July 7, 2013 at 9:27 pm #57670
My partner and I currently live in the UK. We are planning to buy a small flat in Barcelona – I’ve spent time living and studying there, and my partner loves it there, too. We will initially rent it out (either to tourists or to locals, depending on the area we choose and the applicable renting regulations), but after a year or two we intend move over to live there.
The plan is that we would take a trip across to Barcelona in the next couple of months to look for – and hopefully secure the purchase of a property. Assuming we find one that we want to buy – we are trying to work out what to expect so we can be prepared.
From my understanding –
- We find a solicitor/lawyer before property hunting who will be willing to do all relevant due diligence, including checking that there is no debt attached to the property and that it has appropriate documents etc. I realise we don’t technically need a lawyer, but we want to ensure that there are no nasty surprises!
We talk with property management companies who can organise tenants once the purchase is complete
We go to Spain and choose a property
Our solicitor checks everything is above-board, and arranges a contract with the seller for us to buy
We sign the contract, pay a deposit and arrange when the sale will be complete – and when we have to go to the notario to sign the deeds (I’m guessing about 6 weeks later?)
We then arrange a loan (we have a large deposit and plan to raise extra money on our property in the UK rather than getting a separate Spanish mortgage) and have the funds waiting in a Spanish account
We return to Spain to go to the notario and pay the fees
We pay the outstanding money and get the keys
We then go to the tax office to register
We renovate the property and get the property management company to arrange tentants
Bob’s your uncle
Does this sound like more or less what we can expect to happen? How long do you think would be a reasonable “property hunting” trip to allow time for signing contracts etc.? (thinking 10 days…)
We do not yet have a solicitor – any personal recommendations? I speak Spanish and Catalan but my partner doesn’t – would we have to pay more for an English-speaking solicitor?
I don’t understand how the money usually gets transferred. Do you sign a contract, then pay at the bank, then go to the notario? Or do you write a cheque at the notario?
When (and to whom) do we pay stamp duty?
Any tips or advice you can give would be very much appreciated!
July 8, 2013 at 7:10 pm #117571
I have only just seen your question re Barcelona property purchase. Are you still in need of information ? I have just completed the purchase of a flat in the city and would be happy to help if you are interested.
July 9, 2013 at 6:33 am #117572
Hi Ciprano, congratulations! Yes – we’re still in need of information! 😀 Sounds like you’ve survived the flat purchasing process – any hints or tips or stories of your experiences would be really useful. Did everything go reasonably smoothly?
July 10, 2013 at 10:42 am #117581
I’d be happy to help answer some of your questions. I’ve completed and over-seen transactions here in Barcelona.
Firstly, I’d definitely advise you to employ a lawyer (abogado). I go by the rule that the precautions you take in the UK, should be the same (if not more) when buying abroad.
If you know the city well already, you should have a good idea about the areas you want to buy in, speaking Spanish & Catalan is a great advantage too. 10 days I would say is a little ambitious to choose a property but if you do most of the ground work at home, research all the properties on the internet first and book appointments, it should be possible.
(I like to see a property at least 3 times on separate times, days, occasions etc. before making a decision. So maybe my time scale would be a little different).
The initial contract is a formal engagement, and upon signing you pay 10%. If you back out of the transaction at this stage you lose your money. If the seller backs out, he pays you double your money.
You need NIE numbers to sign the contract and NIE numbers have a Spanish bank account. And if the property and accounts are in two names, then both parties need NIE registration.
Regarding signing the final contract it can be done a lot quicker than 6 weeks. It’s really dependant on how well and quickly your lawyer works. And more importantly the complexity of the property. As you have rightly pointed out, a lot of property has debt which can be quite complicated when related to ownership issues. (It’s very common here, that property is shared between family members).
I’ve just checked one of my last transfers and that was 18 days after the first signing. But we needed to speed the process as it was a distressed sale.
You are right to think about raising UK finance, it nigh to impossible to get Spanish funds especially if you do not have employment history here.
The main fees are as follows – Transfer Tax, Lawyer fees, Notario and Land registry.
Note that on the 1st August 2013, the transfer tax in Catalunya will rise to 10% from 8%.
The buying process should be relatively straight forward, as long as you do your homework and establish good contacts and have all your finance and registrations in place.
