Upon choosing your dream home or holiday home, there are procedures that you should follow. Firstly, you will be asked for a "signal" deposit, to remove the property from the open market. This can be a nominal sum for example €3,000-€5,000 depending on the value of the property!
This "signal" deposit is not handed over to the vendors. It is held either by your Estate Agent in their Client's Account or by the purchasers' lawyer. This initial deposit forms part of the 10% deposit which is ultimately payable upon the signing of the "Option to Purchase Contract". The latter is signed by both vendors and purchasers, once the purchasers' lawyer has completed all the searches and a mortgage has been arranged/approved (if applicable).
In the "Option to Purchase Contract" a date and time would be set for completion at an agreed Notary. Completion can be done swiftly, or if preferred, within a few months. A delayed completion ie 6-9 months can also be mutually agreed upon, but in this case, the vendor may request a larger deposit!
On the day of completion at the Notary, your lawyer will be presented with the latest up to date utility bills, rates bill, rubbish collection bill and proof of payment of Community Fees (if applicable). The vendors are liable for the Plus Valia Tax (0.5% of the increase in the value of the land between when the property was purchased by the vendors up to the date when it is to be sold) .
Your lawyer will need to make a small retention out of the funds, to cover the vendors' utilities and the Plus Valia. By law, the owner of the property on January 1st of any one year, is still responsible for paying the rates bill (I.B.I.) for that year, even if completion is on January 2nd of the same year.................!! Your lawyer will change the utilities into your names.
A draft of the new deeds (escritura) will be given to your lawyer, in Spanish, and he will go over this with you. Spelling corrections, NIE numbers etc should all tally and if not this is the time for them to be corrected! On the same day of completion, the Land Registry will have faxed through an up to the minute Nota Simple (a history of the property from when it was first registered, proving clear title, lack of encumbrances etc).
Anything untoward up to this point would have been found by your lawyer. The only thing that could be mentioned on this latest Nota Simple is that there is an existing mortgage on the property. You may have arranged to take on this transferable mortgage (in which case your bank & the vendors' bank representatives would also be at the Notary).
If you do not require a mortgage or have arranged another, the existing mortgage is paid off in full, at the same time of completion. Part of the purchasing funds are allocated to the bank in question using a banker's draft. This will have already been organised by your lawyer.
Once you are happy with the draft escritura and its corrections, an original will be prepared, which will be signed by the Notary (who will go over the escritura again with you in Spanish or English), the purchasers and the vendors. Copies will then be printed off so you can go home with your document in your hand!
Once the new Escritura (Deeds) have been signed, the Notary will congratulate you and you are now the proud owners!! The Notary fees and Land Registry fees your lawyer will pay on your behalf. You would have provided him with sufficient funds in advance.
