Advice so that you are prepared rather than deceived!
The buying process in Spain
Though they earn their fees from private individuals and companies, notaries are essentially public officials who play a neutral role in drafting and witnessing many types of contracts in Spain. Their job is to ensure that both of the parties within the agreement understand the terms of the contract, that the terms of the contract do not contravene any laws, and to ensure that the appropriate taxes generated by the transaction are paid.
Why do you have to sign public deeds before a notary?
If or when you buy a property in the UK, you exchange contracts, pay the merchant, get the keys and then the property is officially yours, after which you are free to register your title in the land register. The big difference in Spain is that you can’t actually inscribe your title in the property register – Spain’s version of the land register – unless a Spanish notary witnesses the deeds of sale. Under Spanish law a notary’s signature is required to ‘elevate’ a private contract into public deeds that can be inscribed in the land register, so the bottom line in Spain is no notary signature, no inscription in the property register.
Is inscription of your title in the ‘registro de la propiedad’ really necessary? Theoretically, no it is not, as a private contract between buyer and seller is fully binding on both parties (though not on third parties). Some Spaniards, especially in rural areas, own property that is not inscribed in the register, thus saving on the hassle and expense (notary fees, registry fees and taxes) of inscription. And curiously there is much more property inscribed in the property register than exists in all of Spain, so something is not quite right.
For British buyers, however, it is crucial to inscribe their title in the property register, as it is the only truly secure form of property ownership in Spain. The first person to inscribe title to a property gets to keep it, which is all the reason you need. There are other advantages too, for instance protection from the merchant’s creditors and the capability to take out a mortgage against your property. So all buyers need to complete their purchase in the presence of a notary if they are to enjoy the benefits of inscription in the property register.
When can you sign?
It depends upon whether you are buying a resale property that already exists, or a new property from a developer that is under construction or off-plan.
When buying a resale property you can sign the deeds before notary at the first convenient time for you and the vendor. This is often between 1 and 3 months after signing a private contract. Be careful when buying resale properties from foreign vendors who have large mortgages: there is a small risk that they will take your deposit and may flee the country, after which the mortgage lender will sell the property to pay off the mortgage and you may be left with nothing. When the vendor is a foreigner with a large mortgage you should avoid private contracts with deposits and go straight to signing the escritura – the public deeds before notary.
When buying a newly built property from a developer you can sign the escritura and make the final payment once the property has been certified as duly completed by the head architect. Unless you have agreed to sign deeds for a property under construction, which is always best avoided, you are not obliged to sign the escritura until the developer can produce the ‘certificado de final de obras’ signed by the architect.
Preparing for signing
Whatever type of property you buy you should only sign the escritura once your lawyer has carried out all the final legal checks, for instance on the vendor’s title, debts and licenses, to mention just some of the necessary checks.
You also need to agree a payment method with the vendor before you turn up at the notary. Bank-guaranteed cheques issued by a branch in Spain are the preferred method, though it should also be possible to transfer funds to the notary’s escrow account. Banker’s draughts from banks outside of Spain are likely to be viewed with suspicion by many Spanish vendors, and may well be rejected. To avoid a crisis in the notary’s office just make sure the merchant is aware of and happy with your proposed payment method, and then get all your funds in place.
Also make sure you have the necessary documents with you when you go to the signing. In most cases you only need your passport, though it does depend upon the notary, and you should always have your lawyer clarify what the notary requires before you attend.
Though it is always best to attend the signing in person you can also have someone sign on your behalf by granting them a power of attorney. The easiest way to grant power of attorney is to sign one before a notary in Spain, though at greater expense one can also be arranged through the Spanish consulates in the UK or through a British notary public and Hague Apostille.
Everyone involved in the transaction – all the vendors, buyers, and mortgage lenders – have to be present in person or represented by powers of attorney at the signing of the escritura.
What happens in the notary’s office?
Upon arrival you are shown into an office with all the parties involved to wait for the Notary. The Notary – who always exudes importance – will then breeze into the office, take a seat at the head of the table and start the proceedings.
The notary will then confirm the identity and other personal details of all the buyers and sellers present, and then read the deeds out loud. Some notary’s like to show off their English by giving a partial translation, though most will just read them out in Spanish. Whatever the case you need to be sure the deeds are correct before you sign them, which means having a translator present or relying on your lawyer. Some notaries will refuse to sign the deeds unless a foreign buyer has a lawyer or translator present.
The notary will also make certain legal checks, though these vary by autonomous region. As a minimum they should have request a property registry filing just before the signing to confirm the merchant’s title, and that the property is free of any (unexpected) encumbrances. This leads some estate agents to claim that buyers are perfectly well protected by the Notary and don’t need a lawyer. This is not so. In reality the Notary gives you little protection so you must be accompanied by an experienced and qualified professional when signing the deeds.
If nobody objects to the content of the deeds the notary will pass them around for signing by all parties, and confirm the payment of any outstanding amounts by the buyer before the keys are handed over. This is when you produce payments such as bank drafts for any outstanding amounts on the declared price (the price stated in the deeds less any deposits or down payments already paid). But now comes a very important point of etiquette: if you have agreed to pay a part of the price under the table, which you are strongly advised not to do, then never produce this cash in the presence of the Notary. Always wait until the deeds have been signed and the Notary has left the room before you bring out the envelope stuffed with cash. The vendor will then count out the cash in front of you.
After signing the deeds
After signing the deeds the property is all yours, though the taxes still need to be paid and your title inscribed in the property register. You will be given a copy (copia simple) of the deeds to take away after the signing. Each copy costs around 30 Euros so you should decide how many copies you want in advance. You can use the copia simple to do most things, such as set up utility contracts and pay taxes.
A few days later your lawyer will be able to collect the original deeds signed by the notary (copia autorizada), which are needed to inscribe your title in the property register. In the meantime the notary should have faxed notification of your purchase to the property registry immediately after the sale, thus blocking the register for 10 days and preventing anyone else from inscribing a claim to the same property during this period.
Notary fees are set by the government according to the number of clauses in the deeds and the declared value of the property. As an approximate guide they range from 0.1% of the declared price of a property (for properties of 400,000 Euros or more) to around 0.4% (for properties of under 100,000 Euros). If you use a mortgage then you will have to pay Notary fees on the mortgage deeds as well.