REMAX COLLECTION SOTOGRANDE

T O D A Y ’ S H O M E B U Y I N G

Do you know what you want?

Whether it is the first time you buy or if you have bought before, you have to ask yourself why you want to buy. Are you planning to move to another area for a change in your lifestyle or is it a possibility and not a need? What would you like your house to have that your present house doesn’t have?

We will sit and define your objectives to try to find the house of your dreams, whether it is a house in a development, a centrally located apartment or an apartment on the beach.

Finding your house

G U I D E Searching for the right house

We will analize your objectives and your price range.

When we have a list of properties to visit, you can walk around each area and see the houses that interest you most and reduce the list to your main priorities. Thus, you can initiate your search without pressure and get to know each area in the process.

Then we will make the appointments and we will visit the properties together in person.

This can be fun for many buyers and it is when you really start to compare a house with another.

We will have shortlisted the best houses available, so do not be surprised if the first or the second house ends up being your absolute favourite house.

Home buying process

Examining the property’s physical and legal characteristics

Examining the property’s physical characteristics:

For this, it is essential to visit in person the house that is offered for sale. Go and see it, and check that it coincides with what is offered, the quality of materials, the state of installations, preservation status, light, views, environment, noise, access to transport, etc.

Do not hesitate to notify any fault to your RE/MAX Collection Sotogrande Real Estate Agent and if you need or want, ask to be accompanied by an expert (an architect, a building engineer).

When the first information in respect of the house you may buy comes from information brochures, you have to take into consideration that:

The RE/MAX Agent has available to the public: the following

information

House description, usable area and general description of the building, common areas and the accessory services.

Plan of the house.

House’s energy performance certificate .

Identifying information of the property registration in the Land Registry, or evidence of not being registered in it.

Total price of the house and accessory services and method of payment.

House’s inventory.

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G U I D E

O D A Y ’ S H O M E B U Y I N G

Examining the property’s physical and legal characteristics

Examining the property’s legal situation:

In order to know well the house you are going to buy, not only you need to visit it, but also you need to know the legal situation of the house, that is to say, be clear about:

Previous enquiries on urban regulations. We have external legal counsel which can offer you a pre due diligence for those properties which interest you most and avoid lost time and money in marketing.

To whom it belongs, and therefore, who its owner(s) is/are.

If there are charges or encumbrances on the property, that is to say, if there are mortgages, repossessions or any other burdens on the property.

If there are tenants or owners of the property.

If it is subject to any special regime, such as the subsidized housings.

In the case of an apartment in a community of owners, if it is up to date in the payment of community fees.

If the property tax has been paid - former urban land tax.

In the case of under construction houses or new houses, if the promoter has contracted an insurance covering the damages that may be caused due to structural defects of the building.

If there are subsidized housings (VPO), or of Price-controlled housings (VPT), if there is any prohibition for having the property, or if there are pre-emption rights or rights of redemption in favour of Public Administration. In the case of houses for investment, you may consult the external legal counsel at your disposal and they will study your case.

The reservation / Offer

After having searched and found the house you are interested in, and for that purpose having seen and compared some properties, and supposing that an agreement on the price with the seller has been reached, the time to “tie" the transaction comes.

For this, the payment of a “deposit” for the reservation of the house is agreed with the buyer, with the commitment not to sell the house to another possible buyer, who also may be interested, while the relevant legal inquiries are made for you to buy with peace of mind.

When making this delivery of money, a reservation deposit will be made at the real estate office which will provide you with a "reservation" document which recognizes the payment of the said amount for the purchase of the corresponding house (making reference to the property location), at the relevant date, for the price agreed and also closing the maximum date to formalize the purchase/sale deed and the amount to be paid in it. The document must be signed by the person who receives the deposit.

The reservation may be conditional on the acceptance of the buyer’s conditions, for example, when making an offer for a property. In this case, if the seller does not accept the price or the conditions offered by the buyer, then, the offer is not formalized, so the RE/MAX office, which acts as a mere custodian of the money deposited, will return the total amount delivered, if on the contrary the seller client accepts the offer, the reservation is formalized.

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G U I D E The reservation / Offer

The civil code already contains this type of agreement. In particular, the payment for reserving the house is considered as “penitential deposit", which means that:

If it is decided not to buy the house for any reason, after having paid the amount for reserving it; this amount will be lost, since the seller is not obliged to return it. It would be like a payment that has been done for the inconvenience caused to the seller, who already counted on having the operation closed, and during the time that has elapsed from the reservation to the time of deciding not to continue with the purchase he may have found another buyer and nevertheless, he kept the reservation.

