Buying property in Spain - deposit and completion
Deposit and Completion
This page is an advisory page only and represents our understanding of the current legal and business situation. Advice and opinions expressed here should never be used as a replacement for professional advice.
Once you have found your Spanish property and your lawyer assures you that there are no potential problems, you will most likely have to pay a deposit, usually 5%-10% of the agreed price. If you pull out after the agreement to purchase has been signed, you lose the deposit.
There are various types of deposit contracts, but you should try to negotiate a 'penitential deposit contract'. With this type of contract, the vendor is also committed to the sale, and must pay an amount equivalent to twice the buyer's deposit amount if the vendor pulls out. (In some cases, it is possible to have get-out clauses for either party written into the contract).
You should not pay any type of deposit without consulting a lawyer. Some estate agents will ask potential buyers to pay a non-refundable deposit before even negotiating with the vendor. You should never agree to this.
On the completion day, both parties or their authorized agents (and the banks if mortgages are involved) complete the signing, payment and transfer of deeds in the office of a public notary. (The notary is an officially recognised witness to the fact that a transaction has taken place in his or her presence, and the notary will see that this becomes a matter of public record. The notary will not offer any advice or tell you if the contract is likely to cause you problems).
Your lawyer will register you as the new owner. Make sure this is done immediately as you may not be able to raise finance or sell the property if you are not recorded as the owner.
Once the documents are signed, you will be given the keys to your Spanish property. From this point on, you assume responsibility for all bills, such as community charges and utility bills associated with the property.
It is very important that you contact electricity, gas and water companies with your contact details. Do not assume that bills will be sent to your new home - the previous owner may not have lived there. If bills are being issued and you are not aware of them, you may find your services being cut off. Many lawyers will do this for you as part of their service in handling your purchase.
It is also important to register with your local town hall so that municipal bills are sent to you.
Finally, if your property is part of a community scheme, let the community president know that your are now the owner