You have found your dream home in Valencia, so what happens next?
When it comes to buying or selling a property, we are often asked whether it is really necessary to hire a lawyer. You may probably think, with a view to being cost effective: “The notary checks everything, right? If that is the case, then why do we need a lawyer?”
Let us get you out of the dream right away, because having a lawyer is indispensable in Spain when buying a property.
We are happy to tell you why!
Where the role of a notary in most Northern European countries is the most important key figure in the purchase of a property, this is slightly different here in Spain.
Naturally, the notary is important in the smooth running of the completion process and checking the final notarial deed of sale (the ‘escritura’), but the lawyer is the one who has actually done all the legal work.
The lawyer at the end is the most important person during the purchasing process. With this information we want to give you some insight into the role of a lawyer, what he or she does exactly, when you call for help and of course also the costs.
You have been on a viewing and have found your dream property in Spain. Congratulations! Now what? Since the house is probably not for sale exclusively with one real estate agent, it is important to get the house off-market as soon as possible.
Where normally you can expect that all checks have already been done in advance before a property comes on the market, this will often still have to be done to a large extent due to the non-exclusivity principle itself. That means that before a preliminary purchase contract is drawn and 10% of the purchase price is paid, it is very important that you know for sure that everything is correct.
For this purpose the reservation contract has been devised, the ‘contrato de reserva’. In this way you can take the property off market, but under the conditions of a proper legal check. With this contract and a deposit of usually between €3000 and €6000 you buy time.
Once this reservation contract is signed and the reservation deposit has been received, the property will go off the market. It may no longer be offered and viewed by others. The money remains secured with the broker and will be refunded if the legal checks eventually show that this is not a good property to buy in legal point of view. And otherwise it is already a down payment on the 10% of the purchase price.
This reservation is in any case the moment when we will advise you to contact a lawyer. The validity of a reservation contract is not unlimited. Under normal circumstances it is assumed that all checks will have taken place within 7 to a maximum of 10 days. So within two weeks this should lead to a preliminary purchase contract.
Once you have given the assignment to your lawyer, he will request all relevant documents from the selling party as soon as possible. After making the reservation, it is important in Spain that a lawyer will check various matters for you before proceeding with the provisional purchase contract (contrato de arras) and the 10% deposit. After all, you don’t want to buy a property that turns out to be incorrect afterwards.
If your lawyer discovers a reason why you should not buy, you will be protected from a major mistake and you will simply get the reservation amount back.
You can assume that most lawyers do the same checks but it is worthwhile asking what exactly is included in the package of their purchase assistance. The tasks of a good lawyer in Spain include the following:
A lawyer not only checks, but also knows how to resolve any legal challenges. For example it regularly happens that there are deviations in m² between the cadastre and the register. Not all outbuildings or swimming pools are always described either. Often the lawyer can check whether this can still ne realised and ensure that this is legally rectified before or during the completion.
Your lawyer can also request the zoning plan for a property on request. It can also be used, among other things, to determine whether the house could possibly qualify for a rental license. If you want to rent out, the lawyer is the one who will ultimately give you a definite answer about the possibilities in the specific municipality. A rental license can never be guaranteed for research into the rental possibilities of a lawyer.
After the completion, your lawyer can also change the contracts with the utility companies (gas, water and electricity) for you. These will then be debited from your account via an automatic payment. So you don’t have to arrange anything yourself.
A lawyer can do much of the work remotely and online. You will have to be present yourself for a number of matters, such as of course the completion at the notary. If that is not possible in any way, you can also give a lawyer a power of attorney via a notarial authorization. The lawyer will then be able to sign for you if you cannot be present in Spain yourself.
For example, if you have are in the process of realising your own custom new built dream property in Spain yourself, you will often have to be in Spain to sign various documents. This includes building permits or securing the payments made by receiving a bank guarantee. Your lawyer can do this for you via the power of attorney and you do not have to come to Spain for every signature.