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T O D A Y ’ S H O M E B U Y I N

If it is the seller who after having received the deposit, decides not to carry out the sale for whatever reason (regret, better offer, etc.), he must return the amount delivered as reservation plus an amount equal to the said amount, that is to say, the double of what has been paid for the reservation.

When formalizing the purchase/sale contract it is usually agreed to pay at that time a part of the total amount of the house price (10% usually) and the rest when formalizing the deed of purchase/sale at the notary’s office. Of that amount, the amount previously delivered for the reservation is deduced.

Earnest Money Deposit Contract

It is customary that when the buyer and the seller agree a purchasesale, they sign an earnest money deposit contract or deposit contract, that is a private contract, where the parties agree their commitment to carry out the purchase-sale of the property, being delivered as proof an amount as deposit or “earnest money” deposit.

The amount to be established as “earnest money deposit” is not legally established, so it will be the will of the parties which decides the percentage of the total price. It will be stated in the earnest money deposit contract, although it is customary to be 10% of the total price.

At this point, it is important to distinguish three types of earnest money deposit, depending on the will of the parties, with different consequences in case of breach of the contract or regret :

5.1 Penitential deposit

The penitential deposit is the only one which does not enforce compliance of the contract, being both parties able to desist with the loss of the amount delivered or with the refund of double the same, depending on which party does not fulfill his commitment.

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T O D A Y ’ S H O M E B U Y I N G

5.2 Security deposit

It is a delivery on account of the purchase/sale price. Therefore, if the buyer or the seller does not fulfill what is agreed in the earnest money deposit contract, the opposite party may oblige this party to fulfil the contract or to terminate it, and ask for a compensation for the damages caused for the non-fulfillment. As opposed to what happened with the penitential deposit, the parties can’t terminate the contract losing the amount established as deposit, since this does not prejudge on the compensation for nonfulfillment, in the case that this would take place.

5.3 Penal deposit

G U I D E Earnest Money Deposit Contract

In the case of non-fulfillment, the party failing to perform will lose the deposit delivered or will have to return it doubled, depending on which party is responsible for the non-fulfillment. But this will not prevent that the party which has fulfilled may ask for a compensation for the damage caused, provided that it is justified, apart from being able to oblige forced compliance.

Financing

The mortgage loan is a loan granted and given by a financial and credit institution, which is guaranteed by a real estate, that is to say, in the mortgage loan it is the Bank who allows you to own your house.

A mortgage loan must have the following characteristics :

Maximum amount: the amount facilitated by the bank.

Loan term: the term may be a determinant since a short term implies higher quotas. A longer term makes the loan burdens more affordable.

The amortization is the payment of the outstanding capital. The capital amortization is getting bigger as the life of the loan progresses.

The quota is the amount committed to be paid periodically by the person subscribing a mortgage loan to the financial institution which has given it. It can be monthly, quarterly, half-yearly or annually.

The grace period refers to the period when the part of the capital amortization is not paid and only the interests of that capital are paid.

6.1 Application

You will present it to the financial institution or bank, attaching all the necessary documents to process the loan.

6.2 Application, appraisal and verification

It is necessary to know the appraisal value of the property to be mortgaged and the registration situation of the property. For this, an expert of an independent appraisal company will visit the real estate and will draft the appraisal report. At the same time, a registration note of the real estate from the Land Registry will be requested to check its registration, the registration ownership and any possible burdens. These arrangements may be done by the external legal counsel at your disposal.

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G U I D E Financing

T O D A Y ’ S H O M E B U Y I N G

To contrast the survey’s information and continue with the processing of the loan and of the purchase, you must provide the minimum required documents that we will request from you, as applicable.

6.3 Sending the documents Verification result and appraisal value

After having checked the property’s registration and the property’s appraisal, you will be informed of the result. We will also inform you if there were previous mortgages, burdens to cancel or any other issues, and we will make the appropriate arrangements to resolve them before the signing.

Checking the documents

Upon receiving the documents that you provide us with, we will contrast them with the data previously given by you in the application and if everything is correct the process will continue.

Binding offer

The bank will present you with the binding offer, containing all the economic conditions and the clauses of the deed to be signed afterwards before a Notary. You must read this offer to check that everything is in compliance with what is agreed, and if so, sign it.

