Buying property can be quite intriguing especially for first time buyers. As a lawyer we have spent many years meeting and advising local and foreign property buyers on what they should and shouldn’t do when buying property. We have also helped buyers on mistakes they have made during the purchase process and I’d hate to see those mistakes repeated again. Here are some common mistakes buyers make.
Buying property is a sensitive matter and you would want to have someone with your best interest during this period. In Spain especially purchasing property needs a lot of patience and inspection of every detail in the process. Most buyers trust their agents and hardly seek the legal opinion from a qualified layer on the legal measures in buying property. The real estate agency might also provide an in-house lawyer for you who does not have you best interest at heart.
I would recommend that you find a personal lawyer who can draft and review contracts for you. Foreigners can find a good English speaking Spanish lawyer from various law firms in the country by either recommendation or independent sources. If you have the means to bring along your lawyer then that would work great on your side.
The reservation document is drawn up by the house seller or the agent once an offer is made by the buyer. The deposit is made by the buyer and in Spain the amount depends on the cost of the house. The deposit is used to take the property off the market once the final offer is made but in the event that the property has issues such as a prior mortgage application arises, purchase of the property might take longer or might not happen at all yet the deposit is non-refundable.
Ask yourself these questions before you buy property. Are you looking for a permanent residence, an investment that you can rent out, sell in future or a holiday home? Spain is a great tourist destination so if you are looking to purchase property for renting then you have to consider the expenses that come with it. As a buyer you need to research on the regional laws and tourist rental laws that dominate the property industry. This is yet another reason as to why you should involve a lawyer to guide you with what you want.
As a lawyer I would never recommend for a buyer to take up a loan from either the bank or from family and friends. Banks in Spain, advice clients, to keep a debt at a maximum of at least 30% of their net income. This is a good to ensure that people don’t borrow too much and end up being in debt.
If you are planning on taking a mortgage in Spain, I would recommend that you start planning early. Set you financials right and research on the most affordable mortgage plans to know how much you will need to spend as well as the difference between mortgages in Spain and your country if you are a foreigner.
People sometimes tend to forget about what comes after purchasing property. Take for example a house. A buyer pays up all the necessary fees, to both the real estate agent and the lawyer. In the event that he has used up all his money on the house, he has no way of doing the renovations such as reconstructing that bathroom or catering for contingencies such as health.
This is another major mistake that I have seen buyers do in Spain. As a buyer you are in control, do not be fail to make a counter offer so that you can have a little extra cash to do the renovations you need.
Most sellers in Spain include approximately 10-15% of the price to cover taxes, paperwork and legal fees but they will never really tell. Buyers have the right to know the breakdown of the money they pay so take it upon yourself to ask what the price is inclusive of. It would be best to have the costs outlines on paper and be sure to keep a copy.