1. Starters Buying Property
If you live here, or have visited several times you probably know where you want to buy your new home. But if not – don’t waste your own precious time, or the time of the owners by visiting lots of houses without knowing anything about the location in which you’re looking! You wouldn't do that at in your own home country. Our advice is to hire a car for at least 3-6 days, if not more – tour around the Island, take a look around. Visit the village square and have a drink in the bar. Take time to chat - you’ll be surprised at what a font of information the local barman or waitress is (best to aim for a place that looks likely they’ll speak your language). Decide upon your key criteria – if you want a home near the airport, Palma and golf courses – don’t bother with Pollensa or Esporles, try instead Bendinat or Son Vida. If you don’t want to be overlooked by anyone go inland a bit to one of the many still unspoilt villages. Narrow your criteria down and take another look, and only then start calling.
2. Mallorca Mortgages
If not, it is imperative you do. If you are a cash buyer – great! If you require a loan, as a rule of thumb a resident is permitted to borrow up to 80% of the mortgage company’s official evaluation as opposed to the amount you are wishing to pay. A non-resident can only borrow between 60 and 70% with a maximum term of 15 to 20 years. To begin with you will require your passport, followed by a bank reference from your home bank and proof of income; taking on average between 3 and 4 weeks for a mortgage to be arranged. At the moment Spanish mortgages are offering very attractive rates, and some banks can be more flexible than others, so our advice is to shop around - For more expensive properties (ie 1 million plus) there can be certain benefits to buying a property through a holding company - for further information and advice please contact your legal advisor or alternatively we recommend a company called Blevins Franks who specialise in tax advice, contact Spanish best banks are Solbank, Banca March, Bancaja, Cam Bank, and of cours Santander Bank
You must also take into consideration you need approximately 10% on top of price of the property to cover all purchase costs - see “Buying Costs of Property in Spain” for a breakdown of costs.
3. NIE Numbers
All EU non-residents require a personal identification and tax number to buy either property or a car, referred to here in Spain as an NIE or NIF number. This can take some time (estimated between 3 and 6 weeks) so we recommend you apply early – this must be in your hands within 1 month after your purchase/completion date for payment of taxes, or you will be liable for a fine of approximately 5% of the amount to be paid. Please note this does not affect your status in the UK. You can either apply for an NIE yourself at the Department of Estranjeros (Foreigners Department-see Mallorca/Useful Information for details) ensuring you take your passport, or through your chosen legal advisor. Alternatively, for 75 euros you can apply to a company called Network tel. +34 971 403703 who will tell you what you are required to bring with you.
Non EU applicants should contact their embassy for details of application.
4. Found a property you like?
The great thing about buying property over here is that it’s very unlikely you’ll be gazumped, at least not after the Option Contract is signed which can be in as little as 2 days after the offer is accepted! But firstly we recommend you ascertain the following information prior to making an offer:
• Ask if the owner is aware of any extensions or renovations made without the relevant building permissions (ie. do they have a planning permission certificate). If there are known issues with planning permission – get your legal representative to contact the owner. If nothing is declared, rest assured your mortgage provider or legal representative will ask to check the Land Registry certificate which will answer your questions.
Of course, if you like the property enough, some buyers have been known to turn a blind eye once informed of works without the official permissions-but that is up to the individual.
• What property taxes are currently being paid by the owner (there is an annual tax on the value of the property, the IBI, which quite often bares no relation to the value of the property, but for taxation purposes, the lower the better).
• Are there any community charges?
• What is the stated price on the Escritura (title deed) – is it too high or too low for you (we recommend you discuss this with your mortgage lender or your legal representative – click here for recommendations).
• Check the supply of water and electricity and ask for the last few bills.
• Is your financing organised? We would highly recommend BEFORE you put in an offer, that you have the financing pre-approved. For a list of recommended mortgage providers please click here.
• What will be included in the price? It is important to stipulate what you would specifically like to be left behind in your new home. Key items to think about are curtain rails, light fittings, flooring, air-conditioning units, kitchen white goods such as dishwasher, and anything else which is important to you. These must be negotiated with your offer.
5. The Option Contract
Once all the questions to the above have been answered and you are happy with the outcome, and if your offer is accepted, you will be asked to sign an Option Contract which is normally drawn up by the buyer's legal representative. Normally this can be anything from 2 –10 days of the offer being accepted.
You will then be expected to put down a 10% deposit of the agreed price at the time of signing or within an agreed time period - again normally this is within a week of signing the Option. The Option Contract details the specifics of the agreement, the parties involved (you and the owner), the agreed price and the agreed date of completion . In addition it should state that the property is to be sold free from charges, tenants, town hall fines and forced sale orders, and where appropriate that the water and gas are legally connected.
At this time we would highly recommend you ask the owner to detail everything that is to be left in the house or apartment, or for you to list the items you would like to be left behind in the form of a contents list – sellers have been known to take the kitchen units, and even every light bulb and fitting in the house! Make sure you read it through carefully, get your bank to study it or your chosen legal representative. Then all you have to do is make sure to get the final balance to them on time – otherwise you stand to lose your entire deposit. Equally, if the seller decides to back out, they are required by law to pay you up to twice the deposit.
6. Legal Advice
There are many peculiarities in Spanish Law – don’t even try to understand them. Get your mortgage provider's lawyers or your chosen legal representative Despacho Morell, english speaking lawyers in Mallorca for a recommended legal advisor) look at the property Escritura (Deeds), otherwise you could end up buying a property that allows Great Aunt Maria Jose, from a family twice removed, to just turn up and legally stay in the back room until she decides to pack her bags – permanently! At the same time they will look to see if all of the additions to the property are legal, and whether there are any outstanding debts - here in Spain you can be liable for the previous owner’s debts if you’re not careful, for example property tax, community fees, water bills, etc.!! The good thing about the option contract is that, if there are any discrepancies in the Escritora with which your legal advisor isn’t happy you are legally entitled to cancel the Option Contract.
7. Completion
Completion can take place on what ever date you and the seller agree upon, from as little as one week (as long as you get the mortgage company to agree) up to one year if desired, from the date of signing the Option Contract. This date will be detailed in the Option Contract.
If the purchase is financed by a mortgage, the bank representatives will be present in order to authorise the new mortgage and pay the seller. If you are not able to attend on the specified date you are able to grant your solicitor/lawyer power of attorney so he or she can complete on your behalf.
Completion will take place between the relevant parties in front of the Notary who will witness the signing and transfer of the title deed or Escritura de Compraventa. The Notary acts for neither party specifically, but is a government official responsible for the execution of public documents; He/she will confirm the identity of both parties, and will check the Land Registry to verify legal ownership and that there are no out-standing debts or orders against the property.
The balance of the purchase price will be paid to the seller at this time, and any remaining purchase tax and fees will also be paid if going through a mortgage provider (if paying in full these taxes need only be paid within the month). The Escritura will then be registered by the lawyer in the corresponding Property Register. Once the Deed is signed you will be given the keys to your new property and a copy of the title deed, until the formal deed comes to you from the land registry (or via you Mortgage provider if they have acted on your behalf). Congratulations! – it’s yours…home sweet home. Sit back and raise a glass of bubbly or two in celebration!
Information by mallorcapropertydirect
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