The renovating process can be a lot more complicated and long winded, dependant on the scale of the works you need to undertake.
If you’d like to know more info regarding renovations, I would happily discuss it further.
p.s. One piece of advice, if an agent tries to get you to pay 1% to them when placing an offer, don’t pay it. Incredibly this system still operates here. A throw back to the boom years when people were desperate to secure property.
July 10, 2013 at 11:09 am #117582
Thanks so much for your reply. Do you know how the physical transfer of money usually happens? For example, when we pay the initial 10% deposit, is this paid by bank transfer before/after the contract is signed, or do we bring a bank cheque to the contract signing appointment?
I already have an NIE number but my partner doesn’t – so this will be the first thing we do when we arrive.
Is any debt which is attached to a property for sale always made clear by the seller? For example, in the estate agent listing? If not, will our lawyer be able to make absolutely certain that there is no debt attached?
Thanks for the 1% agent fee tip! If they ask for the 1% fee, should we just say that we are willing to purchase the property, but are not legally required to pay that fee?
July 10, 2013 at 12:52 pm #117587
Everything MikeD wrote is true, but based upon my experience buying in Barcelona last year, while the process is well-defined, the level of compliance and professionalism is dependent upon the seller and their agents. In our situation, the seller’s agent was incompetent beyond belief, so much so that we had him re-write the contract and he actually made it worse.
Our deposit was submitted with the error-filled contract.
And what MikeD writes about renovations also echos my experience. I thought it would be completed by now but it probably will not begin until 2014. Silly me, in both cases (purchase and renovation) I thought the most difficult thing was raising the funds. That turned out to be the easiest part of the process.
Finally do get a mortgage outside of Spain if possible. As an American, I had to put more than 40% down for a not so good mortgage. I am held hostage to currency rates, exchange fees, etc. That said, it is mostly working in my favor for now.
July 10, 2013 at 2:03 pm #117590
Hi fjamvj, I am a Spanish Lawyer based in UK, the process is as you explain, but with some other details, I will try to explain:
1)Find an independent English speaking solicitor. At this stage it can be only for advice and to be ready to engage him in case you find a property.
2)Obtain a foreigner identity number (NIE), it is required for any dealings which involve the Spanish tax authorities, like a purchasing.
3)Open a Spanish bank account (NIE is needed).
4)Once you find a property in which you are seriously interested, make an offer and arrange a verbal agreement on the price, ask the owner (through their solicitorand yours) to agree it and any other conditions in writing. You have to pay the deposit at the signing, and it can be done by cash or cheque
5)Once you have agreed on the price and any conditions of the sale, your solicitor will request:
-Confirmation of the sale price and terms of the sale
-Copy of the Title Deeds, payment of council tax(IBI) and utility bills
-Land Registry extract (nota simple)
Also the Solicitor will check:
-There are no debts or charges, such as a mortgage, on the property
-There are no legal proceedings initiated against the property for contravention of land planning law
-Certificate signed by the President of the Community of Property Owners stating that there are no outstanding debts
-If the property is new, the license of first occupancy or habitation certificate issued by the town hall.
-Energy efficiency certificate if applicable.
-A draft contract of sale
6)If everything is right, he will arrange a date with the Notary and the seller to complete the purchase. At the same time you sign the deeds, they give you the keys and you pay the outstanding money, usually by cheque.
The whole process can be done from UK, were solicitors are regulated by the SRA. If you are not able to attend to the completion it can be made through a Power of Attorney, your solicitor can assist you in this matter too.
If you want more formal information, I will be very happy to help you.
July 10, 2013 at 3:00 pm #117593
Hi again fjamvj,
You asked about the physical transfer of money.
I was always advised on a bankers draft. As this equates to cash. I understand that the money needs to be exchanged on signature therefore needs to paid at the same point in time.
In the UK, solicitors have a client bonded account, where money can be kept by a trusted third party. Only released once both clients are happy. But I don’t think this system exists in Spain, but I may be wrong.
dalorgar’s reply was correct and knowledgable, so maybe he would know the answer?
(One piece of advice though, never transfer any money before signature. The seller can change their mind or simply not turn up to the first signing).
You asked if information was made clear by the seller. Usually no, and even if it was, don’t trust the information. It may be true and honest but it’s your lawyers job to check all the details throughly. A good lawyer will make certain there are no binding issues.
