Full Guide: Legal Aspects of Property Buying in Marbella

For those interested in investing in luxury real estate in Marbella, it is crucial to be aware of the legal requirements for buying and selling property in this beautiful coastal city of Spain. While knowing all the legal intricacies of property purchase is neither possible nor necessary, it is essential to engage a trusted lawyer for your purchase. Nonetheless, we have compiled some useful information in this post that is worth reading. Therefore, let’s explore the necessary legal steps in different stages of the purchase and what expectations you should have.

1. Obtain a Foreigner Identification Number (NIE)

Before engaging in any property transaction and Legal Aspects of Property Buying, foreign buyers must obtain a Número de Identificación de Extranjero (NIE). This number is essential for all financial activities in Spain, including opening a bank account and paying taxes.

Steps to Obtain an NIE:

1. Visit the Nearest Spanish Consulate or Police Station

You can apply for an NIE at the Spanish consulate in your home country or a police station in Spain.

2. Required Documents

Completed Application Form (EX-15): This form is available online or at the consulate/police station.

Valid Passport: You will need to present your original passport along with a photocopy.
Proof of the Reason for NIE Request: This could be a property purchase contract, bank account opening documents, or any other relevant documentation indicating why you need the NIE.
Two Passport-Sized Photographs: Ensure these meet the standard passport photo requirements.
Payment of the NIE Fee: The fee can vary but is typically around €10-€12. The payment is made through a bank using the form Modelo 790, which will be provided to you.

3. Application Submission

If applying at a consulate, you will need to book an appointment in advance.

Submit all documents in person. In some cases, you may appoint a legal representative with a power of attorney to apply on your behalf.

4. Processing Time

The processing time can vary, but it typically takes 2-6 weeks to receive your NIE. If applying in Spain, you may receive a temporary NIE number on the same day, which can be used until the official number is issued.

5. Collecting Your NIE

Once processed, you will be notified to collect your NIE. If applied through a consulate, the NIE will be sent to your home address or you may need to pick it up in person.

6. Cost and time frame

The fee for the NIE application is generally around €10-€12, payable at a bank.

7. Timeframe

It usually takes between 2-6 weeks to process the application, though a temporary number may be issued the same day in some cases.

2. Conduct Due Diligence

In Legal Aspects of Property Buying, Due diligence is a crucial step in the buying process. This involves two main types:

Technical Due Diligence: Assessing the physical condition and structural integrity of the property.
Legal Due Diligence: Verify property rights, check for any pending lawsuits, and ensure compliance with local zoning and building codes.

Below is a detailed explanation of how to conduct each and which organizations to refer to.

Technical Due Diligence

Steps :

1. Hire a Qualified Surveyor or Engineer:

Engage a certified surveyor or structural engineer to assess the physical condition of the property.

This includes checking the foundation, structural integrity, plumbing, electrical systems, and any potential pest infestations.

2. Obtain a Technical Inspection Report:

The surveyor will provide a detailed report highlighting any defects or areas needing repair. This report is crucial for negotiating the final price and planning future renovations.

3. Review Maintenance Records:

If available, review the property’s maintenance history to understand past issues and repairs.

4. Organizations to Refer to:

Colegio Oficial de Arquitectos de Málaga (Official College of Architects of Málaga): For finding certified architects and surveyors.
Local Municipalities: For records of any building permits and inspections.

Legal Due Diligence

Steps:

1. Verify Property Rights and Ownership:

Hire a real estate lawyer to check the property’s legal status.

Obtain a “Nota Simple” from the Registro de la Propiedad (Property Registry) to verify ownership and any encumbrances or liens on the property (Marbella Property) (Marbella Dream Living).

2. Check for Pending Lawsuits:

Ensure there are no ongoing legal disputes involving the property. This can be done through the local courts or by consulting with a lawyer.

3. Review Zoning and Building Codes:

Verify that the property complies with local zoning laws and building codes. This includes checking for any unauthorized constructions or modifications.

4. Obtain Urban Planning Certificate:

Request a “Certificado de Planeamiento Urbanístico” from the local Ayuntamiento (City Hall) to ensure the property complies with urban planning regulations (IberianTax).

