There are a lot of things that happen in the background when you are buying a Valencia Property. Your agent, lawyer, mortgage company and bank are all doing things to make your purchase as smooth as possible and many of those things you may know about but never see.
However, in this post we are looking at the little things you will need to do that may come as a surprise at each stage of the process of purchase. There’s not too much if you are using the professionals stated above and they will generally guide you through the process seamlessly but be aware that at some stage you may be asked for any or all of the following. Some are optional and you MAY have to do and some you WILL have to be prepared for and do.
On Making An Offer
These days you MAY well be asked to place a small deposit or reserve fee on making an offer. This is generally only the case when making an offer through an agency. If you are making the offer directly to an owner then you will probably not have to do this.
The reserve may be anything from 500 Euros to 5000 euros depending on the price of the property and usually it doesn’t go to the owner, it is held by the agency and shown to the owner in order to prove that the offer is serious. If the offer is accepted then the reserve becomes part of the deposit paid on signing the “Arras” contract, usually around 10% in total of the full price but again negotiable with the owner.
The reason that this has come to be the norm now is because people were making offers on multiple properties and walking away from them when one was accepted because maybe another seller, their preferred option, had also accepted the offer. This left the agents looking stupid in front of the seller who had been left high and dry and often led to conflicts or losing the listing. It also usually means that the property is effectively taken off the market until an answer is received and the agent will stop showing it to potential buyers.
If your offer is refused then the reserve is returned to you immediately in theory. We have heard of some agents holding onto the money to use as a second offer on a different property. To avoid this, make sure that within the reserve contract it is stipulated that the money is returned from where it came if the offer is rejected. Remember though that if the offer is accepted and then you say “no I don’t want the property” then your reserve will probably be lost.
We have recently had a case where a reserve was placed on condition of receiving a good valuation and mortgage offer from the bank and the valuation came in low. In these cases normally the reserve is returned but the buyer may try to renegotiate the terms of the purchase agreement, this almost never happens though and the money is generally returned upon proof of valuation and mortgage offer not being high enough.
Once your offer is accepted then you WILL need to get moving and do some other things.
On Waiting For Your Date in the Notary
You have placed your offer and it has been accepted and you have deposited on your house. What do you need to do now before your date set in the notary?
Firstly, you WILL always be required to send a copy of your deposit and reserve payments, if applicable, to your lawyer to include in the paperwork supplied to the notary. This is all to do with money laundering. You must demonstrate where the money came from so you need to show the source account for any transfer or bank draft. You can ask your bank to supply this.
For the deposit it is not so important that this document comes from a Spanish bank but it is important that it comes from a recognised financial institution, bank or money transfer company with a licence. Online banks are fine but sometimes it can be difficult to produce the evidence that the notary requires so make sure you do this well before your signing date.
You WILL also need to transfer your funds into your Spanish bank in plenty of time and let the bank know the amounts, number of bank drafts required and date that you require them for your final notary date. Sometimes you need more than one bank draft to pay the sellers and maybe to pay off the mortgage of the current owners and, if so, their bank will be there on the day of the signing to receive the bank draft and cancel the mortgage and you will give the owners a bank draft for the remaining amount, this may actually be divided into various drafts especially in cases of inheritance.
You can get the information about the amounts required from your lawyer who will be liaising with the seller or seller’s agent on the amounts required for cancelling mortgage if there is one, paying to various sellers and keeping back a percentage if the seller is non resident for example.
Open a Spanish Bank Account
You WILL need a Spanish bank account to receive your funds in order to pay for the property you buy. Therefore open an account asap. Various banks will allow you to open a non resident account without a NIE number, which you will supply to them later when you receive your NIE (See below) so do it. We can help you to open an account by making the appointment for you in the bank with an English speaking teller.
You WILL need to supply them with your tax details, your personal details, details of where your funds will be transferred from and you WILL have to satisfy international banking regulations for Know Your Client (KYC)
Depending on your nationality, situation and papers you WILL need to get a NIE/TIE or NIF number in order to be able to complete any purchase of property in Spain and the situation is rather chaotic at the moment especially for UK citizens due to the dreaded B word and the problems it is causing for the rights and obligations of British people in Spain and Europe.
Simply put, if you want it done quickly and efficiently give a Power of Attorney to a specialist lawyer in getting the paperwork you require on your first visit to Spain. No excuses.
You WILL need a NIE/TIE/NIF number to purchase anything. Therefore get it done immediately. If you want to be shown around properties and you state you will wait to get the NIE at some nebulous future stage don’t be surprised if the agent drops you like a hot potato and moves onto “more serious” buyers. Not having a NIE number and not arranging to get one shows an agent that you are not serious about the purchase process.
If You Are Getting a Mortgage
Also be aware that if you are funding your purchase through a mortgage yourself then you WILL need to arrange an additional date at the same notary’s office where you will be signing for the property a couple of weeks before the actual signing date to go through the mortgage conditions and sign off that you understand them.
This is because there is now a cooling off period after you sign for a mortgage before you can sign for the property and the notary needs to see that you understand the conditions of the mortgage and are not being bounced into any costs that you didn’t know about on signing for it. This is because banks had a tendency to be rather opaque on costs add in extras on the day of signing and you would have felt pressured into purchasing as everything else had already been set up and the sellers were there waiting for you to sign.
This is why we now advise getting a pre-approval for your mortgage dependent on valuation and take time to study the conditions being offered to you.
On The Day Of Signing
You will need a bank draft (or more than one) to pay for the property of course but you WILL also need a copy of the details of the bank account from where the money was drawn out to put into the deed. Always ask your bank for this document when you pick up your bank draft to pay for the property.
It is also important to remember here that this is why you get a Spanish bank account as the process is eased massively by having those details to hand. If you transfer the money to the owners or notary from a non Spanish bank account then it makes the process much more difficult and also puts you at risk of losing the money as owners will always require that it is in their account before signing and then for whatever reason they might not be at the notary…
You WILL also need the details of the bank account for changing over the utility bills on the property into that account. Spanish utility companies in general will not accept non Spanish accounts for direct debitting the bills.
You MAY also need to take down the Notary’s bank details to send them a payment for the 10% tax and the associated Notary, Registry and Gestor costs if the notary is organising all of those payments (Which they normally do). Make sure to make the payment of the taxes and costs as soon as possible after the purchase, you have a maximum of thirty days for all of the payments to be registered, and you won’t have a problem with the property being registered in your name. Sometimes your lawyer arranges this especially if they have a Power of Attorney.
You still need to do things after you have purchased the property. Your agent or lawyer might well be changing over the utility bills to your name and bank account but you MAY have to go along to the utility company to sign a new contract. Electricity is generally done by phone and you then receive a new contract in the post in duplicate and you return one copy but water depends on the company and you MAY well have to visit the water company offices to sign the new contract. Take along your original NIE papers and Passport to these meetings if you have to go.
You WILL need to contact your agent, the previous owner for explanations of how things work, the notary in a couple of months time to pick up the full set of deeds once they have passed through the property registry and others so make sure to keep the contact details of everyone involved. Sometimes we are contacted months or even years after a purchase by one of our clients to clear up an issue with the previous owners, this usually involves a septic tank to tell the truth! Many of our buyers don’t speak Spanish and many of the sellers don’t speak English so we are used as a translation service for future issues.
That’s It… For Now
We will probably keep adding little things into this post from time to time so bookmark it for future reference. If there were any surprises that you picked up on during your purchase in Spain then let us know and we will add them in and if you thought this post was useful then share it with your friends and social circle and read other similar posts below by clicking on the images.