BUYING AND SELLING. REAL ESTATE.
The purchase of goods seems at first glance to be an easy and risk-free management, however, it can become a jigsaw if we do not take the steps and the necessary checks to what is the property situation.
As a summary, the ESSENTIAL AND BASIC STEPS are the followings;
Title to Property. Charges.
It is essential to know who the seller is, it means we have to know if the person or company who is selling the property correspond with the inscription in the Property Registry. Why is it so important?
In order to register our Tittle as owners in the Property Registry “Registro de la Propiedad”, we have to buy from the registered owner. There may be some situations which the seller does not have the property title registered, it would have to be rectified by making a “successive tract file” or even a “domain file”.
To buy from the seller registered gives us the legal certainty that we buy from the legitimate owner, otherwise we expose ourselves to several risks and problems.
We must also check meticulously the possible charges of the property; seizure, foreclosures, mortgages …
IBI (Property Tax) and Garbage bills.
Depending on the village or the city where the property is, we will check if there are debts due to the garbage rate or the Property Tax, these information is available in “Patronato de Recaudación” or the Town Hall.
Community of owners
If the property which we are interested in buying is located in a building, the Horizontal Property Regime will be applied.
It is important to be informed about the community fees and the possibility of extraordinary quotas, also about the debts that may are unpaid. We have to know about the Community agreements and rules as well.
In certain situations, it is advisable to check with the competent Town Hall; Building License, First Occupation License, Urban Planning File….
We will check if there are debts of water, electricity, gas … in the case of there are debts, the supply companies can put problems in changing the ownership of these supplies.
The Cadastral Register “Registro del Catastro” is an Organism dependent on the Ministry of Finance. From this organism each property is organized with a cadastral reference that allows its location in the cadastral cartography.
Thanks to the information given from the organism, we can know exactly the characteristics declared about the property. Therefore, the cadastral situation must be checked especially in terms of the meters described. Sometimes can be discrepancies among the reality of the property, the situation in the Cadastral Register and the Property Register, which in some cases could be recommended to rectify it.
Check tax value
To determinate the “Tax Value” is very important, it will be the minimum value for which we have to pay taxes, otherwise we will receive “an additional payment” from the Andalucia Government.
The tax value of a property is calculated based on the cadastral value and applying percentages stipulated for each municipality.
The tax value may be lower than the “Sales Value”, then we will calculate the taxes for the sales value. On the other hand, if the tax value is higher than the sales value, we always have to pay the tax value.
“Arras Contract” and Purchase Agreement
Firstly, the usual practice in the process of selling-buying a property is the signature of “Arras Contract” or Deposit Contract.
The purpose of these private contracts between the parties is to reserve the property we want to buy, since for example, we need time to seek funds. A specific time is stipulated to make the sale operation effective (it means to signature the Public Deed in the Notary). Also, we stipulate in these private contracts an amount to be delivered by the buyer to the seller as a performance guarantee for both parties.
Therefore, it is possible to agree a penalty, if the seller fulfils the agreement must refund to the buyer the amount in duplicate. Instead, if the buyer fulfils will lose the amount delivered.
Sale with Mortgage
In case of need a mortgage, we must work the procedures with the bank; to negotiate the bank interest, the years of the mortgage, possible commissions, bonuses, insurance…and the expenses of the operation.
The essential is to be well informed of how our mortgage loan will work.
According to; act as a buyer or seller, where the properties are located, if the buyer or seller are resident or non-resident in Spain, if the property is new or second-hand, the corresponding taxes must be paid, which are detailed in the post, “Sales Taxes”.
Registration. Property Registry
The inscription in the Property Registry is not a legal requirement. Although in certain situations, for example, if we buy with a mortgage, the bank will put the condition of the registration of our Title of Property in order to practice the registration of Mortgage Title.
Although registration is not mandatory, it is highly RECOMMENDED, providing legal certainty. The function of the registry is give faith and guarantee, among other situations. The purpose of the Property Registry is to grant legal certainty and protection to those who have acquired a property or have registered their right.
The most important thing in the purchase/sale transactions is to be well informed and sure that all the steps are taken with guarantee. From our office we work purchases and sales properties operations for residents and non-residents offering the security of a successful operation.