Regarding the 1% trick as dalorgar stated only agree prices / offers verbally. And your lawyer can do this for you.
Don’t be pressured to make any irregular payments. There is always a phantom third party making another offer – according to the estate agent.
Gary made some good points, regarding sellers and sellers’ agents incompetency. Never deal with the seller’s contracts or paperwork. This will naturally be biased in their favour. Your lawyer should draw up the initial relevant paperwork to protect you, and the final deed is a neutral contract overseen by a notario.
Remember Barcelona is a buyer’s market now, and you hold the power. You can call the shots. Good luck!
July 10, 2013 at 4:03 pm #117596
Hi Mike and thanks for your comments,
Regarding the transfer of money,you are right, in Spain there is no system of bonded account, and the best way to do it is at the same time of the signing on the Notary, the seller gives you the keys, both sign the deeds and the buyer gives him a certified bank cheque (which is no normal cheque, because in this one the bank garantees that there are funds).
About the advice of not transfer any money before signature, I do not agree, in every purchase the buyer has to make a deposit(about 5% of the price)to reserve the house and the seller will not sell it to another that offers more, in that I think is different to UK, once you pay the deposit the offer is accepted. By submitting this deposit a contract is signed between seller and buyer (drafted and supervised by solicitors) in which all data are detailed of the property, the buyer and seller and the conditions of the sale. If the seller breaches the contract must return that amount plus another equal to the buyer. I can assure that this happens rarely, and more in the current economic situation, and if the contract is well written by a professional, the risks are minimal.
Mike is right, be patient and search without pressure, remember that the estate agent works for the seller, not for you.
July 10, 2013 at 10:38 pm #117598
Wow, thanks everyone for your detailed replies – this is all really helpful and very much appreciated.
GarySFBCN and MikeD – thanks for the warnings about renovations. I’m guessing that the problems mostly come down to unreliable tradespeople… if so, we would be planning to do the vast majority of the (mostly cosmetic) renovation work ourselves. We’re quite ‘handy’, having done bits and pieces of plumbing, joinery, minor electrics etc…so hopefully tradespeople won’t slow us down toooo too much.
The last time we were in Barcelona we spoke with a manager at Banco Sabadell who said we’d be able to get a mortgage, but based on what you’ve said I think we’d prefer to borrow as much as we can from our UK bank… just for the sake of expediency/expediency, and knowing exactly how much we’ll end up paying. Depending on the grand total including lawyers fees, taxes etc., this could limit our budget slightly, but this is plan A!
Really helpful information from dalograr – none of this is surprising so it’s given us some confidence. I already have two Spanish accounts and an NIE number so we’re part-way there, but my partner has neither. Will he be able to get an NIE number without a fixed address in Spain? (i.e. before having purchased a property?)
Good to know about bank cheques/drafts being used – this was something I wasn’t clear on. I imagined us walking around with a briefcase full of cash!
First things first, we will organise a local lawyer and then move forward bearing all this in mind. This website seems to recommend DiG advocats – does anyone have any experience with them, or know of anyone else worthy of mention?
July 12, 2013 at 9:42 am #117621
Regarding the renovations it really depends on the extent of the work you want to carry out.
Different work requires different licenses. Some licenses can be registered and received in a short space of time, but more detailed work, especially work that effects the structure of the building require detailed permissions. These take time to plan and process. They are granted by the local government or ayuntamiento, they also need to be sent to and authorised by the COAC. The architecture collective.
Regarding tradespeople, as in any city in the world. There are good and bad workers. Obviously if you haven’t worked with them before it’s difficult to initially evaluate. However, references and examples of past work and portfolios are always a good start. Contracts are also important with penalties for late completion.
Architects, however, did surprise me when I first started here. In the UK it is a highly regulated industry. I therefore presumed the standard would be equally high and an architectural education would guarantee a high professional service. However, I realised that there was an abundance of architects and not all were of a good professional standard.
Regarding a lawyer, I haven’t heard of DiG advocats, but if people are recommending them, it’s usually a good signal.
I do have a trusted abogado that I use which I can recommend. I don’t think he would appreciate me putting his details on a message board, but if you wanted to email privately we could discuss the relevant details. (I will be out of my office next week, but returning w/c 22nd July).
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