[BUYING AND SELLING REAL ESTATE IN SPAIN] 238
KEY FACTS OF REAL ESTATE ACQUISITIONS UNDER SPANISH LAW
I. PROCEDURE
OF
A
REAL
ESTATE
situation: Legal information is normally obtained from the Land Registry (by requesting excerpts relating current liens and charges; Tax/Economic information may be obtained from the Town Hall and from the “ownership association” (“ comunidad de propietarios ”), if any, as under Spanish Law, who acquires a property is liable for the amounts owed to the ownership association and the payment of local property tax; and Town Planning information, may be obtained by requesting from the Seller or the Town Hall the Activity License/First Occupation License (“ Licencia de Actividad/Licencia de Primera Ocupación ”) for commercial/housing purposes or in the event of land, Town Planning information (“cedula urbanística”). 3. Standard Forms of Agreements A . Offer to Purchase sets forth Buyer’s offer of price and other terms and conditions such as Due Diligence period when applicable, it may be verbal o written, Seller may accept or reject. B. Once the Offer to Purchase has been
TRANSACTION 1. Brokers A. In Spain, both parties are free to hire a Broker to conduct the conveyance process of real estate properties, representing their interest during the operation. It is not mandatory, however, to sign a service provision agreement between the Broker and the party parallel to the sale and purchase agreement. Whether there is a separate agreement usually depends on the level of closeness between them, i.e. if the broker is a close person to the party, they may verbally agree some terms. However, if the real estate operation is complex or if the Broker also advises legally the party, they usually sign a service provision agreement and agree on professional fees. B. Each party pays the fees of the Broker they have hired. Seller usually bears all the costs regarding the professional fees of the broker(s) when selling a property and in the fewer cases, when the Buyer looks for a very specific investment or property, hires a Broker to search and identify that specific property to buy, and the Buyer pays the fees of his Broker. 2. Formal procedure of a real estate transaction Before any formal transfer begins, it is highly advisable to take some initial checks relating the property’s current legal, tax/economic and town-planning
accepted by the Seller, the most common way to Purchase a property in Spain is to sign an Arras Agreement between Buyer and Seller (unless the due diligence of the property is clear and the Buyer has the funds to buy, in such case, the parties may directly sign a Purchase and Sale Agreement). The Arras Agreement sets forth the date for closing, contingencies for inspections, financing, payment
ILN Real Estate Group – Buying and Selling Real Estate Series
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