How does the property process work in Spain?

The process of buying property in Andalusia may seem complicated at first, but you don’t have to go through it alone. It’s a good idea to seek the assistance of a law firm and experienced agents who can help you navigate the entire process smoothly and stress-free.

The process of buying property in Spain varies depending on whether you are purchasing on the primary market (from a developer) or the secondary market. We can provide you with contacts for numerous independent law firms in Andalusia, including those with Polish-speaking staff, which makes communication with the person overseeing the entire process much easier. The solicitor represents your interests exclusively, acting completely independently of the agency selling the property. All contracts can be signed in person or by a proxy.

Buying property in Spain on the primary market

1. Reservation

If you wish to reserve a property with a developer – either during construction or ‘off-plan’ (i.e. before construction begins) – you must pay a reservation fee of up to 1% of the property’s value (several thousand euros); this varies depending on the developer.

It is worth noting that developers in Spain are not open to any price negotiations. If, at the time of reservation, the development does not yet have planning permission, further formalities are put on hold until the developer obtains it.

Once the developer has obtained the building permit – in most cases approximately 2–3 months after the booking – the development contract is signed and an advance payment is made – amounting to approximately 30% of the price plus VAT.

2. Development contract

Before the agreement is concluded, the law firm verifies the following documents and circumstances:

• confirmation that the plot designated for the development has the appropriate zoning for construction,
• confirmation of the building permit and the developer’s ability to obtain the first occupancy licence (Licencia de Primera Ocupación – LPO) upon completion of the development,
• verification that the developer provides a bank guarantee or insurance policy – securing funds paid during the project’s implementation – in accordance with Spanish law; in the case of the primary market, buyers’ payments must be secured by a bank guarantee; this ensures that you will not lose your money, even if the developer fails to fulfil the contract,
• analysis of the developer’s financial situation to assess their credibility and stability,
• confirmation that the developer holds the required insurance,
• verification of the contract’s content to ensure compliance with applicable laws and the scope of protection of the buyer’s interests.

Before making any payment and concluding the contract, the buyer is required to submit documents confirming the lawful origin of the funds intended for the purchase of the property (e.g. income from professional activities, sale of another property, savings, inheritance) – in accordance with the provisions of the Anti-Money Laundering Act (AML).

The development contract is the primary document governing the rights and obligations of the parties, specifying in particular:

• the payment schedule and method,
• the completion date of the development,
• the developer’s obligation to provide a bank guarantee,

• the escrow account into which payments are made during construction,
• the insurance policies the developer is required to hold,
• the architectural plans and technical specifications of the project (forming integral annexes to the agreement).

Depending on the project schedule, further payments in instalments may be required during construction. Typically, 50–70% of the property price is paid upon signing the deed of sale.

3. Notarial Deed

The deed of purchase for property in Spain is drawn up in the form of a notarial deed before a notary. Before it is signed, the law firm verifies the legal status of the property, in particular confirming:

• the removal of the developer’s mortgage encumbrances from the property,
• the assignment of an individual cadastral number to the property,
• the issue of a certificate of completion,
• insurance and guarantees – including for the structure (Seguro Decenal), installations and equipment,
• the obtaining of the First Occupancy Licence (known as the LPO).

The final stage will be the registration of ownership in the Land Registry and the transfer of utility supply contracts (electricity, water).

If purchasing a property using a mortgage, it is advisable to submit a mortgage application at least two months in advance to ensure the process runs smoothly

We discuss the costs of buying property in Spain later in this article.

Buying property in Spain on the secondary market

1. Reservation and payment of a deposit

Once a property has been selected, it is recommended to reserve it whilst negotiations take place and the formal and legal matters are finalised.

In accordance with market practice, a purchase offer is first submitted, setting out the proposed price and terms of the transaction – often in the form of a reservation agreement.

In some cases – although this is not standard practice at the negotiation stage – a deposit of approximately €6,000 or around 1% of the property’s value is required. Much depends on the seller’s practice and the specifics of the transaction. Nevertheless, in certain situations, this may serve to strengthen the buyer’s negotiating position. This deposit is paid into the account of the estate agent or law firm.

We recommend that all essential terms of the transaction be specified at the offer stage, including in particular the scope of the property’s fixtures and fittings, the planned date for concluding the preliminary agreement, any conditionality of the transaction on obtaining mortgage financing, and other relevant provisions.

If the seller accepts the offer price and the agreed terms of the transaction, the parties proceed to the subsequent stages of the process, described below. This is the point at which the detailed legal due diligence begins.

If, during the course of negotiations, the parties fail to reach an agreement on the price, the entire deposit previously paid is refunded to the buyer.

2. Verification of the property’s legal status

With the assistance of a solicitor who will represent the buyer and oversee the entire purchase process, a preliminary agreement will be drawn up. This agreement contains the most important information regarding the purchase of the property – including the date of signing the Deed of Sale (usually between one and two months in the case of the secondary market).

