If we handle a conveyance for you, we will cover all the aspects of your purchase or sale making sure that the transaction happens safely and smoothly. We will offer (without waiting for you to ask ) all the advice that we consider could be useful in relation to in whose name to to put the property , capital gains tax, wills, NIE numbers, residency status, inheritance etc. The advise will cover all the tax implications both in England and Spain. We will offer this advice before you purchase to enable you to make the correct decisions.

Below please find different articles published by Davies Solicitors in different English local papers.

BUYING A PROPERTY IN SPAIN
If you have decided to buy a home in Spain, , follows some information regarding the legal aspects of the purchase.
Buyers of property in Spain naturally find the formalities and procedures involved, strange and confusing and this is often compounded by problems of language and difficulty in obtaining local professional advice that they can understand.
Some purchaser, seem only too happy to sign and pay as and when asked, sometimes with unfortunate results.
The wise thing to do is to take on the services of a qualified professional, of which there are many in all the tourist orientated resorts who speak good English or who at least have English speaking secretaries. The work of Spanish solicitors is controlled in Spain by the Law Society in each province..

Here is a very general outline of the work that goes on behind the scene, so that you have a rough idea of what to expect.

1. Request of the copy of the sellers escritura. A study of the first notarial copy of the sellers Escritura de Compraventa will indicate whether all the tax and registration procedures have been completed on the previous transfer. The registration details entered on the Escritura will enable the lawyer to do a complete search in the Register, and therefore make sure that the seller has a proper title and ensure there are no hidden charges or encumbrances affecting the property.
2. Make sure there are no outstanding bills.
3. It is normal for a deposit to be handed over to reserve the property until the signing of the Escritura de Propiedad can take place. When the deposit is handed over your lawyer will draw up a solid contract to secure both parties until the day of the signing.
4. If you are a non resident the Spanish Ministry of interior requires you to obtain a certificate of non residency (which in turn determines your fiscal number) so that you can sign the escritura. It will also be required later on by the Tax Authorities.(this is known as the NIE number 9)
5. If you buy from a non resident, who has had his property for less than ten years, you must hold back 3% of the price stipulated on the escritura which your lawyer or in this case yourself will pay to the Tax Authority on behalf of the sellers capital gains tax.(if you do not retain this money you will be responsible for the sellers CGT). If he is accustomed to dealing with foreigners, he will point this out, if he does not, watch out.
6. When deciding where , when and how you are going to pay for your house in Spain it is very important that you seek advice on your particular case, because the Spanish Law concerning foreign investment does not permit the payment to be made in any old way. If your lawyer is used to foreign conveyancing, he will automatically point out the correct way of handling this.
7. Your lawyer will draw up a rough draft for the notary to draw up the final title deed on official paper.( By contrast to England, in Spain each time a transaction takes place a new title deed is drawn up).
8. When the escritura is signed there are taxes and fees to be paid, which your lawyer will do for you, on receiving appropriate funding. (you will normally get change out of 10% of the purchase price)
9. Order the property register to inscribe your title deed.
10. Aprox. one month from the signing of the escritura you will receive your escritura with the registers stamp on it, and receipts for all the payments made on your behalf.(I recommend you staple them to your title deed forever, because when you go to sell they can be used as deductions against capital gains.)

PURCHASING A PROPERTY UNDER CONSTRUCTION:
After looking at all the finished properties available for sale in the area of Spain that you have chosen, you may decide that you will need to purchase under construction:

After finding a property, the most important thing to do is to choose a good independent solicitor to handle the purchase for you:

Good ways to choose a solicitor:

• Ask other people that have purchased property in the area.
• Ask the British Consulate in Malaga to let you have their list of English speaking solicitors.
• Ask your bank in England if they have a list of recommended solicitors in this area.
• Ask for an initial consultation to confirm that the procedures above will be followed.

Bad way to choose a solicitor:

• To depend entirely on the recommendation of the estate agent or builder.
• Choose a solicitor simply because he/she is the cheapest.

Choose a bank: You also need to find a bank to deal with your affairs in Spain. To choose a bank , we recommend the same rules as for choosing a solicitor.

After six years of solid property boom in the Almeria Province, their is a good choice of English speaking solicitors and banks, so their is no need to use the one recommended by the estate agent or builder.

Now that you have chosen the property ,agreed a price and located a solicitor and bank, the next step is to sign a pre-reservation contract at which time the builder will normally expect you to hand over 3000 euros, which should be refundable if the final contract is not agreed on.

The purchase contract will stipulate all the terms and conditions of the transaction:

• Description of what you are purchasing.
• Price. (be aware that the purchase of a property is subject to 7% V.A.T )
• Completion date, etc.

The contract will stipulate stage payments during construction with aprox 50 to 70% of the price due on completion.
Very important is for your solicitor to secure that the contract stipulates the obligation for the builder of issuing bank guarantees on the stage payments.

When the property is complete a title deed needs to be signed in your favour. Your solicitor will make sure that the builder has all the necessary paperwork in order before completion.

The deed needs to be registered. This will take aprox. two months from signing and will be done by your solicitor.

Expenses to expect above the purchase price quoted by the builder. The general rule is that you need to expect aprox. 10% of the purchase price in expenses, the breakdown of which is:

• V.A.T to the builder: 7% of purchase price.(at the time of print). V.A.T will probably be increased during 2010.
• Document tax to government: 1%.
• Notary fee: between 400 and 900 euros.
• Registrar´s fee: between 200 and 400 euros.
• Solicitors fees: This can vary. Ask for a quote. For our fees, please have a look at FEES.
• The expense that can vary the most is the solicitors fee. The best thing to avoid surprises is to request a budget in writing of all the taxes and fees before you start.

