Mj Carrillo Lawyers. Spain


New Properties

Steps in the purchase process

We can sum up the normal procedure for purchasing a new property in three stages:
  1. Before signing the contract: the signing of the reservation document and the handing of a signal. Before the contract is issued we will have to investigate the title to the land, make the necessary searches, and ensure the terms of the contract are agreeable.
  2. Signing of the private contract with the seller: in the meantime you will be expected to make advanced payments until receiving the keys. In case you cannot be physically present at the moment of signing the contract you can give your lawyer a general Power of Attorney, to sign on your behalf.
  3. Completion: signature of the title deeds, paying of the final amount. On the day of completion, you should attend the Public Notary’s Office to sign the transfer of ownership deed. Once the legal formalities are attended to and completion takes place, the keys to the property can then be released.

Precautions before buying a new built property in Spain

  1. Before buying the property: publicity

    Your first contact when you decide to buy a property in Spain will almost certainly be the State Agent. That is the main reason why the vendor advertising has an essential importance.

    The seller should follow the dispositions of the General Publicity Law from November 5th, 1988, which provides that the advertising target is to promote on a direct or indirect way, the properties purchasing (...) and it is dishonest the advertising which can induce the seller to make an error on his decision, causing him any economical damage.

    It is also illegal the publicity which does not inform the purchaser about essential data of the property.

    So, every offer, promotion and advertising directed to the property purchase, should adjust to the real characteristics, conditions and utility of them, and should also express whether the houses are being built, or if the building has already finished (according to the RD 515/ 89, April 21th).

  2. Buying the property: the buyer’s right to information.

    The developer is legally required to provide you the following documents:

    1. House map and map of the house situation. Building specifications and description of the electricity, water, gas and heating networks and fire protection measures. Dimensions and specifications of the fixture and fittings. This information is contained in the “ quality description” (memoria de calidades)
    2. Instructions of the use and maintenance of the installations.
    3. Property description and details of the useful surface, common zones and accessory services.
    4. Details of the registration of the building in the Property Registry, or mention of the building permit.
    5. Reference to the materials used in the construction of the property.

    The right to information should also be extended to one of the essential elements of the purchase contract: the price. You should take into account some important aspects about it:

    1. The price itself.
    2. A reduction of the price because of an advanced financing of the buyer.
    3. A postpone payment and its interest.
    4. Financing payment (according to the edification) and penalties because of the delay in the payment or even if the developer does not complete the construction on time.

    The content of the right to information, according to the RD 515/1989, is the following:

    The information about the purchase price should be detailed and especially clear. That includes:

    1. Total price of the property which should include the Agent fees and the VAT. In any case the quotes for the Stamp Duty and for the Property Transfer Tax should be indicated.
    2. Ways of payment. In case of possible postponement they should indicate the interest rate.
    3. Admissible ways of payment for the postpone quantities.
    4. Should also be clearly indicated the Public Notary who authorized the deeds, date, inscription data from the Property Registry, and the mortgage responsibility from every property.
    5. Guarantees for the buyer and the advanced payments.

    The breaking (infraction) of the right to information has been reported to the Consumers and Users Association in several occasions. As an example we list you some of the most alarming statistical data.

    The 60% of the developers do not inform the buyer about the details of the property registration (at the Property Registry) and they do not inform in a written way about the payments guarantee.

    The 30 % do not provide the buyer with the prices on a written document, they just give them orally, with the possibility of changing them whenever they want.

    The 25% of the developers don’t inform the buyer in a written way about the useful surface of the property.

    The 59% of the developer do not provide the purchase contract until having received the money, so the buyer do not have the possibility of studying it carefully.

    In many of the contracts the guarantee conditions or the completion dates were omitted.

    In some contracts they gave low information about the mortgage loan.

