Investment

Guide to buying a luxury property in Marbella – Costa del Sol.

Tuesday April 11th, 2023
Investment guides

Guide to buying a luxury property in Marbella – Costa del Sol

Invest in La Costa del Sol in a planned and secure way.

 

Step #1. Professional advice.

The first step, even before choosing the property, is to have a team of trusted advisors.

Buying a property in Spain is not a complicated process. However, it requires knowledge of the regulations, formalities, and documentation required at each step of the process. For this reason, it is essential to have adequate real estate, financial, legal and tax advice to ensure a safe purchase process.

At Surinvest we offer global advice through a team of economists and lawyers who are experts in real estate investments on the Costa del Sol.

Step #2. Due Dilligences.

  • Real Estate. The job of a professional real estate agency is not limited to showing you properties. Their responsibility is to show you the right selection of properties that best suit your budget, needs and lifestyle. In addition to carrying out a thorough inspection of the property, they will take into account all the details in order to successfully negotiate the price, time and other conditions of the purchase, in perfect coordination with the rest of the advisors.
  • Legal and Tax. The figure of the lawyer expert in real estate law is indispensable in a real estate transaction. His responsibility is to verify that there are no limitations to transfer the property to your name, and he will verify that the property you wish to purchase is free of liens and encumbrances. To start the legal process, we recommend to formalize in a Notary’s office a power of attorney that authorizes the lawyer to make decisions on your behalf in matters and formalities related to the sale (Land Registry, Cadastral Office, Tax Office, City Hall and Banks). In Surinvest we work with a selection of lawyers of recognized trajectory and professional solvency..
  • Financial. We are former bankers of corporate and private banking, a determining factor that allows us to offer a differential and professionalized service in the real estate sector. We accompany you and introduce you to the most agile and accustomed financial institutions in sales transactions on the Costa del Sol, both for the opening of a bank account, and to apply for a mortgage in your case.

 

Step #3 Formalization of Contracts.

Once the property has been selected, a written offer has been formally sent to the seller, and the offer has been accepted, the legal phase of the sale and purchase process begins, which is usually formalized through three contracts.

The Reserve Contract.

This is a private agreement between the buying and selling parties, whose objective is to reserve the property, and therefore stop offering it on the market, for an agreed period of time, usually less than 4 weeks. During this period the most important thing is to obtain three essential documents in the process: a power of attorney, NIE and a bank account in a Spanish bank.

The amount that the buyer gives to the seller in this act is usually equivalent to 1% of the purchase price in resale homes. In the case of new homes it depends on the price of the property, and the payment plan required by each developer, and can range from €6,000 to €20,000 or even more in the case of high-end homes. The amount of the reservation is used as part of the total payment in case of going ahead, but otherwise, if the buyer decides not to buy, he loses this amount to compensate the seller for the damage caused by not offering the property on the market during the agreed period, unless the possibility of withdrawal is expressly included in the reservation contract.

*Note: sometimes the Reserve is dispensable and a Private Contract is formalized directly. It is something that happens in houses of high amount, when the amount that is given as Reserve does not compensate the seller to decide to withdraw the house from the market.

The Private Contract.

Once the Reservation period has elapsed, it is time to confirm the commitment reached between the buyer and the seller by signing a Private Contract whereby the buyer gives the seller a percentage of the value of the property, usually not less than 10%, and rarely more than 30%.

An expert Lawyer will draw up a good Private Contract which will include all the terms, conditions and obligations for both parties. The contract must be rigorous, complete and clear in its wording, mentioning the registry details of the property and its annexes, the ownership of the owners, the purchase price, the conditions and the final deadline for signing the Public Deed. Usually this period can be between 2 and 8 weeks, depending on the characteristics and difficulties of the operation.

During this period, excellent coordination between all parties is necessary in order to prepare all the necessary documentation in a timely manner prior to the signing of the title deed in the notary..

The most common type of private contract in real estate brokerage transactions is called a Penalty Deed, whose main feature is the penalty. If the Buyer defaults, he loses the amounts paid. If the seller defaults, he will be obliged to return to the buyer double the amount received up to that moment.

Notarial Public Deed.

The Title Deed publicly materialices, before the faith of a Notary Public, the transfer of ownership and title to a property in Spain, and grants veracity and legal certainty to the buyer and seller, i.e. as a guarantee for all parties involved, and allows its subsequent registration in the Land Registry.

Step #4 Land Registry.

This is the last step necessary to officially register the property in your name. Normally the Notary’s offices have an administrative service that takes care of its immediate telematic presentation after the signature of the Notary, being necessary to provide the registry with the following documents:

  • Notarised copy of the public deed of sale.
  • Proof of payment of the Transfer Tax.
  • Justification of having presented the documentation for payment of the municipal capital gains tax (Plusvalía Municipal).

 

Once the registration has been made, the Registry will communicate the change of ownership to the corresponding Cadastre.

The Registry takes approximately fifteen days to officially communicate the change of ownership, putting an end to the sale process once the fulfilment of all legal guarantees has been verified.

 

*Legal Note. The legal, tax and financial legislation and regulations applicable to real estate investment are subject to frequent changes, and their scope and impact vary according to the personal and financial circumstances of each investor and the characteristics of each type of transaction. This document does not constitute an investment recommendation on any asset, nor does it have any contractual effect. Contact Surinvest for a global and detailed analysis of your real estate investment project, adapted to your asset profile and the type of transaction in each case.