In addition to the standard tasks and providing independent advice, your lawyer in Spain can also arrange a number of other matters for you. With a Power of Attorney (issued at the notary), your lawyer can arrange matters for you or sign for you if you cannot be present in Spain yourself. For example, a lawyer with a power of attorney can also apply for an NIE number for you if you have not yet done this yourself during the preparation process. In Spain you need the NIE number (the tax number for foreigners) when buying a property.
In that case, keep in mind that the NIE number is a lot more expensive than if you do this yourself, via the normal way. Where a NIE number normally costs about €10 administration fee, this amount quickly comes to about €300 per number through a lawyer. But of course it is nice that your lawyer can arrange this for you in Spain if you have found your dream property and want to proceed.
Of course we always recommend that you be present yourself as much as possible, after all, you are the one who is going to buy a property in Spain!
There are of course a number of good lawyers in Spain. Especially lawyers specialized in real estate and purchase assistance for properties. Many potential buyers do not yet or not sufficiently speak the Spanish language, so at least an English speaking lawyer is important. Since you hire the lawyer yourself, it is important that no miscommunication can take place.
It is important to have personal contact with the lawyer before hiring to feel whether you have the ‘click’ for the trust.
After finding your dream home, we can always put you in touch with a good native or English-speaking lawyer based in Spain. It is important that the lawyer is independent of the selling party and has good local knowledge. Certainly with specific objects, for example if you buy a ‘rustico’ property (finca in the countryside), a B&B (casa rural) or, for example, an apartment in Valencia. Then it is important that the lawyer has the local knowledge and inputs to act quickly and to obtain the correct information.
Furthermore, we are regularly asked whether, in order to avoid additional costs, it is possible that the lawyer who do work with in their home country can also do this in Spain or whether you can do this yourself if you have a legal background. This is certainly not advisable. Spain is a large country and the rules sometimes differ per municipality. We always recommend hiring a lawyer based in Spain. Sometimes it is even the case that a lawyer from, for example, the Almeria region is not aware of the rules and guidelines in, for example, the region of Valencia.
What additional costs for a lawyer should you consider exactly? In Spain a lawyer often charges a basic rate of around 1% of the purchase price + 21% IVA (Spanish for VAT) for the purchase guidance. The costs differ per lawyer, but are in any case usually between 1 – 2 percent of the purchase price excluding VAT. In addition to a percentage, they usually also apply a minimum rate. Think of €2000 to €3000 excluding VAT.
Also take this into account when calculating the costs of the buyer. In Spain it is often said about 12-13%, but apart from the regional differences that exist, some costs are a bit heavier for cheap homes. With a house of, for example €100,000, the costs to the buyer therefore weigh more heavily in percentage terms than with houses in a budget above that. The attorney’s fees could be then 2.5% instead of 1.5% (including VAT).
Click here to read more information about the buying process and the other buyer costs that you can expect in addition to the lawyer during the purchase process in Spain. In any case, always inform in advance which costs the lawyer will charge. This way you will not be surprised afterwards. It is of course possible that the costs are higher if you ask your lawyer to assist you in more complicated cases in addition to the standard tasks.
Don’t be put off by this long story. Or by stories you have undoubtedly heard about someone who bought a property in Spain with all kinds of problems. By being guided by a good lawyer, you can make purchases carefree. You do not have to know everything yourself, but if you choose for professional legal advice you have the experts ahead of you. To save you from the pitfalls.
We would of course be happy to help you find a good lawyer in Spain, known in the region and who can assist you in your own language or at least in English if necessary. If you are not known in Spain, it is often difficult to determine. Over the years we have assisted many people with their purchase and built up a good network. We are happy to connect you to the lawyer for the best legal advice who best suits you and your situation.
See you soon in Spain !
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Dream Properties Valencia is Certified Estate Agent based in Valencia and meets all legal requirements to carry out the profession of estate agent in the Comunidad Valenciana.