The purchase contract

We anticipate you a list of the essential provisions that the contract should contain:

  1. Seller and buyer identification.
  2. Seller and buyer legal capacity to make a contract.
  3. Description of the property, details of the useful surface, common zones and accessory services, and its location.
  4. The selling price and taxes levied on the property to be paid.
  5. That in case of dispute, both parties agree to submit to the exclusive competence of the Spanish Courts from the location of the property.
  6. Signature of the parties to the purchase contract.
  7. Payments terms while the apartment is under construction, up to its completion.
  8. Bank account details where advanced payments are to be paid in.
  9. Reference to the penalties to be applied either in case the buyer does not accomplish the payment term agreed, or the seller does not provide the qualities promised.
  10. Possession date: the date when the buyer will take possession of the house. The contract shall also contain the penalty applicable in case the developer does not complete the construction of the property on time.
  11. Plan of the property and its description and specifications (memoria de calidades)

Documentation the developer must provide you together with the private contract:

  1. Description of the property and the building where it is located, the common areas and accessory services.
  2. Plans of the property and its location.
  3. Construction details: electric wire, fire protection measures...
  4. Reference to the materials used in the construction of the property.
  5. Details of registration of the building in the Property registry (Registro de la Propiedad), or mention to the non registration of it.
  6. Copy of the building permit.
  1. Advanced payments and precautions:

    Some basic ideas:

    • The minimum content of the contract which oblige the buyer to deliver the advanced payments to the seller, should include:
      1. The developer obligation to refund you the advanced payments and its interest in case of the delay in starting the building or in the completion of the property or even in case they don not get the cedula de habitabilidad (certificate of occupancy)
      2. Reference to the bank guarantee or insurance contract, identifying the guarantor.
      3. Specification of the Bank and also the bank account in which the buyer should deposit the advanced payments.
      4. Since the very beginning the developer should give the buyer the document with the guarantees to the amounts deposited as advanced payments.
    • The guaranteed quantities are not only the advanced payments but also the interests until the complete refund of the money.
    • That guarantee is just destined to the advanced payments and not to other matters as building defects or the apparition of charges and liens.
    • The obligation of the developer to have a separated bank account destined only to the funds from the purchase.

  2. Precautions and expenses

    Traditionally, the seller has paid the notary fees and the plusvalia tax, as he is the one making the profit on the increase in the land’s value, while the buyer pays the impuesto de transmisiones and the registry fee, as he is the one who is interested in making sure the property is truly registered to his name. Spanish consumer regulations state that this should be the normal division of costs.

    It is a frequent practice; however, for the contract to state that the buyer will pay all the expenses arising (todos los gastos). There is nothing illegal about this. Remember that the two parties are free to make any contract they choose.

    This practice, which may seem unfair to the buyer, has come about because tax bills, especially the plusvalía, have often gone unpaid, especially by non-resident sellers. By the time the new purchaser realised this, the seller was gone and the buyer stuck with the taxes anyway, as they were billed to the owner with all the taxes is least straightforward and avoids complications.

    Nevertheless, you can use this point in negotiating your final price. If the contract you are offered states that you as the purchaser must pay all taxes and fees, you could suggest that the seller take something off the price.

Builder's responsability in case of construction defects

Once you receive your home’s keys, you should check your house in order to detect the existence of possible defects.

The term of guarantee for possible construction defects is as follows:

For houses which applications for building licences were issued before May of 2000, the guarantee periods are as follows:

  1. 6 months, at least, since the deed was signed, for defective construction which have not affected on the building’s final purpose.
  2. 10 years, from the date of completion of the works for defective construction of the essential parts of a building.
  3. 15 years, for the cases in which the contractor had no complied with the terms of the contract.

For houses which applications for building licences were issued after the month of May, 2000, the guarantee periods are as follows:

  1. 1 year for defective construction which have an adverse effect on the finish of the house (electricity installations, painting....). In this case, the builder is responsible for all the property damages.
  2. 3 years for defective construction which have an adverse effect on the habitability conditions (humidity, for example). In that case, the other agents involved in the construction of the building are liable for the property damages.
  3. 10 years for defective construction which have an adverse effect on the building structure.

According to the Spanish law you have a time limit of 2 years to claim for construction defects from the date on which the defect was apparent and known to the proprietor, provided that the defect arose during the guarantee period described above.

The different agents will be personally and individually liable for property damages to the buildings caused by their own acts as well as by the acts of others for whom they are legally responsible. They will be jointly liable when the responsibility for the damages cannot be attributed to any one individual or entity.

© 2005-2009. MJ Carrillo Abogados. Calle Comedias, 2. 3ª Planta. 30201 Cartagena (Spain). Tel: 968 12 17 15 Fax: 968 52 69 73. contact@SpainSolicitor.com