Buying guide for luxury properties on the Costa del Sol

Step #1. Professional advice.

The first step, even before choosing a property, is to rely on a team of trusted advisors.

Buying a property in Spain is not a complicated process. However, it does require knowledge of regulations, formalities, and documentation necessary at every step of the process. For this reason, it is essential to have adequate real estate, financial, legal and tax advisors to ensure a safe purchase process.

At Samsara Wealth we offer a global consultancy service through a team of experienced professionals in real estate investments on the Costa del Sol.

Step #2. Due Dilligences

• • DD Real Estate. The job of a professional real estate agency is not just to show you properties. Their responsibility is to show you the right selection of properties that best suit your budget, needs, and lifestyle. In addition to carrying out an exhaustive inspection of the property, they will take into account all the details in order to successfully negotiate the price, term and other conditions of the purchase, in perfect coordination with the rest of the advisors.

• • DD Legal and Fiscal. The figure of the Lawyer expert in real estate law is essential in a real estate transaction. Their responsibility is to ensure that there are no limitations to transfer the property to your name, and they will verify that the property you wish to acquire is free of charges and encumbrances. To initiate the legal process, we recommend to formalize in a Notary’s office a power of attorney that authorizes the lawyer to make decisions on your behalf in the matters and formalities related to the purchase and sale (Land Registry, Cadastral Office, Tax Office, Town Hall and Banks). In Samsara Wealth we work with a selection of Lawyers of renowned trajectory and professional reliability.

• • Financial DD.
    We accompany you and introduce you to the most suitable financial institutions in buying and selling operations on the Costa del Sol, whether to open a bank account or to apply for a mortgage, if necessary.

Step #3 Contract formalization

Once the property has been selected, a written offer has been formally conveyed to the seller, and has been accepted, the legal phase of the acquisition process begins, which is usually formalized through three contracts.

Reservation Contract.

This is a private agreement between the buying and selling parties, in which the purpose is to reserve the property, and therefore cease being offered on the market, for an agreed period of time, usually less than 4 weeks. During this period the most important thing is to obtain three essential documents: a power of attorney, NIE and a bank account in a Spanish bank.

The amount that the buyer hands over to the seller in this act is usually equivalent to 1% of the purchase price for resale properties. In the case of new-build properties it depends on the price of the property and the payment plan required by each developer, and can range from €6,000 to €20,000 or even more in the case of high-end properties. The amount of the reservation is used as part of the total payment in case of going ahead, but otherwise, if the buyer decides not to buy, he loses this amount to compensate the seller for the damage caused by not offering the property on the market during the agreed period, unless the possibility of withdrawal is expressly included in the reservation contract.

*Note: sometimes the Reservation is dispensable and a Private Contract is directly formalized. This is something that happens in high value properties, when the reservation amount is not enough to compensate the seller for deciding to withdraw the property from the market.

Private Contract.

Once the Reservation period expires, it is time to confirm the commitment reached between the buyer and the seller by signing a Private Contract whereby the buyer gives the seller a percentage of the purchase price of the property, usually not less than 10%, and rarely more than 30%.

An experienced Lawyer will draw up a good Private Contract which will include all the terms, conditions and obligations for both parties. The contract must be thorough, complete and clear in its wording, mentioning the registry details of the property and its annexes, the ownership of the owners, the purchase price, the conditions and the final deadline for signing the Public Deed. Usually this period may be between 2 and 8 weeks, depending on the characteristics and difficulties of the operation.

During this period, an excellent coordination between all the parties is necessary in order to prepare all the necessary documentation in a timely manner before the signing of the Title Deed.

The most common type of Private Contract in real estate brokerage operations is called a Penitential Arras, which main characteristic is penalization. If the Buyer defaults, he loses the amount paid. If the seller defaults, he will be obliged to return to the buyer double the amount received so far.

Notarial Public Deed.

The Title Deed publicly materializes, in the presence of a Public Notary, the ownership and title transfer of a property in Spain, and grants veracity and legal certainty to the buyer and seller, in other words, it is a guarantee for all the parties involved, and allows its subsequent registration in the Land Registry.

Step #4 Land Registry

This is the final step required to officially register the property under your name. Usually the Notary’s offices offer an administrative service that takes care of the immediate telematic presentation after the Notary’s signature, and it is necessary to provide the following documents to the registry:

Notarised copy of the public deed of sale.
Proof of payment of the Transfer Tax.
Proof of submission of the documentation for the payment of the municipal capital gains tax.
Once the registration has been made, the Registry will communicate the change of ownership to the Cadastre.

The Registry takes approximately fifteen days to officially communicate the change of ownership, putting an end to the sale process once the fulfilment of all legal guarantees has been verified.

*Legal Note. The legal, tax and financial legislation and regulations applicable to real estate investment are subject to frequent changes, and their scope and impact vary according to the personal and financial circumstances of each investor and the characteristics of each type of transaction. This document does not constitute an investment recommendation on any asset, nor does it have any contractual effect. Contact Samsara Wealth for a global and detailed analysis of your real estate investment project, adapted to your asset profile and the type of transaction in each case.