Below you will find an overview of commonly used concepts in the purchasing process.
Deposit
In a sale transaction of an existing home, a deposit of 10% is usually made as soon as the private purchase contract has been signed. This gives the seller the assurance that the buyer is serious and intends to pay the rest of the sale price when signing the title deed at the notary, after the lawyer’s legal examination.
Lawyer
In the Spanish sales process, a lawyer is responsible for work that is usually carried out by the notary in the Netherlands or Belgium. This includes conducting the legal investigation, checking outstanding debts, verifying the legal content of the title deed and performing after-sales work. A Spanish lawyer must be a member of a regional trade association for lawyers and must have official business liability insurance.
AFO certificate
The DAFO (or AFO) certificate is a confirmation from the municipality that all buildings on a rural property are old enough and that the service facilities meet the official requirements. It is not an obligation, but most rural houses , fincas nowadays are sold with an AFO certificate that is normally paid by the seller.
Architectural research
An official Spanish architect can assess the structural condition of a real estate through an architectural survey (estudio arquitectónico). This research is usually only carried out on older or more expensive houses. The architect can also carry out an architectural survey of the national boundaries of the site, especially in rural real estate.
Catastro (land register)
The land registry is one of the two authorities that register real estate and is part of the Spanish tax authorities (Hacienda). Registration of property with the Spanish Land Registry (Catastro) is mandatory, because this determines the tax value for, among other things, the local property tax (IBI). The land registry is also responsible for registering the exact national boundaries of the site via photos and floor plans.
Contrato privado de compraventa of PPC
The private purchase contract (contrato privado de compraventa or PPC) is the contract drawn up by the lawyer and signed by the buyer and seller. It contains all the conditions of the purchase/sale, such as the sale price, the payment plan, tax matters, the deadline for signing the title deed at the notary and the resolutive conditions if a party wants to abandon the agreement.
Contrato de reserva
A reservation contract (contrato de reserva) is a short private contract drawn up by the real estate agent and signed by the buyer and seller. This temporarily takes the property off the market until all the terms of the private purchase contract have been negotiated by the lawyer/advocates. What happens to the reservation sum if the buyer or seller does not want to proceed with the transfer depends on the conditions and resolutive conditions in the contract. It is possible to include obtaining a mortgage as a resolutive condition, although this is not common.
Escritura de propiedad.
The title deed (also called the deed of transfer) is the official public document signed at the notary during the completion of the sale. The title deed confirms who is the legal owner of a property and is therefore of great importance. It is always advisable to sign this deed and not just a private purchase contract. The notary keeps the original of the deed, while the buyer receives a copy with which the new property can be registered in the Land Registry.
Gestor
A “gestor” (the company is called “gestoria”) is a Spanish accountant or bookkeeper who helps individuals or companies with matters such as accounting, insurance and tax returns. A gestor must be a member of an official organization of gestors in Spain.
IBI
The IBI (Impuesto sobre Bienes Inmuebles) is the annual municipal property tax. The tax value (catastral value) of the property is determined by the Spanish Land Registry (part of Hacienda), on which the IBI is based. Compare it in Belgium with the Cadastral Income (KI) or WOZ in the Netherlands.
Impuesto sobre Incremento de Patrimonio de la Venta de un Bien Inmueble
The value increase tax (Impuesto sobre Incremento de Patrimonio de la Venta de un Bien Inmueble) is paid by the seller on the profit from the sale based on the sale price in the title deed. The percentage of this national tax is 19% on profits and there are special rules for sellers who are non-tax residents in Spain. In this case, according to the law, 3% of the sale price must be withheld by the buyer during the final payment at the notary. The buyer is obliged to pay this amount on behalf of the seller to the Spanish tax authorities as a temporary advance on the final calculation of the value increase tax.
IVA
IVA (Impuesto sobre el Valor Añadido) is the Spanish VAT. When purchasing a new-build home or apartment, you do not pay 7% transfer tax, but 10% VAT on the purchase price.
Licencia de Primera Ocupación
With the license of first occupation (Licencia de Primera Ocupación), the Spanish municipality officially gives permission to live in a property once the construction is completed. The license of first occupation is therefore an important aspect of the lawyer’s legal investigation into the legality of the property.
Note Simple
The ‘Nota Simple’ is a public extract from the Spanish Land Registry (Registro de la Propiedad) that contains information about the owner, debts, unpaid taxes, mortgages, attachments and other information related to a Spanish property. It is an essential document for the lawyer’s legal investigation.
Notario
In Spain, the notary is an official who verifies that transfers of ownership, wills and other public documents are signed correctly and verifies the identity of the parties involved. The task of the notary during the purchase process is different from that of notaries in other European countries. In Spain, it is the lawyer who is responsible for the legal investigation and control of outstanding debts, official registrations and the legal content of the agreement.
Transfer Tax (ITP)
The ITP transfer tax (Impuesto de Transmisiones Patrimoniales) is the tax that the buyer must pay when purchasing a property. In Andalusia, this tax is 7% of the official value in the title deed. If part of the sale price for furniture is paid, the ITP transfer tax is 4% of this amount.
Plusvalía
The Plusvalía is the municipal tax on the increase in the value of the land paid by the seller. The percentage of the Plusvalía is based on the selling price plus other variable factors.
Poder / power of attorney
An authorization or power of attorney (el poder) is an official document that gives someone else, such as a lawyer, the right to act officially on your behalf, for example if you live abroad. To sign an official title deed at the notary, the authorized representative needs a public power of attorney / authorization from the notary.
Registro Propiedad
The Registro de la Propiedad is a body for the official register of real estate and one of the two authorities in this field. This register registers the property on the basis of the notary’s deed. The extract from this register is called the “nota simple”. Although registration with the Registro de la Propiedad is not mandatory, it is highly recommended. However, it is mandatory for obtaining a mortgage. In case of conflicting information with the land registry (Catastro), the data of the Registro de la Propiedad will be used.
Registro de Turismo de Andalucía (RTA)
If you rent out your house commercially to tourists, you are required to apply for a rental license from the Registro de Turismo de Andalucía (RTA). This license is required for both “urbano” (urban) and “rustico” (rural) properties and the houses must meet certain quality standards.
Suma de reservación
The reservation sum (suma de reservación) is an amount (usually between €3,000 and €6,000) that is paid when signing the broker’s reservation contract. This amount temporarily takes the property off the market until all conditions for the private purchase contract have been checked off.