Preparation of deeds – Signing appointment

Your RE/MAX Collection agent will contact you to set the date for signing the deeds before a Notary. Once the date is chosen, your adviser will coordinate with you the rest of the operation: amount and method of payment of the property, provision of funds for expenses, and the documents to be provided on the day of the signing. RE/MAX Collection Sotogrande offers you the possibility of using an external legal counsel for this service .

Financing

Signing of deeds

On the scheduled date and place, the purchase/sale and the loan deeds will be signed before a Notary. The sellers (all the registered owners), the buyers (registered holders of the loan) and the bank’s representatives will have to attend this act.

The Notary will check the property’s ownership and burdens and he will appraise the legality of the contract’s conditions. The Notary gives satisfactory proof to the formalization of the contract and to the date, acting independently and impartially in relation to the parties. In this act the cancellation/subrogation of the mortgage and the constitution of a new one, if any, is also agreed.

Registration under a risk

The transaction agent will collect both deeds at the Notary’s office, he will settle the corresponding taxes and will present them in the Land Registry for registration. Once they are registered, you will receive the original of your purchase and the copy of the loan at your address, together with all the invoices paid on your behalf, and the final settlement of your provision of funds made by the agent. These issues are usually included in the management process of the purchase/sale. We have an external legal counsel at your disposal for this service.

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G U I D E Taxes

The taxes to be considered in a purchase/sale transaction vary depending on whether it is a new house or a second hand house:

Generally, the buyer pays all expenses, except the capital gains, the property tax and the possible debts with the Community of Owners. If debts are found, the corresponding withholdings can also be applied.

7.1 New house Value Added Tax

(VAT): It is exclusively paid by the buyer on the transfer of a new house, that is to say, on the first delivery of the house made by the promoter/builder to the buyer. It has a 10% tax rate. VAT is NOT applied in a private sale of a house.

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Stamp Duty (IAJD): It charges the formalization of public documents (notary, mercantile and administrative documents) in real estate transfers not exempt from VAT. It must be paid by the buyer of the real estate and the tax rate is 1,5% in Andalusia. In the mortgages it is based on the mortgage liability and, in the first transfer of a house purchase, the price appears in the public deed.

7.2 Second Hand House Property Transfer Tax

(ITP): It taxes the purchase/sale of second hand houses or successive (not those of new house,

which pay VAT). It must be paid by the buyer of the real estate and has a tax rate which ranges between 8%, 9% or 10%, depending on the property price. The tax must be paid in the Tax Office of the corresponding autonomous community, based on the purchase price appearing in the public deed. You have an external legal counsel available for this service.

Taxes

7.3 New house and second hand house

•Onerous transfer tax (TPO): It has a tax rate of 1% and it is paid when a mortgage loan is requested to finance the purchase of a new house or second hand house.

•Tax on the Increase in value of land of urban character (capital gains tax): It is a municipal tax which encumbers the increase of the value in the land of urban character from its purchase to the time of the sale. The capital gains tax will be paid by the seller in case of a purchase/sale (a recent sentence of the Supreme Court of Justice has ratified that the promoter of new houses CAN’T charge the buyer with the capital gains tax). In the case of a transfer of house for inheritance or gift, the taxpayer is the one acquiring the house.

•It must be paid within the period of 30 business days from the date of the property transfer, except in the case of inheritances, when the period is six months from the date of death (extendable to a year if thus requested in writing within the first six months). It is necessary to present the payment receipt to register the purchase/sale in the registry. Other taxes which do not burden the purchase/sale but that must be paid to complete it.

•Real Estate Tax (IBI): it is a municipal tax charged on the value of the real estate of rustic and urban nature situated in the respective municipalities and that the law establishes that it has to be paid by the real estate’s owner on 1 January.

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G U I D E Foreigners

Foreigners linked to Spain for economic, professional or social interests, will be provided with an exclusive, unique and sequential personal number for identification purposes.

The personal number will be the foreigner identifier. It must appear in all the documents which are issued or processed, as well as the formalities stamped in your identity card or passport.

In order to obtain a NIE for economic, professional or social interests, the following applications will be admitted :

Those presented in Spain in person by the interested party, Those presented in Spain through a representative, Those presented in the Diplomatic Representations or in the Spanish Consular Offices situated in the country of residence of the applicant, corresponding to his residence.

O D A Y ’ S H O M E B U Y I N G

The following documents must be provided to have this number assigned:

1Standard form-application (EX-15), duly fulfilled and signed by the foreigner.

2Original and copy of your passport, or identity document, or travel document or registration certificate in force.

3Communication of the economic, professional or social causes which justify your application.

