Spanish Legal Terms for Property Acquisition
Important Words to Know When Buying Property in Spain
May 10, 2009
Buying some real estate in Spain can still be a good investment, either as a holiday home or for the purpose of holiday rentals. A prospective buyer has to be aware, that Spanish law regarding real estate is very different to the law of the USA and the UK and so is the procedure.
It's helpful to know some important terms in Spanish and their legal meaning even if relying on a Spanish attorney who speaks English fluently.
Preliminary Steps to Buying a Property in Spain
- A prospective buyer should never rely on verbal information or assurances either from realtors or the seller. The only place that provides accurate advice on the legal situation is the Land Registry or Registro de la Propiedad. Depending on the size of the community where the property is located, there may be several land registries. The property is not identified by its address but by a series of numbers which appear in the appropriate page of the register.
- The buyer should engage the services of an attorney who will obtain a Nota simple. That's a certified copy of the land registry, which shows the actual owner, any outstanding taxes which may affect the property, any mortgages and other charges and incumbrances.
- The NIE or Numero de Identificacion Fiscal de Extranjeros is a tax number every foreigner buying a property in Spain has to obtain to be able to open a bank account, register the property in his name, contract water, electricity and telephone and pay the relevant taxes. The NIE is applied for at the foreigner department of the local police station and it's a lengthy process, so it's best to start soon.
- The abogado or attorney is not to be confused with the notary public where the title deeds and formal contract have to be signed. The attorney will help along the way, obtain all the necessary preliminary information and documentation and prepare the title deeds to be presented to the notary's office. The buyer has their choice of notary.
Legal Procedure of Property Acquisition in Spain
- Contrary to the USA and the UK, the notary public or Notario Publico is a very important person in any Spanish property transaction (and many additional business transactions). No property acquisition is valid and no deeds can be issued and duly registered if not signed before a notary by both parties and provided with his or her official seal. Private contracts do not convey ownership and are binding only inter partes but not towards third parties.
- The Escritura Publica de Compraventa document is the official purchase contract and conveyance which transfers ownership from seller to buyer and which is signed in the presence of the notary public. The document is presented to and registered in the appropriate land registry after taxes have been paid and is the only valid proof of ownership.
- The plusvalia is a tax that buyers who do not buy a brand-new home should be aware of. It's levied on the difference in value between the previous acquisition and the present one. The local town hall calculates the tax and the amount should be ascertained before entering into a binding contract because sometimes it can be a nasty surprise. By law, plusvalia is payable by the vendor, but it's perfectly legal to agree otherwise, which is done most of the time.
Knowing a few important legal terms and their meaning and mentioning them when entering into negotiations with a realtor or seller and before making an offer on a property shows that the buyer is an informed person who has done his or her homework and therefore strengthens their position.
Norms, Laws and Regulations can be found in the Spanish Codigo Civil which dates from 1889 and is updated constantly.
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