Administrative preparation BEFORE the purchase
Before embarking on a property purchase in Spain, some administrative steps are essential.
- Obtaining the NIE (Foreigner Identification Number): it is necessary for any financial transaction and therefore for any real estate acquisition in Spain. To find out how to obtain it, see our article.
- Opening a Spanish bank account: this is not mandatory, but having a bank account in Spain considerably facilitates transactions and administrative procedures during the purchasing process.
- Determination of tax status: anyone who resides in Spain for more than 183 days per year (or whose economic or family interests are concentrated there) is considered a tax resident. Take stock before launching your project.
Financing
If you need financing for your acquisition, here's what you need to know:
- Non-residents can generally obtain financing for 60 to 70% of the property price. This implies that the buyer must have a substantial initial personal contribution.
- Tax residents, on the other hand, can have their purchase financed for up to 90% of the property price (for a first purchase or the purchase of a primary residence).
Good to know: in Spain, obtaining a mortgage is generally faster than elsewhere. Allow 7 to 8 working days on average.
Property search
Advice from Terreta Spain experts: the Spanish real estate market is rather opaque, and it is not uncommon to come across fraudulent online listings or overvalued properties. It is therefore not advisable to carry out your research alone. Entrust your real estate project to a professional who knows the local market.
Property verifications
In Spain, as the notary has a limited role in the real estate purchase process, it is advisable to use a lawyer to check for any outstanding debts or mortgages on the property. They will also examine the property's compliance with the land registry and local regulations. This step is of paramount importance to avoid problems that could prove very costly.
Property reservation
This is a key step in the real estate purchase process in Spain, which involves the payment of la señal, i.e. a deposit to secure the property (from 3 to 10% of the sale price).
- The señal allows the property to be withdrawn from the market.
- It proves the buyer's commitment.
- It protects the seller against possible withdrawals.
To find out more, read our practical guide on the subject.
Signing the arras contract
The arras contract is the equivalent of a preliminary sale agreement. In Spain, there are 3 types of arras, with varying degrees of commitment.
- The arras confirmatorias.
- The arras penitenciales (the most common type of arras).
- The arras penales.
We have prepared a comprehensive guide on arras for you.
Advice from Terreta Spain experts: sign the arras before a notary to guarantee the legal security of the transaction.
Signing of the public deed
It is called the escritura de compraventa, and it is the last step in the real estate purchase process in Spain. It takes place in the presence of a notary, who verifies the identity of the parties involved and the conformity of the documents.
During this meeting:
- The notary reads the deed to the parties.
- The buyer must pay the outstanding balance of the sale price (by banker's draft or bank transfer via a Spanish bank account).
- The property is registered in the Land Registry (el Registro de la Propiedad).
Conclusion
Purchasing property in Spain requires thorough preparation and an understanding of the administrative and financial steps involved. Engaging competent professionals, such as specialized lawyers and experienced real estate agents, helps to avoid pitfalls and secure the transaction. Proper anticipation of costs and taxation is also essential for a successful investment. We address this point in another factsheet.
Further information
This article gives you a quick and concise overview of the subject. To go further, Terreta has prepared a very detailed article on the process and stages of buying real estate in Spain, complete with retro-planning. Click here to read it.
Sources: Terreta Spain
FAQ — Steps for Buying Real Estate in Spain
What are the steps involved in buying a property in Spain?
The process of buying property in Spain generally involves several steps: obtaining a NIE, determining your budget and financing, searching for a property, making an offer, signing a reservation agreement or a preliminary sales contract, and then signing the final deed of sale at the notary’s office.
What is the first step in buying a property in Spain?
The first step is usually to obtain an NIE (Número de Identidad de Extranjero), an administrative number that is essential for conducting any real estate or financial transaction in Spain.
Do you need to obtain an NIE before buying property in Spain?
Yes. A NIE is required to purchase real estate, open a bank account, pay the taxes associated with the purchase, and sign the deed of sale at the notary’s office.
Should you secure financing before looking for a property?
Yes. It is strongly recommended that you verify your financing options before starting to view properties or making an offer, especially if the purchase involves a mortgage.
How much of a down payment is required to buy a property in Spain?
For foreign buyers, banks typically finance between 60% and 70% of the property’s price. The buyer must therefore set aside a down payment to make up the difference and cover closing costs.
How should you plan your real estate project before buying in Spain?
It is important to clearly define your budget, your purpose for buying (second home, primary residence, or rental investment), your desired location, and the property’s features.
How do I search for real estate in Spain?
The process involves analyzing the local market, viewing properties that meet your criteria, comparing prices, and assessing the property's potential before making an offer.
Is it possible to buy real estate in Spain remotely?
Yes. It is possible to purchase real estate without being physically present in Spain by using a notarized power of attorney that allows a representative to sign certain documents on your behalf.
What checks should you make before buying a property in Spain?
Before purchasing, it is important to verify the property’s legal status, ensure there are no outstanding debts, confirm compliance with zoning regulations, review the cadastral records, and check for any potential co-ownership fees.
What is the role of a notary in a real estate purchase in Spain?
The notary is responsible for authenticating the deed of sale and verifying the identities of the parties. The notary formalizes the transaction when the deed of sale is signed.
What is a purchase offer in Spain?
An offer to purchase is a proposal made by the buyer to acquire the property at a specified price. If the seller accepts the offer, the parties may formalize the agreement through a reservation contract or a preliminary sales agreement.
What is a real estate reservation?
A reservation involves paying a deposit to take the property off the market for a specified period while the transaction is being prepared.
What is an arras contract in Spain?
The preliminary sales agreement is a contract signed between the buyer and the seller that formalizes the sale. It typically requires the payment of a deposit of approximately 10% of the property’s price.
Can you lose the deposit paid when signing the preliminary sales agreement?
Yes. If the buyer backs out of the transaction after signing the preliminary contract, they may forfeit the deposit they paid. If the seller backs out, they generally must refund double the amount received.
What is a property appraisal when buying a home?
A property appraisal is an official assessment of a property conducted by a professional to determine its value, particularly in connection with a mortgage application.
What happens during the signing at the notary's office?
When the deed of sale is signed, the notary reads the official document, the buyer pays the balance of the purchase price, and ownership is officially transferred.
When do you officially become a homeowner in Spain?
The buyer officially becomes the owner upon signing the deed of sale at the notary’s office.
What happens after buying a property in Spain?
After the signing, several steps are taken: registering the property in the property registry, paying the taxes associated with the purchase, and transferring the utility and service contracts.
How long does the process of buying a home in Spain take?
The timeframe varies depending on the project, but it generally takes anywhere from a few weeks to a few months from the initial property search to the final signing.
Is it possible to buy a property in Spain without traveling there?
Yes. With a notarized power of attorney, certain steps in the process can be completed remotely.
Why is it advisable to have professional guidance when buying real estate in Spain?
Working with professionals helps ensure that legal due diligence is conducted properly, prevents administrative errors, and streamlines the entire purchasing process.
