Buying a house is not an easy task and many doubts arise in the process. Below you will find a list of the questions most frequently asked by our clients and these may serve to help any buyer. If the answers do not clarify your doubts, you can request more information at info@grupolabaro.com
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When the house is not registered, can a change of ownership take place? In which cases?
- CASE 1: Due to the death of the owner.
- CASE 2: Due to the divorce of the owners.
- CASE 3: When both co-owner spouses agree to change the ownership to a member of the family group registered for the adjudication of the house (fr example, one of the children, all the children, etc).
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What does the process of a purchase of a house consist of?
The sale-purchase of a house entails the signing of a contract whereby a house is transferred between the parties. This operation is carried out through the handover of the house and the payment of the price of the house by the buyer or by the bank which might finance the operation through a mortgage loan.
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What are the contracts which may be signed?
Earnest money or deposit contract: This is payment on account or as a deposit of the sale-purchase which will be discounted from the final price of the house. It is a non-definitive commitment, however, in the event that either of the parties retracts, this will entail a penalisation (as established in the Civil Code). Earnest money may be forfeitable or confirmatory.
Private contract of sale-purchase: Through this contract, the seller is obliged to hand over a determined house and the buyer is obliged to pay the price agreed to for this house. Thus, the sale-purchase becomes obligatory for both parties even though it has not been formalised before a Notary.
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What taxes must be paid when buying a house?
In the case of a new house, two types of taxes must be taken into account: Value Added Tax (VAT) and Stamp Duty (IAJD).
Other expenses involved in concluding the purchase must be taken into account such as the registration of the house in the Property Registry, the expenses arising from arranging the settlement of expenses and taxes by an administrative agent, and the expenses subsequent to the purchase such as gas, electricity, water, etc, plus the expenses of the Owners’ Community.
What do these consist of?
Value Added Tax (VAT):
- This is only paid in the event that the house which is acquired Sis newly built. Its rate is the reduced one of 7%.
Stamp Duty (IAJD):
- New houses.
- Settlement of the tax through an official form provided by the Autonomous Community.
- This will amount to between 0.5 and 1% of the sale price which is recorded in the Public Instrument.
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What is Value Added Tax?
Value Added Tax, which is commonly called VAT, is an indirect tax levied on consumption. The finality of this tax is to place a levy on the final consumers of goods and services transferred.
Therefore, on acquiring property, the buyer must definitively pay this tax. In order to know the sum which must be paid, the real value of the property, which is consigned in the Public Instrument of sale-purchase, is multiplied by the tax rate of 7%.
There is an exception which has to be taken into account: officially protected housing has a special reduced tax rate of 4 %.
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When is VAT paid on the purchase of a new house
VAT is paid on all the payments made to the promoter in the proportion in which these are made.
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What is a mortgage loan?
A mortgage loan, more commonly called a mortgage, is a loan intended to facilitate access to an the acquisition of a house.
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Which persons intervene in the processing of a mortgage loan?
Las personas que intervienen a la hora de tramitar una hipoteca: son el vendedor, el comprador, el banco, el notario, la gestoría y el registro de la propiedad.
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What expenses will I have when applying for a mortgage loan?
When formalising a mortgage loan, there are normally a number of expenses: an opening commission, evaluation, formalisation expenses (through a public instrument and the Property Registry), Notary expenses, insurance, agency fees and Stamp Duty.
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What is the Property Registry for?
The Property Registry is an organism where it is possible to verify, through an informative simple note, that the seller is really the holder and owner of the house you want to buy and it is also possible to check whether it has any kind of encumbrance.
The informative simple note is normally issued on the same day or the day following its request. Consulting the Property Registry will protect you future problems as it entails a legal guarantee.
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What documentation is required to buy a new house?
In order to accredit the nature of these types of Houses, it is necessary to provide the Notary with an urban certificate, a land registry certificate and a habitability certificate.
The legality of the construction and the use is accredited in the following documents:
- The work licence and the certification of the competent technician, which accredits that the work has finished in accordance with the project approved by the Town Hall.
- The licence of first occupation of the building (related to its habitability) which verifies the effectiveness of compliance withy the legal regulations.
- Habitability certificate.
- Registration in the Property Registry.
This should not worry the buyer as this documentation is usually provided by the promoter of the house.
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What is the Public Instrument of sale-purchase?
The Public Instrument is a public document authorised by a Notary, in which the Notary expresses a judgement on the identities and capacities of the parties, and drafts a document in accordance with their wishes and adapted to the legal requirements. He also advises the parties regarding their obligations.
The authorisation of the document is equivalent to the handover of the house. The price of the house is usually paid to the seller in the presence of the Notary.
According to article 1455 of the Civil Code, "The expenses of the authorisation of the instrument are paid by the seller while the expenses of the first copy of the instrument are paid by the buyer".
Once the Public Instrument of sale-purchase is obtained, it is registered in the Property Registry of the place where the real estate is located.
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Why is it necessary to make the registration in the Property Registry?
- So that the buyer is fully protected as regards the right he has acquired as the only, true owner (with regard to creditors of the seller, with regard to hidden charges...).
- So that the buyer can obtain a mortgage loan in order to finance the acquisition of the house.
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What documents must be handed over to the Property Registry?
- An authorised copy of the Public Instrument of sale.
- The form with the settlement of the corresponding tax.
- The last receipt of the Property Tax in order to obtain the Land Registry reference.
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In what way is the buyer linked to the seller through a private pre-contract?
Normally, when a purchase is made on the plan, the parties sign a private pre-contract whereby the buyer hands over a deposit or earnest money to the seller, this is a sum of money whereby the seller gets the buyer to reserve the house until the sale-purchase contract is made. Finally, if the buyer desists from the purchase, he loses the sum handed over as a deposit.
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What expenses are involved in a sale-purchase?
- Notary expenses
- The drafting of the public document of sale-purchase. The amount varies depending on the price of the house, and the number of sheets required to draft the document.
- Generally, the seller pays the expenses for authorising document, and the buyer pays the cost of the first copy of the document.
- Registration expenses
- The registration of the Public Instrument in the Property Registry of the place where the real estate is located.
- The fees of the Property Registry must be paid by the buyer unless otherwise agreed to.
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What guarantees are there in the event that the house has defects?
- 6 MONTHS: Hidden Flaws. The seller remains bound by these hidden flaws even though he was unaware of them. The buyer has two options:
- To desist from the contract.
- To have a proportional part of the price reduced in accordance with the opinion of the inspectors.
The Law on the Development of Building of November 5, 1999 (article 17) established a new system of periods concerning defects in construction:
- 1 YEAR: Defects which affect the finishing of the work. E.g. paintwork.
- 3 YEARS: Defects which affect the conditions of habitability. E.g. dampness.
- 10 YEARS: Defects which affect the structure of the building.
