The process of buying a house in Spain is different from that in the UK and in many ways a lot better.  There are some minor differences between purchasing a property from a developer and buying a resale but with both there are three basic stages:

Reservation

Once you find a property that you wish to buy, you will need to put down a reservation fee to secure the purchase.  This is typically 3,000 Euros however can be as much as 6,000 Euros with some developers or when purchasing more expensive properties.  This fee is generally non-refundable unless of course the property is not legal in which case you can get your money back.

Upon making this payment, both you and the seller will sign a reservation document that sets out the price of the property and rough timescales for completion.  The seller will then take the property off the market for a period agreed upon (normally between 2 and 4 weeks) to enable you to get everything in place to go to the next stage.

Private Purchase Contract

Once you have made the reservation payment, it is time to get the lawyers involved to check that all the paperwork is in place, and that there are no outstanding loans, embargoes or mortgages against the property that you have not been made aware of.

A Private Purchase Contract is drawn up (normally by the vendor’s lawyer) which will specify exactly what you are buying, when and for what price.  Your lawyer will need to check this out to make sure that it is not detrimental to you and may also request inclusion of additional clauses to further protect you.

Once both parties are happy with the contents of the Private Purchase Contract, it is signed and a second payment is made.  This is where things diverge a little between re-sales and properties from a developer.

With a resale this payment is normally 10% of the final purchase price less the reservation fee (e.g. purchase price 200,000 Euros, 10% is 20,000 Euros, less 3,000 Euro reservation fee equals 17,000 Euros to pay).   Upon receipt of this money the vendor is legally bound to sell it to you at the agreed price and in the agreed timescale - no gazumping, no gazundering, and no holding off for 12 months because their onward chain has hit a problem.  If they default for any reason, then they must pay you back twice the money that you have paid them (in the example above that would be 40,000 Euros).

In the case of properties from a developer, the payment amount will vary from developer to developer.  Typically, you should expect to pay 30% less reservation fee for off-plan apartments, 50% less reservation fee for off-plan custom built villas, and anything between 5% and 30% for key ready properties (however for these the developer will normally specify that you have to complete within a month or two of signing the Private Purchase Contract).

With some developers there may also be additional stage payments to be made either on a time basis or, preferably, upon building stages e.g. 25% on Private Purchase Contract, 25% on completion of structure, 25% on completion of walls and roof, 25% on completion.

Please note that for all off-plan properties, under Spanish law the developer must provide you with a bank guarantee or equivalent insurance policy in exchange for any money paid and this money must be kept in a bonded account until completion.  If for any reason they fail to deliver the property as agreed then you are entitled to get your money back directly from the bank plus statutory interest (currently 6%) and may also sue for compensation for any rise in property prices during the interim period so that you can purchase an equivalent property without being financially worse off.

Completion

Once both parties are ready to complete, the lawyers will book a mutually acceptable date at the public notary.  On the big day, all parties will assemble at the designated time and then sit around for a couple of hours whilst lawyers scurry from room to room.  Eventually your turn will come and you will be ushered into a plush office where a distinguished looking person will ask you all to be seated and will read out a rough gist of the contents of the title deed (Escritura).

They will then ask if all parties are in agreement.  If so, then every one goes into a signing frenzy as the documents are typically between 10 and 20 pages and each page needs everybody’s signature.  Five minutes later, you are out the door, keys in hand, the proud owner of your own little corner of Spain.  All that is left to do is for the lawyers to scurry around some more getting documents copied, paying notary fees and exchanging the money.

Things to be aware of:

• Before going to completion, you must have applied for and received an N.I.E (Numero Identificación De Extranjeros).  This will take approximately 3 weeks from application to issue so bare that in mind when planning timescales.
• The Private Purchase Contract can be sent to you and signed in the UK, however the final title deed must be signed in front of the Public Notary.  If you don’t want to come out to do this, then you can give your legal representative Power of Attorney to sign on your behalf.
• The Public Notary provides no legal protection.  He simply draws up the Title Deed, witnesses that all parties have been present and have signed an agreement and that there are no outstanding fines or loans on the property that have not been detailed.
• It is not normal to obtain a full structural survey on properties in Spain.  The vast majority fall into 1 of 3 categories; it is has been built in the last 20 years and therefore has been designed to withstand earthquakes, it is hundreds of years old and if it was going to fall down it would have already, or it is in a ruinous state and a survey will tell you just that.  We only know of two British chartered surveyors who have operated in Almeria and both have stopped doing surveys because of lack of business.  The last time we had a client that insisted on a full survey, we brought a surveyor up from Malaga at the cost of 2000 Euros to give a report that a local builder would have given for a tenth of the price.
• Do not expect offers to be accepted as readily as they are in the UK.  Historically the Spanish get a figure set in their head and would rather wait for someone to pay it than take a lower offer, and foreign sellers have tended to follow suit.  That said, as the market tightens we are seeing many more offers accepted.