PROPERTY PURCHASE GUIDE
COSTA DEL SOL, SPAIN
WHY WORK WITH CROSBY&MILLAN?
Dedicated Buyer’s Advocates
Unlike many real estate agents in Spain, we work only with buyers, to ensure your interests are represented.
Financial Analysis
We provide a thorough financial evaluation of your purchase, including projected income for investment properties.
Legal Assistance
We provide in-house legal assistance and representation from Spanish lawyers. Our services include legal due diligence, contract review, and more.
Local Market Knowledge
As an American and Spanish team living in Spain, we offer local market knowledge with an American style.
Unique Experience
We have more than 25 years combined experience in financial and legal consulting for Fortune 500 companies and the United Nations.
Financial Preparation
You determine your budget and how you will finance the property.
If applicable, you secure mortgage pre-approval from your lender.
Initial Consultation
We discuss your living criteria and any financial requirements in addition to your budget.
We work together to narrow down location as needed.
Property Visits
We source an initial selection of properties that meet your criteria.
After any needed adjustments, we tour properties of interest, either in person or remotely.
Make an Offer
Once you have selected a property, you make an offer.
We prepare a Letter of Intent outlining the terms of that offer.
For high value properties, consider making a Good Faith Deposit (GFD), usually between €5,000 and €10,000.
If an agreement is reached, the seller holds the GFD and accepts the offer, and we move forward.
If no agreement is reached, the GFD is returned to the buyer. The search continues!
Conduct Due Diligence & Secure Mortgage Funds
We conduct property background and legal checks.
General inspections are carried out on the property.
The bank secures your mortgage funds, if applicable. In Spain, an official appraisal is required by law for mortgage transactions. This helps the bank ensure that the loan amount is proportional to what the property is worth.
Sign a Reservation Agreement (Optional)
Once the offer is accepted by the seller, it is relatively common in Spain to sign a Reservation Agreement (“Contrato de Reserva”) and pay a fee to temporarily take the property off the market. This agreement will usually specify the period of time for which the property will not be actively marketed (usually up to 30 days), the reservation fee, and the agreed upon sales price.
While Reservation Agreements are customary when buying property in Spain, they are not mandatory. The agreements are not standardized and are negotiable, and they are usually written to protect the seller if written by their lawyer or real estate agent. Therefore, we strongly advise you to seek assistance from your Spanish lawyer in negotiating to ensure your interests are protected.
Additionally, we advise that you do not sign a Reservation Agreement until you conduct due diligence on the property and secure mortgage funds, if needed, since a buyer who withdraws often forfeits the reservation fee as compensation to the owner for taking the property off the market.
Sign the Private Arras Contract
The “Contrato de Compraventa con Arras” or Private Arras Contract (PAC) is a document whereby the buyer of a property delivers a certain amount of money to the seller to guarantee that they will honor their side of the contract, meaning the eventual purchase and sale. This agreement contains standardized legal provisions which are meant to provide safety and security for both the buyer and the seller during the purchase process, including the terms, conditions, and timing of the purchase.
The contract also stipulates the payment of a deposit, which although not fixed is commonly 10% of the purchase price. If the buyer backs out after the contract is signed, they lose the deposit. If the seller backs out, they must return to the buyer double the deposit paid.
The PAC serves as an intermediate step between the Reservation Agreement, if you signed one, and the Final Purchase Deed, providing legal security during the period leading up to the final signing.
Finalize the Sale
You sign the Public Purchase Deed in front of a notary and make the final payment.
The signed Public Purchase Deed is presented to the Land Registry and you receive a copy of the deed.
Post - Completion Tasks
You complete any outstanding tasks, which may include paying taxes at the Spanish Tax Office, signing new contracts with the utility companies and, if the property belongs to a community of owners, informing them of the change in ownership.
FREQUENTLY ASKED QUESTIONS
Can non - residents buy property in Spain?
Yes! The process can be confusing and there are a few additional considerations for non-residents (see the following page). In addition, the real estate industry is not regulated across Spain, so working with a trusted partner is especially important.
What should I expect to pay in taxes and fees?
At the time of purchase, you should expect to pay taxes and fees equivalent to approximately 10% of the purchase price for resale properties or closer to 15% for new builds. That includes transfer or VAT taxes, plus legal, notary, land registry, and other miscellaneous fees.
What taxes will I pay on an ongoing basis?
Your taxes will be highly dependent on your personal situation, but at a minimum you will pay annual municipal property taxes (IBI) of approximately 0.5%-1% of the cadastral value of the property. In some cases, you could also be subject to income tax or a wealth tax. Consult with your tax advisor for additional information.