As part of the legal due diligence, the following are subject to verification in particular:

• the nota simple, i.e. the current extract from the Land Registry (Registro de la Propiedad) – containing information about the owner, the property’s floor area and any encumbrances (mortgages, restrictions),
• Licencia de Primera Ocupación (LPO) – confirmation that the property holds all required building permits and has been granted a certificate of occupancy,

• the validity of the title deed and its registration in the seller’s name in the Land Registry (Registro de la Propiedad),
• the existence of any encumbrances – such as mortgages, loans, seizures, easements, leases or tenancy agreements,
• the absence of other liabilities or claims affecting the property,
• the property details’ compliance with the Land Registry (Catastro),
• the property’s compliance with the local urban development plan (PGOU) and the absence of administrative sanctions of an urban planning nature (e.g. resulting from unauthorised extensions or so-called unauthorised construction),
• the financial situation of the owners’ association (Comunidad de Propietarios), including any outstanding payments (e.g. service charges, property tax – IBI, utilities),
• an energy performance certificate, containing information on the property’s energy efficiency.

The due diligence process, i.e. the verification of the property’s legal status, begins once the offer has been accepted. In practice, the law firm has a period of approximately 14 to a maximum of 21 days to analyse the documentation.

In addition to the legal analysis, we also recommend carrying out a technical survey of the property. This represents a relatively small cost compared to the value of the investment and helps to identify any potential technical defects. In particular, when purchasing on the secondary market, it is advisable to commission such a survey from an independent specialist.

3. Preliminary agreement and payment of the deposit – the so-called Contrato de arras

We then move on to the stage of signing the Agreement – the so-called Contrato de arras, which sets out the deadline for signing the Deed of Ownership and the terms of purchase. This agreement guarantees your reservation of the property in question.

Upon signing the agreement, 10% of the property’s value (including the deposit already paid) plus VAT is paid.

If the seller withdraws from the contract, the buyer is entitled to a refund of double the deposit. Conversely, if the buyer withdraws from the purchase without a valid reason, the deposit is retained by the seller.

It should be emphasised, however, that in the event of significant defects in the property coming to light or other circumstances affecting the purchase decision, the possibility of withdrawing from the contract and the rules governing the refund of funds depend on the provisions of the contract. Therefore, it is of key importance that the contract is properly drafted and that the buyer’s interests are safeguarded by a law firm.

4. Deed of Sale (Escritura de compraventa)

The deed of sale is signed before a notary – usually 4–8 weeks after the conclusion of the preliminary agreement – in person by the buyer or, on the basis of a power of attorney, by their representative, e.g. a law firm. The notary draws up the deed of sale and ensures the transaction proceeds correctly. Please note that the notarial deed is drawn up in Spanish.

The remaining portion of the property price, payable upon signing the notarial deed, is usually settled by means of a bank cheque (cheque bancario) – issued by a Spanish bank for the agreed amount. A less common method is a bank transfer, executed on the day of the transaction.

It should be borne in mind that issuing a bank cheque usually involves an additional fee, so it is worth agreeing the terms with the bank in advance and, where possible, negotiating the commission before the planned transaction.

In Spain, a notary is a public official who oversees the legality and formal correctness of a transaction, acting impartially and without representing the interests of either party. Their role is to verify the identity of the parties, check that the deed complies with applicable law, ensure that the parties understand the implications of the document being signed, and give the transaction legal validity.

Consequently, they do not replace the role of a solicitor acting on behalf of the buyer. It is therefore recommended to work with a law firm that provides full support and safeguards the client’s interests at every stage of the transaction.

When purchasing property using a mortgage, the lending bank is also present at the signing of the notarial deed. Two agreements are concluded at the same time – the property purchase agreement and the mortgage agreement.

If the property being purchased is subject to a mortgage, this debt is usually repaid on the day the deed of sale is signed. In such cases, a representative of the seller’s bank is also present at the notary’s office.

This process requires the prior preparation of all necessary documentation, and part of the purchase price – intended for the repayment of the existing mortgage – is transferred in the form of a separate bank cheque, made payable to the seller’s bank.

After signing the notarial deed, the buyer receives an abridged copy of the notarial deed from the notary.

It is on the day the deed is signed – once all formal requirements have been met and payments settled – that the keys to the property are handed over. At this point, the buyer becomes the full owner of the property.

This is a moment which, for many people, marks the culmination of the entire process, yet simultaneously the beginning of a new chapter: life in the sun, an investment, or the fulfilment of a dream.

