We sat down with Matthias Wohlfahrt from Wohlfahrt-Rechtsanwälte-Abogados in Guadalmina, San Pedro for a two-part interview on property law in Spain.  With almost 20 years experience in real estate law and a member of the Law Society in Spain since 2000, Matthias has extensive knowledge in this field and helped us compile a quick guide on how to successfully buy a property on the coast.

What does the realtor do?

The realtor will usually receive a commission from the seller which can range from 3-7% plus 21% VAT. Once you have found a property within your price range you will need to pay a reservation deposit of around €5,000 to the agent which he accepts on behalf of the seller; after which there is usually a 14-day grace period for a final decision to be made. If the sale does not go through the agent or seller must return these funds.


Do I need a lawyer?

The short answer is yes! With a multitude of properties having been built illegally in Spain it is advisable to choose a reliable lawyer to handle all the paperwork for you. A lawyer calculates the purchase costs which come to around 10 to 12% of the purchase price and includes the land transfer tax (8% for properties up to €400,000 and with a maximum of 10% for properties over €700,000.01), 1% lawyer fees plus 21% VAT, the notary fees and the registration in the Land Registry. With new constructions, the VAT is 10%, and the stamp duty is 1.5%.


The lawyer

The lawyer will begin by going to the planning authorities and check that the property has all the necessary planning permission. If there have been extensions/conversions that do not have the required paperwork, then there needs to be an agreement with the seller as to whether the purchase price can be renegotiated or in some cases, the purchase is not feasible.

The lawyer will also need to check with the administration of the community if there are existing problems within the community such as expensive infrastructure issues etc.

Then the lawyer will need to obtain an up to date document from the Land Registry to ensure there are no charges against the property.


Signing the pre-agreement

In Spain, this document is signed privately and not in front of a notary, usually in the office of one of the representing lawyers. A 10% deposit in the form of a cheque is paid to the seller, and it is often agreed on that this money remains in the account of the seller´s lawyer until the signing at the notary.

The property is only taken off the market once the seller has received the 10% down payment. This deposit is non-refundable should the sale fall through due to the buyers, if the seller cancels the sale then these funds are returned.


What happens after the pre-agreement?

Both lawyers need to meet and agree on the other charges of the property which include the community fees, utilities, property tax (IBI) etc. These are calculated up to the date of signing at the notary. The seller will already have a Spanish tax ID number (N.I.E.), and the buyer must obtain one to purchase the property, your lawyer can help with this process.


The notary

Both buyer and seller appear in person at the notary for the signing, if this is not the case, they must be represented by a Spanish notarial authority. The signed contract is needed to register the change of ownership at the Land Registry.

If you have further questions on this process, please call us on +34 674 527 599 | +49 173 96 229 72 or email [email protected], and we will be happy to assist.