5. Check the Catastro:

In continuation of Legal Aspects of Property Buying, Review the Catastro, a national database that includes detailed information about the property’s boundaries, size, and location. Ensure this data matches the Land Registry details (IberianTax).

6. Organizations to Refer to:

Registro de la Propiedad (Property Registry): For verifying ownership and any charges against the property.

7. Ayuntamiento (City Hall):

For urban planning certificates and zoning compliance.

8. Catastro:

For property boundary and size verification.

3. Sign a Deposit Contract

Before the final purchase agreement and as per Legal Aspects of Property Buying in Marbella, it is common to enter into a “contrato de arras” or deposit contract. This document outlines the terms and conditions of the sale and typically requires a deposit, usually 10% of the property price, to secure the deal.

Where and When the Deposit is Paid

1. Preliminary Agreement:

The buyer and seller agree on the terms of the sale, including the purchase price, and any conditions that need to be met before the final sale.

2. Drafting the Contract:

The deposit contract is typically drafted by the buyer’s lawyer. This contract should include details about the property, the agreed price, the deposit amount, and the timeline for the final sale.

3. Signing the Contract:

Both parties sign the deposit contract. This can be done in person or remotely if necessary.

It is advisable to sign the contract in the presence of a notary or legal representative to ensure its legality and proper documentation.

Order & Payment of the Deposit

1. Payment of the Deposit:

The buyer pays a deposit, usually 10% of the purchase price, upon signing the deposit contract. This payment secures the property and signifies the buyer’s commitment based on Legal Aspects of Property Buying.

The deposit is typically paid by bank transfer to the seller’s account or held in escrow by the real estate agent or lawyer (Vista Spain Property) (Marbella Dream Living).

2. Receipt of the Deposit Contract:

Upon receiving the deposit, the seller provides the buyer with a signed copy of the deposit contract. This document serves as proof that the buyer has paid the deposit and that the property is reserved for them until the final sale is completed.

Subsequent Steps:

The deposit contract usually includes a timeline for completing the sale, often within a few months.

If the buyer fails to complete the purchase within the agreed timeframe, they may forfeit the deposit. Conversely, if the seller backs out, they may be required to return the deposit plus an additional penalty to the buyer.

Documents Handed to the Buyer

1. Signed Deposit Contract (Contrato de Arras):

This document outlines the terms and conditions of the sale, the deposit amount paid, and the obligations of both parties. It legally binds both parties to proceed with the sale under the agreed terms.

2. Proof of Deposit Payment:

A receipt or confirmation from the bank or escrow agent showing the deposit has been paid.

According to the Legal Aspects of Property Buying by signing the deposit contract and paying the deposit, the buyer secures their interest in the property and sets the stage for the final steps of the purchase process, including arranging financing, conducting due diligence, and preparing for the final sale agreement.

4. Notary Involvement

According to the Spanish Legal Aspects of Property Buying all property transactions in Spain must be certified by a notary. The notary ensures that all legal formalities are met and that the transaction is legally binding. The buyer must appear before the notary to sign the deed of sale, known as “escritura pública”.

Services Provided by Notaries

1. Legal Authentication:

The notary verifies the identities of the buyer and seller. Ensures that both parties understand the terms of the sale and that the transaction complies with Spanish law.

2. Drafting the Public Deed (Escritura Pública):

The notary prepares the official deed of sale, which includes all necessary details about the property and the transaction. This document is essential for the legal transfer of property ownership.

3. Ensuring Clear Title:

The notary checks the Land Registry to confirm that the property is free of encumbrances, liens, or unpaid debts. Ensures that the seller has the legal right to sell the property.

4. Managing Funds:

The notary oversees the transfer of funds to ensure that payment is made according to the terms agreed upon. This includes managing the payment of any taxes or fees due at the time of sale.

5. Registration:

After the sale, the notary registers the new ownership with the Property Registry (Registro de la Propiedad). This step is essential for legal recognition of the new owner’s rights.

