The purchase of a property on the Costa Blanca is a reason for joy, especially if it is the first time you buy as it is likely to mean a major change in the life of the buyer for the better! It is important to hire a competent lawyer who will make sure you have the paperwork in order, but even with professional help it is handy to have a checklist of what you will need.
To help you start this new stage on the right foot, we have made a checklist of the paperwork you will need when buying a resale home.
1. Procurement procedures for a home: before purchase
Reserve or pre-contract
This is a private document between the buyer and the seller through which the reservation of the home is made. It is not a mandatory procedure, but it is usual practice, and normally accompanied by the payment of a small deposit.
Although it is a private document, when signed it goes have legal validity and, therefore, both parties will be obliged to comply with what it establishes unless it goes against the usual legal system.
Before signing this agreement, keep in mind that in the case of a sale between individuals you must ensure that all the current homeowners sign it to avoid possible problems afterwards.
After signing the pre-contract and, before moving on to the next step, make sure you have requested and validated the following documentation:
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- Certificate of habitability and energy certificate.
- Valid ID.
- Simple note (nota simple): You or your lawyer can request this in the property registry, it will inform you of the status of all possible charges of the property, such as if you have a mortgage, a lien or any other limitations.
- IBI (paid): ask the seller for the last receipt of this tax.
- Make sure the seller or former owner has no outstanding debts with the community.
2. Procedures for buying a home: buying and selling process
Contrato de arras
The Contrato de arras is a contract whereby the buyer gives the seller an amount in the form of a deposit which is deducted from the total price of the property. The amount is usually 10% of the value of the property, but the contract may agree on another amount. The most common type of arras determines the price to be paid by each party in case of cancelling the transaction of sale of the property: the buyer would lose the agreed amount, while the seller would have to pay twice the amount paid if It was he who cancelled the sale.
Elevation of the contract to public deeds
This is done by the notary where he records the change of homeowner and all the conditions of sale.
After this step, you must pay the ITP (property transfer tax) during the 30 days following the sale of the property. Its amount depends on the autonomous community and is between 4 and 10% of the value of the property. The buyer must also foot the notary expenses.
The owner, on the other hand, must take charge of the municipal capital gains (which is paid to the city council) at the most, 30 days after the public deed of sale, and the fiscal capital gain (increase in assets that is recorded in the income statement of the fiscal year in which the property is sold).
3. Procurement procedures for a home: after purchase
Registration to the Property Registry
This is a mandatory procedure in the event you need a mortgage. The registration of the new owner can be processed directly by the notary, he must do this during the 60 days following the signing of the sales contract.
Change of ownership of the cadastre
The change of owner that appears in the cadastre must be changed to the new owner. This is a procedure that is done automatically when the contract is written to public deeds.
Real estate tax
The real estate tax, known as IBI, is an automatic procedure. The IBI is a municipal tax that you will have to pay annually, and its amount depends on each municipality. Some municipalities also have other local property taxes such as the rubbish (basuras) tax.
Changing the utilities
Registering the utilities in the new owner’s names a procedure that must be done by the buyer. You must contact each utility administration to notify them of the change of ownership and the account number from which you wish to pay the bills.
These are the standard procedures of a purchase and mandatory home for the process of buying and selling a property.
Again, to ensure that all procedures are done correctly, we advise you to hire a lawyer or a real estate consultant. They will supervise all the steps and contracts and will help you to know all the clauses and conditions well and ensure that you have the best possible deal.
In many cases, the purchase of a home is usually accompanied by a mortgage. If this is your case, here you will find all the information (link to the article below) you may need. Enjoy your new home!