When you receive the title deed to the property, you only need to think about two last things:

1. If it is beneficial or not to become a Spanish resident.
2. To make a Spanish will.
3. To ask your solicitor about tax obligations in Spain if any. (it will depend of if you are resident/non resident etc.

PURCHASE OF SPANISH PROPERTY: INDEPENDENT INFORMATION WILL HELP SOLUTION MOST OF THE PROBLEMS THAT PURCHASERS COME ACROSS.
Last week Mr. Mark Sucklin who writes the Spanish Property Doctor Column for the Sunday Times was in Almeria to gather information for his column.
We had lunch together and I have to say he is full of knowledge about the legalities of the purchase of property in Spain . He also has a very complete overall picture of how the property market in Spain works for a large percentage of the British purchasers and why some purchasers get themselves into so much trouble.
The main problem is the source of information for the majority of purchasers. This source of information in general is the selling agent or builder. This is wrong as the buyers need to receive independent and sound legal advice from a solicitor that has no incentive from pleasing the builder.
In most of the cases the solicitor recommended by the builder will be 100% independent and will have all the correct knowledge, but not always.
It is essential that a solicitor has the absolute freedom to confront the builder if need be. In what is now a very competitive market (the legal profession) absolute Independence is an expensive luxury for a solicitor, because in general with English buyers estate agents and builder have the first contact with purchasers and it is very easy for them to direct a majority of the purchasers to the solicitor of their choice.
For a solicitor receiving 80 out of 100 conveyances on a single project it is easy to be very cheap and still make loads of money, but Independence to confront the builder in this scenario must be difficult.

People like Mr. Mark Stucklin with his column in the Sunday Times will continue to recommend purchasers to seek independent legal advice before they purchase and to avoid using the solicitor recommended by the builder, but in the meantime we recommend that at least you purchase a book about purchasing property in Spain, and that you insist that the practice should be exactly the same as the theory. We are tired of situations where clients come in to see us with a major problem that originated in the builder telling them when confronted with something as logical as wanting to have their bank guarantee certificates on their stage payments that Spain is different and that in practice this does not happen even though this is in all the books. Bank guarantees on stage payments are obligatory and have been since 1964, but they cost the builder money and if the client or his solicitor does not ask for them sometimes the client does not get them. (this is an typical example ,but their are many more).

Mr. Mark Stuckling will be writing about bank guarantees next Sunday. We hope many people read his column every week , as it is independent advice full of knowledge and common sense.

In the meantime we agree that, SPAIN IS DIFFERENT and we like it this way , but this should affect purchasers guarantees when buying property in Spain.

For more information please refer to Mark Stuckling s website www.spanishpropertyinsight.com as mentioned in the SUNDAY TIMES.

MORTGAGES IN SPAIN
If you are non resident most Spanish banks will be willing to lend you approximately 60% of the valuation price.
If you are resident some banks will lend you up to 80% of the valuation.
In both cases the bank will need proof that you have sufficient income to make the monthly repayments.
The loan would be over a period ranging from 10 to 25 years.

Q. What do we do to get the best loan possible?
A. Spanish banks are very competitive with their mortgages, and interest rates are at an all time low in Spain.

My advice is to shop around. (The following advice refers only to variable mortgages, which is what we recommend .On fixed mortgages you pay a high premium for the risk that the bank takes regarding the changing interest rates.). What you need to look out for when comparing the offers made to you are:

1. Start up commission: this will range from 0.5% to 2% of the loan.
2. Reference rate: the banks use different reference rates. The most transparent reference rate is the EURIBOR, which is published daily in all the newspapers. This is the most widely used and the one we recommend. The EURIBOR at present is running at aprox. 1.25.%
3. Differential: This is the percentage that the bank charges on top of the reference rate. If the reference rate is Euribor the differential applied will be between 0.5% and 1.5%.
4. Early repayment commission. This will range from 0% to 2%.

Beware also that most banks offer a special deal over the first year. There is nothing essentially wrong with this as long as it is not hiding bad conditions on the rest of the duration of the mortgage.

Before choosing a mortgage, enquire into the above variables and compare. Regardless of which bank you choose , you need to count also on the following extra expenses (apart from the ones on the purchase itself):

1. The bank will charge you for the valuation which will be done by an independent company chosen by the bank. The charge will be between 150 and 250 euros.
2. Notary fee for the mortgage deed: between 270 and 600 euros.
3. Registrars fee for registration of the mortgage deed: between 150 and 250 euros.
4. Document tax: 1% of the responsibility, which is normally apron. 50% more than the amount borrowed. (i.e. on a loan of 100000 euros, the document tax would be apron. 1500 euros)

When canceling the mortgage apart from the cancellation commission to the bank, you need to count on the following fees to complete the documentation:

1. Notary fee for the cancellation deed: between 270 and 600 euros.
2. Registrar’s fee: between 150 and 250 euros.
3. Document tax: since last year there is no document tax on cancellation of mortgages.

Be aware also that if you are buying a building under construction, the builder has sometimes already set up a mortgage of aprox. 60% of the value, that you can choose to take over or cancel on your last payment. The advantage is that instead of the set up charges shown above you only pay a takeover commission which varies from 0.5% to 1.5%. Obviously even though you make an initial savings and therefore this type of mortgage has a head start over organizing a new one, it is still necessary for you to study the mortgage conditions (reference rate , differential etc. ) to make sure that taking over the mortgage is more advantageous than starting up a new one.