Buying a property in Mallorca
Here we outline the key steps in buying a property in Mallorca, including notes on the legal process and details of fees and taxes you should expect to pay. We’ve included some general tips too, to help put you on the front foot in negotiations and managing the process.
Appoint a lawyer
While this doesn’t necessarily need to be the first step, a good lawyer in Mallorca will be more actively involved in your purchase than you might expect in the UK. So having a lawyer alongside at an early stage can be very helpful. They may advise getting further information before an offer is made or raise points that have a bearing on an offer you intend to make. Having a lawyer in place also demonstrates to the seller that you are serious and ready to proceed. This will make your offer more tempting.
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Negotiate and agree a price
The manner in which negotiations take place varies according to who is involved. Sellers will usually have appointed an agent to receive and negotiate offers on their behalf. Conventionally, buyers will also deal direct with the seller’s agent. This can make it difficult to judge whether you are getting the best deal.
With MPP onside, you’ll have the full benefit of our experience in judging prices and deciding an offer. We’ll be there to assist throughout, ensuring communications with the seller are carried out as effectively as possible.
Initial legal checks / confirm offer
When a price has been agreed a, your lawyer will complete some initial searches in the Land Register. They will also perform other checks to ensure the property is free of debts or other charges. Following this, the terms of purchase are usually confirmed in writing between your lawyer and the seller’s lawyer.
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Legal and structural surveys
Properties in Mallorca are usually sold “as seen”. This means surveys are generally not regarded as a standard procedure. However, while newer properties with all the relevant licences and a building guarantee may well not need a survey, there are instances when a professional survey would be advisable. If, for example, there is a question over building permissions or you are intending on re-developing the property, an appropriate survey would certainly be recommended.
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The Option to Purchase
The Option Contract is a private contract detailing the property and the terms of the sale. It will also set a date for final completion. Your lawyer will prepare the Option Contract. This usually takes two to three weeks but may take longer if it is a complex transaction or documentation needs to be obtained. Any terms that have been agreed should also be detailed in the contract. E.g. if the seller is to do any works or is to produce any missing documentation.
When the buyer and seller have signed the contract, the buyer usually pays 10% of the purchase price. It is a non-refundable deposit. So, if the buyer does not complete for a reason outside of the terms of the Option Contract, the deposit is lost. However, if the seller does not complete they have to pay back the 10% deposit plus another 10% in compensation. So there is an equal penalty on both sides for breaking the Option Contract and failing to complete.
Checklist of points to covered prior to signing the Option Contract
- The original 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 and confirmation that payments are up-to-date.
- 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 the property is part of a community, statutes of the owners’ association. It should include both a statement of the payment of common costs and proportional payments of the present owner and a statement that the owners’ association has no debts to third parties.
- If relevant, an inventory of the furniture, equipment, fittings signed by the vendor.
If any of these points have not been finalised at this stage, they should be detailed in the Option Contract as being required prior to final completion at the notary.
Final completion at the notary
In Spain, a sale is completed when the title deeds of purchase (Escritura) are signed in front of a notary. At this point, the buyer makes the final payment and takes possession. The Escritura details the name of the owner and gives a description of the property. The buyer may attend the signing or grant a power of attorney to a representative – usually their lawyer.
Following the final completion the notary will fax a copy of the title deed to the local Land Register. Your lawyer will 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.
You should ensure your budgeting allows for the professional fees and taxes applied when buying a property in Mallorca. These should be 11-13% of the purchase price, depending largely on the price of the property. This excludes mortgage arrangement fees which should be calculated separately. Please click here for a more in-depth summary of purchase costs.
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Other points to bear in mind
Foreign nationals 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. More about NIE numbers.
Local bank account
You will need a local bank account for payment of utility bills as these are paid by 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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Whether you're buying a holiday home, relocating to Mallorca permanently, considering it for the future or simply mulling over whether Mallorca might be right for you, don't hesitate to get in touch.