6. Advisory Role:

Notaries provide impartial advice to ensure that both parties fully understand the legal and financial implications of the transaction. They can explain local regulations, taxes, and other legal considerations.

7. Costs of Notary Services

The costs associated with notary services when buying a property in Spain typically include the following components:

8. Notary Fees:

Notary fees are regulated and based on a sliding scale relative to the property’s sale price.

For a property worth around €1 million, notary fees usually range from 0.2% to 0.5% of the sale price. Therefore, for a €1 million property, the notary fees might be between €2,000 and €5,000.

9. Administrative Costs:

Additional costs may include fees for copies of the deed, document management, and administrative services.

10. VAT (IVA):

Notary fees are subject to Value Added Tax (IVA) at a rate of 21%.

11. Registration Fees:

Separate from notary fees, registration fees for entering the property into the Land Registry can range from 0.1% to 0.2% of the property price.

Summary

Legal Authentication: Ensuring identities and legality.
Public Deed Drafting: Preparing the official deed.
Clear Title: Verifying no encumbrances.
Fund Management: Overseeing payments.
Registration: Registering new ownership.
Advisory Role: Providing impartial advice.

Costs:

Notary Fees: 0.2% to 0.5% of the sale price.
Administrative Costs: Additional documentation fees.
VAT (IVA): 21% on notary fees.
Registration Fees: 0.1% to 0.2% of the property price.

5. Property Registration

After signing the purchase deed as per what is predicted in Legal Aspects of Property Buying in Marbella, the property must be registered in the Property Registry (Registro de la Propiedad). This formalizes the transfer of ownership and protects your legal rights to the property.

Key Points to Bear in Mind

1. Ensure Proper Documentation:

Ensure that all necessary documents are complete and correctly filled out. These include the public deed (escritura pública), proof of payment of taxes, and any other relevant legal documents.

The public deed should be signed by both the buyer and the seller in the presence of a notary.

2. Submit to the Property Registry:

The signed deed must be submitted to the local Property Registry (Registro de la Propiedad) where the property is located. This process is usually handled by the notary or your legal representative.

3. Pay Registration Fees:

There are fees associated with registering the property, typically ranging from 0.1% to 0.2% of the property’s sale price. These fees cover administrative costs for entering the property details into the official registry.

4. Confirm Registration:

After submission, confirm that the property has been successfully registered in your name.

Obtain a certified copy of the registration for your records. This document will show you as the legal owner of the property.

5. Verify Land and Building Records:

Ensure that the property details recorded in the Land Registry match those in the Catastro database, which contains the property’s physical and geographical details.

Discrepancies between these records should be resolved to avoid future legal issues.

Summary

Legal Authentication: Ensuring identities and legality.
Public Deed Drafting: Preparing the official deed.
Clear Title: Verifying no encumbrances.
Fund Management: Overseeing payments.
Registration: Registering new ownership.
Advisory Role: Providing impartial advice.

Costs:

Notary Fees: 0.2% to 0.5% of the sale price.
Administrative Costs: Additional documentation fees.
VAT (IVA): 21% on notary fees.
Registration Fees: 0.1% to 0.2% of the property price.

Legal Rights of the Buyer

1. Legal Ownership:

Registration establishes you as the legal owner of the property, providing indisputable proof of ownership as stated in Marbella’s Legal Aspects of Property Buying documents. This is essential for protecting your rights and interests in the property, especially in case of any disputes.

2. Protection Against Third-Party Claims:

Once registered, your ownership is protected against any third-party claims or prior undisclosed liens or encumbrances. This means that no one else can claim ownership or legal rights over the property once it is in your name.

3. Right to Sell or Mortgage the Property:

As the registered owner, you have the right to sell, lease, or mortgage the property.

These transactions also need to be registered to be legally binding and enforceable.

4. Access to Legal Recourse:

If any issues arise concerning the property, such as disputes over boundaries or illegal encumbrances, the registration provides a legal basis for seeking recourse in court.

5. Transparency and Public Record:

The Land Registry provides a public record of ownership, which adds transparency to property transactions. This transparency helps maintain an organized system of property rights and can aid in future transactions or legal matters.

