. If the property is part of a community of owners you need to remind the vendor at least 10 days in advance of the signing to request this certificate of payments from the administrator or secretary of the community of owners. This certificate (certificación sobre las deudas con la Comunidad de Propietarios) will need to be shown to the Notary during the signing.
- Check which documents you need to bring to the signing. Check with your lawyer – who will check with the Notary – what documents you have to bring to the signing. As a minimum you will need to bring your passport (or Spanish residency card if you have one) but you may also be required to produce an NIE number and other certificates such as birth and marriage certificates, and even possibly official translations of these documents. It depends upon the Notary and the circumstances of your transaction. Always check in advance.
- Check the postal address of property. Find out the exact postal address of the property. This may not be the same as the address given in the deeds.
- Gather information for changing the utility contracts. Get all the information you need to take over the vendor’s utility contracts, if you haven’t done this already. This means getting copies of all the latest utility bills from the vendor. Make a note of the telephone number. If more than 3 months have passed since your lawyer checked that all local taxes and utility payments are up to date then ask to see the latest receipts or payment.
- Keys. Find out how many sets of front door keys will be handed over. Ask to be given keys to all doors and gates, or be given instructions as to where they will be left at the property.
- Security alarm. If the property has a security alarm, find out the security code.
- Confirm date of vacancy. Confirm that the property will be vacant from the time of signing the deeds. The vendor has no right to remain in the property after signing the deeds, but you may give them permission to stay for a specified period of time whilst they arrange to leave. If this is the case it must be covered in the private contract you sign. Always try and avoid anything but vacant possession.
- Last visit. If at all possible try and arrange for a time to visit the property with the vendor to find out how all the property’s functional systems work, and cast an eye over the condition of the property.
- Local providers. Ask for a list of contact details of useful local providers from the vendor.
- Arrange insurance. Arrange insurance for your new property so that you are covered from the moment you sign the deeds.
Signing the deeds before Notary
Notaries are required by law to run certain checks before they witness a deed of sale. For instance the Notary is supposed to request a nota simple to confirm that the vendor is the genuine owner of the property and that the property is free of any (unexpected) encumbrances. This leads some estate agents to claim that buyers are perfectly well protected by the Notary and don’t need a lawyer. Nothing could be further from the truth. You must use your own lawyer, not only for the due diligence but also for accompanying you to the Notary. In reality the Notary gives you little protection so you must be accompanied by an experienced and qualified professional when signing the deeds.
In the days before the signing of the deeds your lawyer should have passed the Notary’s clerk all the information required to prepare the deeds. Your lawyer should then have obtained a draft copy of the deeds to check before the day of signing. This check is important, as you do not want to discover any errors in the Notary’s office as this could delay the signing.
Assuming that everything has been correctly prepared then signing the deeds before Notary is a relatively straightforward affair. Having said that it can feel a bit crowded and chaotic, not to mention bizarre for British buyers unaccustomed to such proceedings. Along with the Notary, all parties to the agreement must be present, which means everyone selling, everyone buying (or powers of attorney), any mortgage lenders involved, and lawyers from both sides. Any estate agents or brokers involved are also likely to be present – to ensure that they are paid!
Under normal circumstances all you need to take with you to the signing is your passport and any cheques or cash if you are paying this way. You should also take along your NIE number if you already have it, though this is not essential for the actual signing (but will be needed within 30 days of the signing to pay the necessary taxes). Always make sure you have a few hundred Euros of cash on you, as there may be some petty expenses, such as sharing the IBI for the year, which you may be able, settle on the spot with the vendor.
Upon arrival you will be asked by the Notary’s clerk for your identity document, and then shown into an office with all the parties involved to wait for the Notary. You may pass an uncomfortable half hour or more of silence or small talk with the vendors, who you may be meeting for the first time. The Notary will then breeze into the office, take a seat at the head of the table and start the proceedings.
