FINDING A MORTGAGE

The approval is a simple calculation that considers several factors, but primarily your income. The mortgage formal approval by the lending entity enables you to have a feel of the price of the property you can afford, knowing that, where approved, you will be able to borrow a percentage between 60 and 80 per cent of professional valuation price.

TOWNHOUSES

A townhouse is a good investment given its all-year-round high demand. They require little maintenance, have low running costs and are comfortable to live in. Against this choice is the prospect of living door to door with other property owners.

VILLAS

A villa is a choice for those seeking tranquillity and independence. They require a higher investment in maintenance and the higher prices have the logical effect on annual running costs. Countryside villas or ‘fincas’ have low running costs, at times ridiculously low. These however tend to be located at some distance from towns or cities. For those buyers with a good amount to spend, villas are the choice.

SMALL PROJECT DEVELOPMENTS

It is happening in coastal resorts. Investment buyers place deposits on all of the units of a project development and put them for sale straight away. The investment buyer then liases with the project developer in order that legal exigencies such as bank guarantees are met. It is a cheap and safe way of investing and can give high returns in a short time. Engaging a good real estate company is a good choice when choosing this form of investment.

RESALE VS NEW SALES

From a strict investment point of view, new sales are more promising in terms of making a gain when selling. Resales have already been squeezed for a gain, and thus the gain to be made is less predictable. There are however no fixed rules in this respect, which makes the gain predictions a bet for the future. Certain buyers will necessarily choose a resale: villas are not normally for sale from a project developer, although the building restrictions in some areas and the demand for one-family villas are encouraging developers to build these close to other kind of developments.

If you are planning to buy a property in Spain, it is recommended that a lawyer is engaged before an offer is made. The fact that an offer accepted by the seller is binding as any other contract makes the intervention of the lawyer appropriate at that time in order that the terms and conditions of the offer are correct and favourable to the buyer. The lawyer will also help the buyer find out what the ongoing taxes are on the property if the real estate agent fails to do so.

Once the terms of the purchase-sale have been discussed, and offer is submitted to the real estate agent who in turn will inform the seller of the details of the offer. If the seller accepts the offer, a binding agreement is born. It is normal practice in Spain to include with the offer a sum of money to reserve the property prior to the exchange of private purchase contracts, in order to show the seller that there is a real intention to purchase.

After that you will need to make private purchase contracts. If the legal representation of both parties deem necessary the exchange of private purchase contracts, this is verified against payment of normally a 10% of the purchase price. This documents sets out the agreed terms and conditions of the transaction and sets out the date for final completion before the Notary Public.

After the reservation deposit has been lodged with the real estate agent and prior to the signing of the private purchase contract, the appointed lawyer will have completed the legal searches and investigations of the property.

Any debt or charge attached to the property will be reflected in the private purchase document. These will have to cancelled prior to completion. If not, the buyer will be entitled to either withdraw from the proposed deal and claim damages or deduct the amount of the debt together with the cancellation costs, if any.

The purchase is formally completed when the public title deeds of purchase-sale are signed before a Notary Public, the agreed payment of the price paid and the possession given to the buyer. Unless agreed otherwise, the public deed always stipulates that the property is sold free from charges and encumbrances, up to date in all the different payments and free from tenants and occupants.

Four or five days after completion, the deed is collected from the Notary´s office. With the original deed, all the relevant transfer taxes are paid in the different tax offices and eventually the deed is taken to the Land Registry in order to procure formal registration of the title to the property. Registration is not mandatory, although highly recommendable.

Similarly, the lawyer will arrange for the transfer of accounts with the local suppliers of utility services and organise a direct debit on a current account of a local bank.

Depending on the Land Registry of the area, registration may take from 15 days to 3 months. The Land Registry will then give notice to the lawyer that the registration has been completed and the deeds are available for collection. Land Registry fees are paid then.

During the interval the purchaser can have a copy of the records by requesting from the Notary Public a ´copia simple´. The lawyer will need a couple of copies in order to complete all the legal formalities.

The majority of property purchasers in Spain do so through a Real Estate Agent. A buyer ought to be extremely cautious when appointing one. Regardless of whether they have a large or small portfolio, it is important that they are serious when handling monies. A small real estate agent may have a few excellent properties available for sale and follow the few legalities imposed, directly or indirectly, by the laws and regulations of the trade. A large real estate agent can claim to have thousands of properties in their books and be totally unaware of the minimum requirements for the protection of a prospective purchaser.

Real estate agents are not lawyers, nor they intend to be, but it has to be said that some tend to offer buckets of legal assurance, and also free legal advice, to buyers, in the hope the monies are quickly lodged with them. Because real estate agents are not lawyers, they should refrain from giving qualified legal advice inasmuch as lawyers do not sell properties.

However, registered real estate agents are obliged by the regulations of the trade to check the situation of the properties they sell. But does this really happen? Very rarely. The answer to this can be found in the following:

Real estate agents activity has weak and confusing regulations and laws. Licensed operators do adhere to a set of professional standards.

No licence or authorisation is required. Anyone can sell properties in Spain. Much to the bitterness of registered real estate agents, most of the highest rated agencies in the Costa del Sol are not registered and are not subject to any rule or regulation.

Real estate agents are more worried in looking for buyers and matching them with the available properties than performing the relevant searches on the legal status of the properties.

Even if they had the time, language barrier to some real estate agents is a problem. The understanding of legal terminology is in this case rather poor.

A real estate agent does not get paid for representing the interests of either buyer or seller. They have made possible a deal and do not earn fees if the deal stalls.

A small percentage of operators can be regarded as unscrupulous and self-seeking. What happens to the buyer, or the seller, is not a concern as long as they get their fee.

These factors are compelling evidence and should make buyers realise one thing: buying property is serious enough to merit the intervention of a qualified professional other than a REA with basic knowledge of the laws. There are excellent real estate agents, licensed and not licensed, in Spain, who do what they know best: sell properties with professioanlism. But a real estate agents undertaking the burden of the conveyancing procedure can result in disaster. For all these reasons, marbella-lawyers.com strongly recommends buyers to employ the services of a lawyer.

A lawyer will provide the legal guarantees for the purchase of the property ensuring that Spanish legal requirements are met and that the property is bought free of encumbrances, charges, liens or debts and up to date in all its payments of local contributions and community charges.