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Buying a new construction-property in Spain – Off plan

Our team of Spanish Lawyers experts in Spanish properties will guide you in the process to buy your  Spanish property in Valencia, Alicante, Costa Blanca, Almería, Murcia, Costa del Sol, Málaga, or Catalonia.

The process of buying  new Spanish properties is very similar than to buy resales, but there are important differences to consider. Our team of Spanish lawyers have prepared a practical guide with the main aspects involved in the acquisition of Spanish propeties, in relation with the conveyance process.

BUYING OFF-PLAN IN SPAIN: LEGAL ASPECTS AND TAXES

– Buying off-plan: In the majority of the cases, the first agreement for the purchase of the Spanish properties is done when the construction is projected, and  works are not started yet.

Off-plan projects demand a long term purchase/construction process which may create insecurity in the investor’ side, specially when they have to deposit and pay amounts of money in account of a final price of a property when, on that moment is only a “project”. This uncertainty is even higher when the buyer/investor does not know essential aspects of the project as:  the Builder´s reputation or credite score, the economic situation of the building’s project, etc. And, the most important, which kind of  guaranties are offered to secure the required payments in case the project is not finished.

In order to reduce the risk of the investment, we have prepared a list of aspects to consider when buying new properties in off-plan projects:

– Legal and Administrative construction documents: When buying a new property, there are several documents which must be studied and properly checked in order to control the legal situation of the plot and building, and the proper development of the construction.

This is a task which must be done by recognized and construction specialist lawyers, and it must be done  in every step of the construction process: From the earliest steps of the process till completion.  So, in every step, there are documents and information  which must be supplied and obtained from the purchasers, or by their lawyers, in order to confirm that all the legal and administrative requirements are fulfilled properly.

– Expenses, taxes and other costs: Although, in general, the process of acquiring new properties is nearly the same than buying a resale, there are determinate costs, taxes and expenses which have a different concept and treatment.


HOW TO BUY A PROPERTY IN SPAIN

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ASPECTS TO CONSIDER WHEN YOU ARE OFF-PLAN PROPERTY:

  • One of the most important decisions when buying new properties or off-plan is to pay the initial deposit and the following payments on account of the price on a property which is not built yet.

    So, it is extremely important to obtain as much as information as possible from the builder company, its credit and financial score, how long is the company in business, owners and partners, etc.

  • So, when buying new properties it is very important to consider the following checking points about the process:

    1. To prove «who» owns the building plot:  It is necessary to study the legal documents of the property to check who is the owner of the land/plot where the building is projected or executed.
    2. To check that there are no loans /debtsotstanding: It is also very important to know if the land/plot has any kind of debts, limitations, charges, etc, which might affect to the legal situation of the project.
    3. To ensure that the Builder/Developer has paid his Impuesto sobre Bienes Inmuebles (IBI): If it is unpaid, this tax is attached to the property so the new owner will become liable in the future.
    4. To obtain a the cadastral situation of the plot, borders, limits, and how the plot is considered in the construction plans and planning development aspects of the area: It is essential to check that the project fulfills with the construction normative, and also, to know the development and legal situation of the surrounding areas , in order to obtain additional information about what is being developped in the area, and how can this affect to your property in the future.
    5. To consult with the Construction Dpt of the Town Hall  in order to ensure that the development fulfills with normative  and that all the propert construction documents are obtained and  granted. It is also very important to check that  there are no other developments planned nearby that could affect the project.
    6. To check that the builder has obtained a Licencia de Obra ( Building/Construction License)
    7. To obtain all the necessary information/documents from the builder as per requested by laws. Spanish laws forces builders/developers to provide complete and detailed information about the project, the property, how the building project will be developped, quality materials, etc.
    8. To obtain documents translated into your language. Essential legal documents and contracts, quality materials, etc, must be explained and translated in your language. Sometimes we find that builders do not adapt these documents on your language, and are offered to you to sign in Spanish. Ask your lawyer to translate them in your language for a better comprehension of the conditions contained.
    9. To confirm that the amounts paid on account of the price will be guaranteed as per laws. Payments on account of the price must be covered with enough guaranties, in order to «protect» them, and to «refund» them to you in case the building project fails, or in case of any other circumstances which might result in essential breaches of the contract from the builder’s side.
    10. To confirm that the builder will obtain the License of Occupation/Certificate of Habitation on completion. Spanish laws force builders to provide this document to buyers before completion of the purchase process.
    11. To confirm who will carry out with the connection of the different utilities and services of the property as: water, electric, gas, community of owners, etc. Sometimes builders do not proceed with these connections, leaving buyers in the uncomfortable position to deal with these connections.
    12. Others: Open a bank account/NIE number: Ask you lawyer to help you with the process to open a bank account in Spain and obtaining NIE number.
    • Notary Fees: For the formalization of the title deeds.
    • Land Registry Fees: For the inscription of the deeds at the land registry office, and proceeding with the change of ownership from the property.
    • V.A.T. (I.V.A. in Spanish): Currently, this is the 10% over the total price of the house. 10 % is also applicable to other secondary elements of the property as garages, parkings, store rooms, etc, which are situated in the building. But, in case the garage/parking is placed in another building different from the one where the apartment is situated, then, the tax rate will be 21 %. (Please, take into account that, in case the sale is just for a plot, VAT might be 21 % if the vendor is a company). 
    • Stamp Duty: Usually is the 1,5 % over the total price of the building, in Murcia, Valencia Region, and Andalucía. This tax can be reduced substantially if the purchasers are buying with the intention to use the property AS MAIN RESIDENCE.
    • Others: Spanish Solicitor´s Fees, mortgage expenses, contracts of water, electric, and gas, Plusvalía, etc

In case you have decided to buy a plot for build your own construction project in Spain, please, visit our specialised section:  CONSTRUCTION AND LEGALIZATION OF PROPERTIES.

*NIE : Non-residents in Spain need to apply the foreigner´s tax identification number NIE when buying properties in Spain.  When you are in the process of buying a property the application for this number must be done previous to completion of the purchase process. SO, ON COMPLETION YOU HAVE TO BRING YOUR ORIGINAL N.I.E. TOGETHER WITH YOUR ORIGINAL PASSPORT.