The Notary will start by checking all the vendors and buyers against their identity documents. Various details of your civil status may be confirmed (nationality, domicile, profession, age, etc) along with your matrimonial regime, if relevant. The Notary then starts reading the deeds aloud in Spanish, so unless you speak Spanish you will have no idea of what the deeds say. This is not a problem if your lawyer is present. However if, for whatever reason, you are not accompanied by a lawyer at the signing of the deeds, you must take a translator along with you so that you know what the deeds say before you sign. Some Notaries will refuse to sign the deeds if one or other of the parties does not understand Spanish and does not have a legal representative or translator present.
In the course of reading aloud the deeds, in which the property and the agreement are described in detail, the Notary also confirms the payments made by the buyer to the vendor. This is when you produce payments such as bank drafts for any outstanding amounts on the declared price (the price stated in the deeds less any deposits or down payments already paid). But now comes a very important point of etiquette: if you have agreed to pay a part of the price under the table, then never produce this cash in the presence of the Notary. Always wait until the deeds have been signed and the Notary has left the room before you bring out the envelope stuffed with cash.
If you are taking out a mortgage then this will require a separate deed, which the Notary will also read through. The Notary should also check the latest IBI receipt and the certificate from the secretary of the community of owners to ensure that the vendor is up to date with these payments. Finally the Notary informs the buyer and the vendor of their fiscal obligations. If the vendor is a non-resident the Notary will confirm that the non-resident tax retention has been made by the buyer, to be paid to the Spanish tax authorities within 30 days.
If no objections have been raised by either party as the Notary reads through the deeds, and if the payments are correct, then the deeds are passed round for signing by all parties and finally by the Notary. You are then handed the keys.
Once the deeds have been signed the Notary will often leave the room. If you are paying any money under the table (which is illegal and you are strongly advised not to do) this is the time to hand it over to the vendor, who will no doubt count it in your presence. Once this is done the sale is complete and all that remains for you to do is collect an unauthorised copy of the deeds (copia simple) from the Notary’s clerk before leaving (there is a small charge for each copy and you should inform them of the number of copies you need in advance). The Notary will keep the original deeds (copia autorizada) for a few days to record them in the Notary’s register, after which they can be collected for inscribing in the land register.
You may have to settle the Notary’s fees before leaving if you have not made prior arrangements on this front with your lawyer. If so be sure you know what the Notary’s fees amount to and have the funds on you to pay them.
After signing the deeds
After signing the deeds there are a number of important tasks to carry out. Some of these can be performed by your lawyer, though you do need to confirm that they are included in the price you agreed with your lawyer. Alternatively you can use a gestor appointed by the Notary, though you should always find out what the cost of this will be in advance. If you have taken out a mortgage then your mortgage lender will insist that their gestor to pay the necessary taxes and inscribe the mortgage and title in the property register. If this is the case they should have informed you what the cost will be.
Immediate notification faxed to the land register
Immediately after signing the deeds the Notary’s office will fax notification of the transaction to the land register if asked to do so by the buyer. This makes it impossible for anyone else to inscribe the same property in the land register for the next 10 days. The risk of this happening is very small, as it requires that the vendor try to sell the same property to two different buyers within a short space of time – an intentional fraud.
Paying the taxes resulting from the purchase
If you buy a resale property without using a mortgage the only tax you have to pay is the transfer tax called ITP (Impuesto sobre Transmisiones Patrimoniales).This tax includes another tax called IAJD(Impuesto de Actos Jurídicos Documentados), which you will often hear referred to as stamp duty. For the lastest ITP tax rates see The Cost of Buying and Owning Property in Spain
If you use a mortgage then you will also have to pay stamp duty on the value of the mortgage. This tax varies (for example, between 0.5% and 1%) by autonomous region.
Taxes must be paid via an authorised bank within 30 working days of the signing of the deeds. You will only be able to inscribe your title and mortgage in the property register if you have proof that taxes have been paid. You will need your NIE number, the appropriate form, and the copia simple to pay any tax. The bank will then notify the regional tax office (Delegación de Hacienda de la Comunidad Autónoma).
If you have purchased a property from a non-resident you will also have 30 days to pay the tax retention that you have withheld from the vendor (payment via authorised banks). Proof of this payment is required before you can inscribe your title in the land register. You will also have to pass on proof of this payment to the vendor or the vendor’s lawyer, as without this they cannot claim back any tax if the retention wasgreater than their tax obligation.
