Before acquiring a second-hand dwelling and in order to avoid future problems:
- Request a "Nota Simple" [an extract] in the Property Registry, where a brief description of the dwelling will appear, as well as who is the owner and the encumbrance, where applicable. In order to request it, you only have to fill out a form in the Property Registry with the information of the dwelling. ï‚· If there is any encumbrance on the dwelling, ask the seller for the vouchers or certificates that he is up to date in the payment of the amounts; if not, the banking entity could proceed to seize the property independently of the fact that the owner thereof had changed.
- Make sure that the dwelling is not rented, since the Law grants certain tenants a preferential right of acquisition in the cases in which the owner wants to sell it to a third party. The rental contract can be private or under public deed, without, in the first case, it being recorded in the Property Registry, for which reason it is advisable to record in the deed of sale that the dwelling is found free of tenants.
- Ask the President or Administrator of the Owners' Association to which the property belongs, for information on whether or not the owner is up to date in the payment of the association fees and what he owes in case he is not, since whoever acquires the property must pay these pending amounts with the maximum limit of a year's total. Currently the Notaries usually require the seller to provide a certificate issued by the Secretary of the Owners' Association in which this point is recorded.
- Verify in the City Hall if the seller has paid the Property Tax as well as request information on any other taxes of a municipal nature that could affect the dwelling.
- Request the accreditation of the person that sells the dwelling, if it is a real estate agent, his official association number, if it is a promoter, his Tax Identification Code and Companies' Registry information, and if it is an individual, his National Identification Document (DNI), etc.
Before signing the public deed of sale in the presence of a Notary, it is usual that between the parties a down-payment contract has been executed by which the seller promises not to sell the property in exchange for the delivery of an amount of money as part of the agreed price of the dwelling. In this down-payment contract, it is usually agreed, on the one hand, that if the sale is not carried out because of the buyer, he loses the amount given on account, and on the other hand, if it is because of the seller, he must return to the buyer the double of the amount that was paid as down payment. This contract can also be called "de arras" (deposit).
The amount of the deposit or down payment must appear in the deed of sale as an amount already paid on account of the price, or be discounted from the price of the property that is recorded in the deed, since on the contrary the seller could claim payment of the total price.
If in order to acquire the dwelling you need to be granted a loan, be sure to sign a down-payment document or a purchase-option document in which it specifically states that the purchase of the dwelling is conditioned on the granting of the loan.
If the dwelling that you want to acquire is less than 10 years old, you can demand responsibilities from the promoter, builder and architect for the structural defects that it may present, conserving the same rights that corresponded to the first owner. If, on the contrary, the building is over 10 years old, you will have 6 months following the date of the purchase to claim to the seller the repair of the defects.
What is shown for the sale contract for the purchase of newly built buildings is applicable to those purchased second-hand.
The expenses and taxes that must be paid when acquiring a second-hand dwelling are the following:
- The Tax on Capital Transfers and Documented Legal Acts (ITPAJD-acronym in Spanish), is paid each time, for example, a notary document is signed. Its amount will depend on the price of the dwelling that is recorded in the public deed, among other things.
- The Tax on the Increase in Value of Urban Lands (called plusvalía). This is a municipal tax that taxes the increase in value of the dwelling from the last transfer, and that must be paid to the seller.
- Expenses for cancellation of encumbrances and liens, They correspond, unless there is an agreement to the contrary, to the seller because they originated before the sale. However, in cases of mortgage subrogation, the expenses are generally paid by the buyer.
- The notary fees, for the drawing up of the public deed of sale of the dwelling, will be distributed as agreed between the parties, and in the event the parties did not enter into agreement will be payable by the seller.
- The Property Registry fees, for registering the public deed of sale. The original of the deed and the vouchers from paying the corresponding taxes are needed.