4When it is requested through a representative he must accredit to have a power of attorney expressly stating that he is empowered to present that application. The external legal counsel at your disposal may process the NIE with a Power of Attorney which will allow him to make all legal queries.

Foreigners

The NIE (Foreigners’ Identification Number) is an exclusive, unique, personal, and sequential number, granted by the Foreigners’ Office. This Identification Number will appear in all the documents to which this number is assigned, being essential in order to carry out any procedure related to purchasing a real estate.

This Identification number does not allow you to reside in Spain, but it will be required for processing records, official proceedings or for professional or economic interests.

It is an indispensable formality for carrying out any economic transaction such as opening a bank account, starting a business, buying a house or a car, filing your tax return or filling an administrative application appertaining to the foreigner’s office.

The Foreigner’s Identification Number is officially issued, that is to say, automatically by the Directorate General of the Police to any foreigner to whom an administrative enquiry has been initiated; or you can ask for it provided that you accredit the reason for your application.

You can apply for the NIE outside Spain appearing in person in the diplomatic mission or the Spanish consular office corresponding to your territory of residence.

If you have the intention to buy a house, apply for a NIE soon after you are in the Spanish territory (RE/MAX Collection Sotogrande will also offer this service to help you to process the NIE successfully when such application is related to the process of acquiring a property.).

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G U I D E

Foreigner’s Taxes

Regarding the taxes for the purchase/sale: when buying a real estate, the taxation is the same, regardless if the buyer is a resident or non-resident.

a. New housing: VAT (10%) and IAJD (1.5%) Of second hand: ITP (8%-10%)

b. In any case, if you purchase with financing, should meet the TPO (1%)

Natural person owners: non-residents who are owners or who have real estate in Spain are subject to the Non-resident Income Tax which is chargeable on the 31st December every year. A withholding of 3% will be applicable to the non-resident seller to secure the payment of the taxes and other possible contingencies.

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a.Some income is estimated if the real estate is not leased and it is built. It is not an actual revenue that the non-resident has got, but it is presumed, that is why it is called imputation of profits. For these purposes, it is determined calculating as income 1,1 per 100 of the cadastral value of the real estate (2 per 100, if the cadastral value had not been reviewed or changed with effect from 1 January 1994).

b.It is paid on that amount, without deducting any expense.

c.Applying to it the tax rate which is 24 per 100.

Example: non-resident who has been an owner of a real estate throughout the year 2011 whose cadastral value is 100.000 euro: 100.000 x 1,1%x 24%= 264 euro per year to be paid.

Foreigner’s Taxes

In the case of property rental the income earned will be taxed without deduction of any expense at the general rate of the IRNR, that is to say, 24%.

Example: monthly rent 600 euro, rented all year: 600x12 = 7.200 euro a year x 24% = 1.728 euro to be paid.

Finally with regard to the requirements for buying in Spain:

Having a N.I.E. “Foreigner’s Identification Number" (NIE) is essential for purchasing a house in Spain. Although you can wait until you find a house to request it, we recommend you to ask for it as soon as possible.

Opening a local bank account. You will need a bank account in Spain during and after the buying process.

The income on that non-resident account must be duly justified, its origin must be stated through forms to be fulfilled in the country of origin of the funds.

Accrediting the methods of payment in the deed: all the payments made in the real estate have to be duly accredited and a bank certificate of the money origin must be attached.

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G U I D E

Property’s purchase expenses

O D A Y ’ S H O M E B U Y I N G

The expenses (agent, notary and registration) of the mortgage and the purchase/sale are quite similar.

Notary purchase/sale: It is determined by the purchase/sale value and also, other factors have an influence such as the number of pages of the deed or number of copies, although the notary’s fees (tariffs) are approved by the government and they are the same for all.

Notary mortgage. A percentage of the mortgage liability (maximum amount of which the property responds to in case of non-payment) is paid which varies depending on the bank.

Registration purchase/sale: it comprises 2 types of expenses. On the one hand, we will pay to verify the ownership and charges of the property (if it has a mortgage that is being paid, if there are non-paid taxes, etc.). On the other hand, the registrar is paid to check the legality of the document and register it in the Land Registry. The cost is associated to the value of the real estate and the loan.

Registration mortgage. The expenses caused when registering the mortgage in the Land Registry are also a percentage of the mortgage liability.

Appraisal: An approved appraisal company is required to certify the property value. For this, apart from the mortgage, expenses and taxes, the buyer has to bear the cost of the appraisal of the house, which implies a cost between 100 and 300 euro. The appraisals have a validity of 6 months and must be paid irrespective of the approval or not of the mortgage.

