Buyer’s Guide

Understanding the Buying Process in Spain

When buying a property in Spain, there are generally two main scenarios:

• You may be purchasing an off-plan property directly from a developer (a home that is not yet finished), or
• You may be buying a resale property from a private individual or company.

Although the process differs slightly in each case — mainly regarding legal checks and documents — the overall structure remains similar.

Reservation Deposit and Contract

The first step when purchasing a property in Spain is to secure your chosen home with a reservation deposit. This ensures the property is taken off the market and the agreed price is fixed for a set period, typically up to 30 days.

It’s important to have funds readily available during your visit to Spain, as most sellers will not remove the property from the market without a reservation payment. Failing to do so may result in losing your chosen property.

Reservation deposits usually range between €3,000 and €12,000.

When paying the reservation deposit, a reservation contract should be signed by both you (or your representative) and the seller. This document outlines the main terms of the agreement, including:

• Property address and details (garage, storeroom, etc.)
• Payment schedule
• Expected dates for signing and completion

Please note that the reservation deposit is typically non-refundable, unless specific conditions are agreed upon (e.g. subject to financing approval or property inspection).

Private Purchase Contract (Exchange of Contracts)

Once the reservation contract is signed, your Spanish lawyer will begin all necessary legal checks to confirm that:

• The seller legally owns the property, and
• It is free of debts, charges, or encumbrances.

Spain operates a Land Registry system, which allows your lawyer to perform detailed searches for your peace of mind.

After these checks, your lawyer will negotiate and prepare the Private Purchase Contract, which formalizes all terms.

At this stage, you will typically pay:

• Between 12% and 50% of the price when buying off-plan, or
• Around 10% for a resale property.

If purchasing off-plan, your lawyer will ensure the developer provides both:

• A bank guarantee or insurance bond protecting your payments, and
• A 10-year structural warranty upon completion.

This bank guarantee ensures your money is refunded if the developer fails to complete, goes into liquidation, or significantly delays construction.

After the exchange of contracts, both buyer and seller are legally committed to the purchase at the agreed price. Neither party can withdraw without incurring penalties.

Completion

Completion takes place when the Title Deeds (Escritura Pública) are signed before a Spanish Notary Public, and the remaining balance of the purchase price is paid.

The Notary’s role is to verify that all legal requirements have been met, including the payment of taxes.

You do not need to be physically present in Spain to complete the purchase — you can grant Power of Attorney or a verbal mandate to your representative.

If you grant a verbal mandate, you will later need to ratify the purchase before a Notary in Spain or your home country. This step allows your signature to be officially registered at the Land Registry.

Registration of the title deeds typically takes around three months once all documents have been submitted.

Post-Completion

After completion, your lawyer will:

• Pay all applicable taxes
• Register your Title Deeds with the Land Registry
• Register you with the Local Authority for local taxes (IBI and Basura)

Local taxes can be paid conveniently by direct debit from your Spanish bank account.

For off-plan properties, please note that utilities (electricity, water, etc.) may not be connected immediately. It can take up to four weeks after completion for all services to be activated. Your lawyer can arrange for all utilities to be transferred into your name.

Complementary Transfer Tax Bills (ITP)

The Transfer Tax (Impuesto sobre Transmisiones Patrimoniales, or ITP) is managed by the Junta de Andalucía and is generally calculated based on the purchase price declared in the Title Deeds.

However, under Article 57.1 of Law 58/2003, the Junta has the authority to reassess the property’s declared value to adjust the tax payable.

They may determine the property’s value using several methods, including:

1. Applying a coefficient to the Cadastral Value of the property.
2. Referencing average market prices in the area.
3. Using insurance policy values related to the property.
4. Referring to the mortgage valuation.
5. Comparing to previous sale values of the same property.
6. Any other legally permitted valuation method.

According to Article 34.1(k) of the same law, taxpayers are entitled to expect that the lowest of these valuations be applied.

However, in practice, the Junta often uses the Cadastral Value coefficient, which usually results in a higher tax amount. Purchasers who receive a complementary tax bill have the right to appeal and request a formal independent valuation of their property — though the cost of this valuation must be borne by the buyer.

Need Expert Guidance?

If you are planning to purchase a property in Spain, our experienced team at NewHome Calahonda is here to guide you through every step — from reservation to completion and beyond. Contact us today for professional advice and peace of mind.