If you have agreed to pay the plusvalía then this has to be paid to the town hall within 30 days of the sale. Once again you pay this via a bank, but will need to visit the town hall first, and maybe even afterwards with proof of payment.
Inscribing your title in the property register (Registro de la Propiedad)
Once the ITP has been paid you can inscribe your title in the property register (via the local property registry office). The law does not oblige you to inscribe your title but there are significant advantages in doing so such as:
- Being considered the only true owner of the property.
- Protection from the vendor’s creditors.
- No one else can register a claim on the property without your consent.
- Being able to secure loans against your property.
The sooner you inscribe your title in the land register the better, so it should be done straight after paying the ITP.
To inscribe your title in the property register you will need the following:
- The original deeds (copia autorizada).
- Receipt to prove that ITP has been paid.
- Copy of the vendor’s latest IBI receipt.
- Photocopy of your identity document.
- NIE number (or NIF number in some cases).
The inscription process should be completed within 15 days, after which the deeds can be collected. If the inscription fails for whatever reason you will be informed of this and told what you need to do to correct the problem and inscribe successfully.
Once your title has been inscribed in the property registry the deeds (copia autorizada) can be collected. You may find it more convenient to have your lawyer to keep them safe for you. Otherwise you need to keep them in a safe place.
Updating the cadastre
You have to inform the Cadastre that you are the new owner within 2 months of the date of signing the deeds. If you fail to do this the town hall will be unable to collect municipal rates (IBI), and if you fall behind with these payments your property can be embargoed, and ultimately sold off. In theory the property registry office and the Notary will inform the cadastre of your new title but they might not provide the cadastre with the information in needs for collecting payments, so you should also have your lawyer or gestor inform the cadastre as well.
The most convenient place to update the cadastre is usually the town hall. Take along a copia simple plus a photocopy of your identity document and your NIE number. You should provide the cadastre with your correspondence address (if different from the property) and your bank account details so that you can pay by standing order.
Setting up utility contracts or changing the previous owner’s contracts
An important task after taking possession is to sort out contracts with the utility companies (water, electricity, gas, and telephone).
Usually you have 2 options when sorting out the utilities.
The cheapest and easiest option is to take over the vendor’s contracts. This avoids you having to set up new contracts with each company, and may save you money. However to do this you do need to have a recent copy of each utility bill from the vendor. Assuming you have copies of the relevant bills you can ring up each utility company (the telephone number to ring is always given on the bills), quote the policy number on the bill, and then change the name, correspondence address and bank account details to yours. You will also have to give each company your NIE number. It is usually possible to provide a correspondence address in the UK if that is where you wish to have the bills sent to. You can also carry out these changes by visiting the nearest consumer services office of each utility company, or in some cases online.
Utility companies tend to charge bimonthly or quarterly so it may be simpler for you to set up new contracts than try and coordinate the payments during the changeover period with the vendor (and risk being cut off). The process for setting up new contracts varies by utility company and region, though in most cases the process can be started by submitting an application on line or by ringing the company. Alternatively you can visit the nearest consumer services office of each utility company.
To set up new contracts you will usually be asked to provide your name, NIE number, the address of the property, your bank account details and a copia simple of the deeds. When setting up contracts for a newly built property you will also be asked to produce a first occupancy licence (licencia de primera ocupación) but for resale properties that have already been receiving utilities this is not usually necessary. If you are asked to produce a document certifying that the property is habitable it will be the cédula de habitabilidad, which you can get from the town hall. It’s always a good idea to have several photocopies of your passport when dealing with the utility companies as they may ask for this. When you set up new contracts someone may have to come round to read the meter, and you may be charged anything from 50 to 100 Euros for setting up each new contract.
Generally speaking you will find it problematic dealing with the utility companies if you don’t speak Spanish. You are advised to hire a gestor or property management company to make all these changes for you.
Community of owners
If you have bought a property that forms part of a community of owners you will have to provide the administrator or secretary of the community with your bank account details and contact details so that you can be charged your community fees and participate in the management process if you wish.
© Mark Stucklin (Spanish Property Insight)