Property’s purchase expenses

The RE/MAX Collection Sotogrande Office does NOT charge any fees to the buyer, given that the fees are covered by the seller.

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G U I D E

Notary’s Office

Public deed

To avoid litigation, the Civil Code establishes that if one of the parties taking part in a purchase/sale wants it he may require the other party to appear before a notary to convert the said transfer into a public deed. Generally, the parties freely choose the Notary. As a courtesy, it is customary that the buyer chooses the notary. What is true is that, at the moment of truth, the employee of the bank with which the real estate will be mortgaged often chooses the Notary’s office.

O D A Y ’ S H O M E B U Y I N G

Among all operations in which a Notary Public is involved, the conversion of the purchase/sale of a real estate into a public deed, is the most well known. The Notary’s task is to certify that an operation has been carried out in accordance with the legislation in force. After the relevant verifications, the Notary’s office is in charge of drafting the deeds, a document accrediting that the property belongs to the person who acquires it. Previously, the Notary Public’s office asks for an informative note of the Land Registry where the owner of the transfer is specified and if it is or not free of charges. Also, he can require a certificate that shows that the seller is up to date with the payment of community fees from the relevant community of owners as well as accrediting the number of cadastral reference of the property.

When the deeds are signed, the Notary is responsible for identifying the people to whom they are granted or take part in the purchase/sale formalized and which original document he records in his protocol. The Notary is a civil servant who acts with independence and impartiality. Through the public deed and its copy, he provides legal security to the real estate transactions. The Notary Public’s intervention, combined with the registrar’s intervention insures the correct performance of purchase/sales.

Notary’s Office

The notary’s fees or tariffs are charged based on a property price scale. There are minimum tariffs established by the Government through royal decree, but there is not a maximum limit.

Other tasks

Besides converting a document into a deed in a real estate purchase/sale, formalizing wills and his presence in inheritance’s distribution are others of the most known Notary’s tasks. The Notary’s office keeps the original will under its custody, and delivers a copy to the testator.

Notaries can also carry out advise tasks, which are given free to the parties involved in a transfer. Before signing, the notary may be required to inform of its content and resolve any doubt.

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G U I D E

Why COLLECTION SOTOGRANDE?

What exceptional services offers RE/MAX Collection Sotogrande to the consumer?

The RE/MAX Collection Sotogrande‘s services are different because RE/MAX Collection Sotogrande is different. RE/MAX Collection Sotogrande offers an exclusive service and relationship from the first moment as they work to exclusively represent the buyer’s interests through the entire negotiation process. We provide the buyer with a list of professionals in refurbishment, moving, insurances, solicitors, financial managers, specialists in currency transfer, etc.. All these services distinguish us from the rest and allow us to have our own identity. Besides, we are pleased to present our reliable collaborators in all these services.

What must the consumer demand from a real estate agent when buying a house?

O D A Y ’ S H O M E B U Y I N G

The buyer must demand from the agent a comprehensive knowledge of the real estate market, that is to say, he must not only demand an absolute knowledge of what he is selling. Besides the real estate agent is required to know all the procedure of the real estate purchase/sale.

What knowledge must a real estate agent have in order to offer a good service to the client?

Among others, he must have knowledge of tax issues, financial issues, real estate appraisals, real estate law, marketing and sales…

Can you search for other properties in the market and save me some work?

RE/MAX COLLECTION SOTOGRANDE takes part in MLS and collaborates with several real estate offices in order to help you to find the product you are looking for. We collaborate directly with more than 300 agencies in Sotogrande and 3.600 in all Spain.

So, if you want, we can help you in the search for your property.

Which aspects make a client choose one over another real estate?

We think that the client looks for a professional and serious agent. The Client looks for an agent with great potential, who has a significant market position. But most importantly he looks for a professional of the real estate sector in this agency. This is a people business and lastly, what makes the client choose one over another is that the real estate agent with whom he is dealing with is prepared and knows how to transmit trust and security.

Which advice would you give to the client who wants to buy or sell his house?

We would tell the client to choose a real estate professional whether you are buying or selling a house, because he is the best person to advise him on real estate purchase/sale issues. It will save time, money and trouble. Also, my advice is that he compares the agencies working in the real estate sector and among all of them, he will distinguish the RE/MAX COLLECTION SOTOGRANDE agent and the RE/MAX brand, a symbol of a solid and professional system of work.

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