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| 1. CHOOSING A PROPERTY |
First you need to decide upon the
location. A few years a go it was taken for granted that it had to be the Costa del Sol,
meaning near to the beach as possible. Today, the new roads leading inland make it
possible to choose a different way of life or holiday.
Inland, only twenty minutes from the beaches, lies an expanse of unspoiled countryside,
full of forgotten charm, clean air, hospitable people, golf courses, tennis clubs,
top-class restaurants, inexpensive ventas and bars. In short, everything the coast offers
without the pollution and the overcrowding. When you decide to buy a property, remember you now have a wider
choice of location. Come to the Guadalhorce Valley: you will be pleasantly surprised. |
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| 2. CHOOSING AN ESTATE AGENT |
| Choosing a reputable Estate Agent will help
you to build your knowledge of the area and of comparable values of properties with
similar characteristics in different locations. By sharing their experience and knowledge
in the property world with you, your Estate Agent will help you locate the right property.
They will help by explaining the contrasts between the different areas and properties,
interpreting your requirements and informing you of those properties, which in their
opinion, may match what you are looking for. They will also will be able to guide you
through the negotiations with the seller. |
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| 3. ONGOING EXPENSES |
| Once you have selected a property that may be
a possible purchase, you should enquire as to the ongoing expenses. In particular, ask how
much you would pay for the Council's Annual Real Estate Tax (known as the IBI), the
community fees, the charges for refuse collection, water rates, electricity charges and
the Property Income and Wealth Tax with regard to the particular property you are
interested in. |
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| 4. DECIDING TO BUY |
| You may find that having looked at three
properties you like, one has a certain feature which is quite attractive, another a
different feature and so on, but none has singly all three. There may be differences of
opinion between you and your spouse over the choice of property. A perfect property in
reality seldom exists, whether you build from new or not. The decision to buy therefore
may be one of compromise. Many buyers find that once they have added their own personal
touches to the property it becomes a home and matches their expectations. |
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| 5. NEGOTIATING THE
PURCHASE |
| Having chosen the property, the next step is
to negotiate the purchase terms with the seller. The terms should not be limited solely to
price but should cover all your requirements in detail. You may wish, for example, to make
your offer subject to mortgage or lawyer's approval, to stipulate that seller pays the
Plusvalia tax (Tax payable on the increased value of a property from its time of purchase
to its resale), to vary final completion dates, or the method of payment. You may wish to
include or exclude the furniture. The salesman who found the property for you may not be
the best person to negotiate the terms of sale with the owner. Ask to speak with the
senior sales person or sales manager in the company and discuss with them the formation of
a team to negotiate and carry through the terms of your purchase. The sales person may at
this stage feel it of benefit to bring into the team a recommended lawyer to assist in the
negotiation, making sure that any offer meets their legal criteria. |
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| 6. CHOOSING A
LAWYER |
| A lawyer will provide the legal guarantees
for the purchase of your property ensuring that legal requirements are met and that your
property is bought free of encumbrances, charges, liens or debt and up to date in all its
payments of local contributions and community charges etc. The lawyer may also assist the
sales team in difficult and complex negotiations with the owner. Using a lawyer from your
home country may double your bill and will most certainly hold up the sales process. There
are many excellent local lawyers who may be fluent in your language. Ask your estate agent
to recommend one. |
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| 7. FORMALISING AN
OFFER |
| Once the sales team, together with the
lawyer, has discussed terms of the purchase with the owner and there is a verbal agreement
the next step is to formalise the offer and terms of purchase by setting them out in
writing. Show the seller that you really do intend to purchase by lodging funds in a local
bank account or with your lawyer. It is normal practice in Spain to include a sum of money
with the offer in order to reserve the property for you until such time as you are in a
position to exchange private contracts. |
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| 8. EXCHANGE OF PRIVATE CONTRACTS |
| Upon acceptance of your offer by the owner,
the next step in the sales process is to exchange private contracts of sale or to sign an
option to purchase. This may take place within two weeks of formal acceptance of the offer
or sooner. Your lawyer will have completed his legal searches and investigations of the
property and will have arranged the procedure for the cancellation of any outstanding
debts with the owner. The private contract of sale or option will (1) reflect all the
agreed terms of the offer and sale and (2) set out the date for final completion at the
notary. It is normal practice to pay ten percent of the purchase price at this stage. |
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| 9. FINAL COMPLETION & EXCHANGE AT THE NOTARY |
| A sale is formally completed in Spain when
the Public Title Deeds of Purchase and Sale are signed before a notary, the agreed payment
of the price made and possession given to the buyer. Once signed, the notary will fax a
note of the title deed to the local land registry. Your lawyer may also deal with the
payment of all the relevant transfer taxes associated with the purchase on your behalf and
also handle the formalities of registration of your title deeds. Similarly, your lawyer
may arrange for the transfer of accounts with the local suppliers of utility services such
as water and electricity and organise their payment through a local bank. |
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| 10. COST INVOLVED IN
PURCHASING A PROPERTY |
| There are basically three fees and two
taxes to be paid when purchasing property in Spain. The fees are as follows:
(1) Legal fees: normally charged at 1% of the purchase value plus V.A.T. (IVA)
(currently charged at 16%).
(2) Notarial fees: The scale is fixed by law and may range from
300 euros for
lower priced properties to 900 euros for higher priced properties.
(3) Property Registry: As a rule of thumb, 40% of the Notarial charges.
The taxes are:
(1) Transfer tax:
When buying from a promoter, developer or habitual trader, this is 6% (ITP) or V.A.T.
(IVA) at 7% plus a Stamp Duty of 0.5%.
V.A.T. (IVA) at 16% is applicable when purchasing parcels of land, commercial premises or
garage spaces.
(2) Plusvalía: this tax is normally payable by the vendor, although it may be
stipulated that the buyer will pay. This tax may range from a few hundred
euros to as
much as several thousands euros on larger properties with a lot of land. The person
responsible for this payment will be decided upon during the negotiations and in
consultation with your lawyer. As a rule of thumb, if you budget for ten percent of the
purchase price you will not be far wrong. |
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