The buying and legal process

Here are the key steps when buying a property in Mallorca.

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1) Appoint a lawyer

We recommend that you have a lawyer alongside before making an offer. It shows the vendor you are serious and makes the offer more substantial and tempting. Depending on the property, your lawyer may also raise points that will be pertinent to the offer and they may on occasion advise getting further information before an offer is made.

2) Agree price / initial checks / confirm offer

Once a price is agreed your lawyer should complete some initial searches in the Land Register and other checks to ensure the property is unencumbered of debts or other charges registered against it. Following this the terms of purchase are usually confirmed in writing between your lawyer and the vendor’s lawyer.

3) Reservation Payment (optional)

The reservation payment is a gesture of intent, usually non-refundable if the purchaser withdraws from the sale. The objective is to confirm the agreement between the buyer and seller and to have the property withdrawn from the market while the Option Contract is prepared.

A reservation payment is not essential. They were more common when buying new properties off-plan and in practice are not a 100% guarantee that the vendor will not sell to someone else should they get a better offer. The need for a reservation payment should therefore be discussed as part of the negotiations.

4)The Option to Purchase – Exchange of private contracts

The Option Contract details the property, the agreed terms of the sale, and states the date for final completion at the Notary. Preparation of the Option Contract usually takes two to three weeks but may take longer depending on the complexity of the sale.

It is usual practice at this stage to pay 10% of the purchase price which is non-refundable should the buyer not complete. Should the vendor not complete they have to pay the 10% back plus another 10% in compensation, so there is an equal penalty on both sides for pulling out after this point.

If a reservation payment has been made this will be off-set against the Option Contract payment.

  • The original or complete copy of the deed of sale (escritura pública) in the property register.
  • Extract from the property register showing the situation of the property, charges and encumbrances (Nota Informativa Simple)
  • Contracts with the water, electricity and gas companies as well as confirmation that payments are up-to-date
  • Presentation of receipts for payment of land tax (IBI) for the last five years.
  • Application for calculation of Municipal Tax of Plusvalia at the local authority offices. Plusvalia is a local property tax normally payable by the vendor.
  • If relevant, statutes of the owners’ association. This is only if the property is part of a community. It should include: a) the Statement of the payment of common costs and proportional payments of the present owner; b) a written statement that the owners’ association has no debts to third parties.
  • If relevant, presentation of an inventory, signed by the vendor, of the furniture, equipment, fittings.

NB. Not all of these points will have necessarily been finalised at this stage. Any outstanding checks, certificates, permissions or other information required should be detailed in the Option Contract as being required prior to final completion at the notary.

5) Final completion at the notary

A sale is formally completed in Spain when the public title deeds of purchase are signed in front of a notary. At this point, the final payment is made and possession passses to the buyer.

The title deeds are called the “Escritura” and specify the name of the owner as well as giving a detailed description of the property.

The purchaser may attend the signing of the deed in the presence of the notary or grant a Power of Attorney to a representative to attend on their behalf – usually your lawyer.

6) Registration

Once signed, the notary will fax a note of the title deed to the local Land Register. Your lawyer should arrange:

  • Payment of the relevant taxes associated with the purchase.
  • Registration of your title deeds (which may take up to 3 or 4 months).
  • Transfer of accounts with the local utility suppliers and setting up of payments through your local bank account.

7) Other important points

NIE number

As a foreign national you will require an NIE number; this is similar to an NI number in the UK and takes about 2 weeks to obtain. It can be done more quickly but it is best to process this at an early stage. There is a small administration charge.

Local bank account

You will need a local bank account for payment of utility bills, which must be paid via direct debit. Your lawyer can most likely arrange this for you, particularly if they have a gestoria service (administrative service) in their firm.

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