OFF-PLAN CHECKLIST
The area: See what development plans there are - will your sea view be
obliterated? - and what amenities and infrastructure are in place or planned.
The developer: what is the firm's track record? Has it paid for the land it is
developing? Does it have all the correct building permits?
The development: when will the amenities - pool, golf course, shops, clubhouse -
be completed? Are you buying into the first phase and, if so, what will the
whole urbanizacion be like when it is finished - and when will that be?
The marketing suite: the developer may have built a replica showhome. Make sure
that the specifications there are not better than the ones on the contract you
sign. Check the floorplan you are given to see how it measures up to the
showhome dimensions.
You should already have your lawyer in place. Now you need to open a ...
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SPANISH BANK ACCOUNT
To buy and run a home in Spain, you will need a current account with a Spanish
bank, preferably at a branch local to your property and, unless you are very
confident with your Spanish, with Englishspeaking staff. Shop around for the one
with the lowest charges - especially for receiving money from abroad - and don't
expect more than a negligible interest rate on your balance. Internet banking is
now available with many Spanish banks.
You should also be making arrangements to ensure you will be able to pay for the
property (see page 16 for information on financing an overseas property
purchase).
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NOW CHECK THIS OUT...
You - and your lawyer - should now see proof that the property has full planning
permission and a building licence, and that financial arrangements have been
made so that your money will be safe should the developer go bankrupt before
completing the project. Check the specification details carefully, to ensure
that it lists the correct fixtures and fittings. Get your lawyer to read the
rules governing the development's community regulations and the agreements you
will have to make regarding the future management and letting of the property.
When you and your lawyer are happy with all of these important issues, you can
sign...
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THE PRELIMINARY CONTRACT
This is usually prepared by the developer to a standard format: do not sign it
until your lawyer has ensured it is modified to protect your interests. In the
case of new build properties it will take the form of a "reservation" contract,
agreeing the price the buyer will pay, provided he or she completes the deal
within a specified period. You will have to hand over a small deposit at this
stage, which you will forfeit if you decide to pull out, though the contract
should contain "get out" clauses, listing the circumstances in which the buyer
will be able to get the deposit back.
You now have a limited time - whatever is specified in the preliminary contract
- to proceed to...
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THE FULL CONTRACT
When buying a property off-plan, you are agreeing to buy a property once it has
been built, and to make payments in stages as the construction work progresses.
Decide whether you want to pay only when certain stages in the construction have
been completed, or on set dates, regardless of progress. At this stage, you pay
a deposit of between 20 and 40% of the full purchase price. Regard with
suspicion any developer who asks you for more than 40% as an initial deposit.
These are some important issues to deal with before signing a contract:
What exactly are you buying? Is the garage, for example, included in the price?
Are boundaries and access clearly defined? Has your lawyer made sure the seller
has the right to sell the property, and that its ownership and details are
recorded accurately in the local land registry?
Is the price on the contract correct - and are any circumstances in which it may
increase - or decrease - clearly stated, understood and agreed by you? Are you
happy with the arrangements for the staged payments? Is the date for completion
of the work - not just on your property, but also on the common amenities -
agreed? What financial guarantees are in place should this deadline not be met?
Does the developer have adequate insurance to protect your payments? Who will
carry out the checks to ensure the property has been completed to the agreed
standard?
Once the contract has been signed and the deposit paid, you then have to wait
for your property to be completed - handing over tranches of money, as agreed in
the contract, as development progresses. When the property is completed, you
will pay the final balance of the price and sign the...
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DEED OF SALE
This makes you the legal owner of the property. A notary - a public official -
will witness this process and then your lawyer must file the correct documents
at the land registry.
Before you sign, check that the land is free of past taxes and debts in its land
registry filing and that the development has a building licence and an
occupation licence from the local authority.
Consider commissioning an independent survey to confirm that the construction is
sound and built to specification, and to compile a "snagging" list.
Don't forget to take out insurance on your property, to take effect as soon as
you have signed the deed of sale.
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BUYING COSTS
Allow at least 10% of the purchase price to cover the costs of buying a property
in Spain. You will have to pay:
Your lawyer
The notary -- a fixed fee of roughly 0.5% of the purchase price of the property
Land registry fees - about the same amount as the notary's fee
Vat - this is charged at 7% on new homes (this figure is sometimes, but not
always, included in the purchase price)
Stamp duty at 1%
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