5. Other steps required to finalise the property purchase process in Spain include:

• payment of transfer tax (in the case of the secondary market) or VAT and notary fees (in the case of the primary market),
• collecting the copy of the notarial deed,
• submitting the document to the Land Registry (Registro de la Propiedad) to register the title in the new owner’s name,
• notifying the change of ownership to the Cadastral Register,
• transferring utility contracts (electricity, water, internet),
• notifying the housing association of the change of ownership and updating details for local tax payments.

A law firm handles all these procedures comprehensively, making payments and completing administrative formalities using the client’s Spanish bank account.

Transaction costs for buying property in Spain

Costs amounting to approximately 8%–13% of the property’s value must be added to the purchase price. These include, amongst other things, taxes, notary fees, legal costs and other charges – depending on the relevant Autonomous Community.

What are the transaction costs for buying property in Andalusia?

1. Tax

• Secondary market: 7% property transfer tax (ITP)
• Primary market: 10% VAT
• 1.2% tax on civil-legal transactions – the so-called AJD

2. Legal costs

• solicitor: 1% of the transaction value + 21% VAT
• notary’s fee: from approx. €1,000 to €3,000 – depending on the transaction value and the number of parties included in the deed
• entry in the register – land registry – the fee is usually 50–70% of the notary’s fee

3. Mortgage costs

• Stamp duty – known as AJD: 1.2% of the loan amount – this cost is borne by the bank, as required by law since 2019, and therefore does not constitute a cost for the buyer
• Mortgage registration fee: 1%–1.5% of the principal

4. Other costs

• costs of signing utility contracts (water, electricity, telephone): from approx. 500 euros
• cost of an N.I.E. number: approx. 200 euros + 21% VAT per person

Documents and formalities required to purchase property in Spain

Before proceeding with the purchase of a property in Spain, it is necessary to prepare specific documents and meet formal requirements to ensure the transaction proceeds smoothly.

1. N.I.E. number
2. Bank account in Spain
3. Notarised power of attorney
4. Separation of property (if applicable)
5. Financial documents (source of funds/AML)
6. Identity document

How to obtain an N.I.E. number in Spain?

Foreign nationals planning to purchase property in Spain are required to obtain an N.I.E. (Número de Identidad de Extranjero) number, which is the equivalent of the Polish tax identification number (NIP).

An application for an N.I.E. number can be submitted:

• at the Spanish Embassy in Warsaw,
• directly in Spain – at a branch of the Policía Nacional.

However, it should be borne in mind that the waiting time in Poland can be significantly longer than in Spain. For this reason, we recommend submitting the application directly on site – in Spain – where the procedure usually takes around 3–4 weeks.

An N.I.E. number is essential for completing a property purchase transaction, as well as for carrying out many administrative tasks, such as signing contracts for utility services or tax settlements.

The most convenient solution is to grant a power of attorney to a chosen solicitor, who can apply for an N.I.E. number on the client’s behalf.

Bank account in Spain – how to open one?

To begin the formalities related to the purchase of a property and legal services, it is necessary to open a bank account in Spain. The account will be used to make payments related to the purchase of the property, as well as to settle ongoing obligations, such as utility bills and taxes.

When opening an account, you must provide the following documents (translated into Spanish):

• a copy of your ID card or passport,
• a document confirming your residential address (e.g. an electricity or water bill issued in your name and address in Poland),
• documents confirming your source of income and the amount of your earnings (e.g. your tax return for the previous year, a certificate from your employer),
• documents confirming the origin of the funds intended for the purchase of property in Spain (e.g. property sale deed, document confirming receipt of an inheritance, bank statements),
• a letter of recommendation from a bank in Poland (if required),
• N.I.E. number

Once the property has been purchased, the bank account is used for day-to-day payments – in particular for utility bills and property tax – usually via direct debit (domiciliación bancaria).

Power of attorney when buying property in Spain

Many clients choose to grant a notarised power of attorney to their solicitors so that they can act on their behalf during the property purchase process.

A power of attorney may be granted:

• in Spain – before a notary public, which is the simplest solution (approximate cost: approx. 100–200 euros),
• at the Spanish consulate in the client’s country of residence,
• in the client’s country of residence – before a local notary.

If the power of attorney is granted outside Spain, it must be properly prepared, in particular by obtaining an Apostille – in accordance with the Hague Convention – and by having it translated into Spanish by a sworn translator, so that the document can be effectively used in Spain.

Separation of property in Spain

Where separation of property applies, it is necessary to submit the relevant document to a notary. This document should be translated by a sworn translator and bear an Apostille.

Support at every stage

We have over 20 years’ experience in property consultancy and agency services. We fully understand the needs and expectations of Polish clients, and we are familiar with all the procedures necessary for the safe and efficient purchase of property in Spain.

Together with our team of trusted specialists, we provide comprehensive support at every stage – from selecting the right location and finding a property, through assistance in choosing a law firm and a notary, right up to the finalisation of the transaction.

We also offer services related to renovation, design and interior finishing, as well as comprehensive property management and rental services.