Summary

Proper Documentation: Ensure all documents, including the public deed and tax payments, are in order.
Submission and Fees: Submit documents to the Property Registry and pay registration fees (0.1% to 0.2% of the property price).
Verification: Confirm registration and ensure consistency between Land Registry and Catastro records.

Rights:

Legal Ownership: Provides proof and legal protection of ownership.
Protection Against Claims: Guards against third-party claims.
Transactional Rights: Allows selling, leasing, or mortgaging the property.
Legal Recourse: Facilitates resolving disputes legally.
Transparency: Maintains a public record of ownership.
Ensuring proper registration is essential for protecting your investment and securing your legal rights as a property owner in Spain.

6. Check Catastro Information

The Catastro is a national database that contains detailed information about the property, including its exact location, size, and boundaries. Ensuring this information matches the Land Registry details is crucial to avoid future disputes as mentioned in Legal Aspects of Property Buying in Spain.

Organization Responsible

The Dirección General del Catastro, which falls under the Spanish Ministry of Finance, is the organization responsible for the Catastro. This agency maintains the cadastral database, which includes maps and descriptions of property boundaries, sizes, locations, and more.

Steps to Check Catastro Information

1. Access the Catastro Online:

The information can be accessed through the Catastro’s official website. This portal allows you to search for property details using various criteria such as address, cadastral reference number, or geographic coordinates.

2. Required Information:

Property Address: Enter the full address to locate the property in the database.

Cadastral Reference Number: This unique identifier can be found in previous property documents or can be obtained from the property seller.

3. Review Property Details:

Once accessed, review the property’s details, including its exact boundaries, size, and geographical features. Ensure these details match those recorded in the Land Registry (Registro de la Propiedad).

4. Verify with the Land Registry:

Discrepancies between the Catastro and the Land Registry should be resolved. This can be done by consulting both records and possibly seeking assistance from a legal expert or a surveyor to reconcile any differences.

5. Physical Inspection:

Conduct a physical inspection of the property to ensure that the cadastral data aligns with the actual property on the ground. This includes checking boundary markers and ensuring that the property size and layout are accurate.

Why Checking Catastro Information is Important?

Ensures Accurate Property Boundaries: Avoids disputes with neighbors over property lines.
Verifies Property Size and Features: Confirms that the property’s size and physical characteristics are correctly documented.
Assesses Property Value for Tax Purposes: The Catastro is used by tax authorities to determine property taxes, making accurate records essential for fair taxation.

Summary

Organization: Dirección General del Catastro under the Ministry of Finance.
Online Access: Via the official Catastro website.
Required Information: Property address and cadastral reference number.
Verification: Cross-check with the Land Registry and conduct a physical inspection.

7. Understanding Taxes

Several taxes are associated with buying property in Spain which should be observed based on Legal Aspects of Property Buying in this city:

Property Transfer Tax (ITP): For resale properties, this tax varies depending on the region.
Value Added Tax (VAT) and Stamp Duty: For new properties, VAT is charged at 10% of the property value plus 1.5% stamp duty.
Annual Property Tax (IBI): An ongoing tax based on the property’s cadastral value.

How to Pay Taxes:

Register for Taxes: Ensure you have a NIE (Número de Identificación de Extranjero), a tax identification number required for all financial transactions in Spain.
Hire a Tax Advisor: A local tax advisor can help navigate the tax system.
Payment Methods: Taxes can be paid online, via bank transfer, or directly at tax offices.
File Returns: Submit annual tax returns, ensuring all property-related income and gains are declared.

Paying taxes in Spain involves understanding the different types of taxes that may apply to property ownership and transactions. It is crucial to register with the local tax authorities, preferably with the assistance of a tax advisor, to ensure compliance with all tax obligations. Payments can be made through various channels, and timely filing of returns is necessary to avoid penalties.

8. Additional Fees

Additional costs include notary fees, registration fees, and legal fees. Notary fees are typically shared between the buyer and the seller, with the buyer paying around 20%. Legal fees for hiring a solicitor usually amount to about 1% of the property price.

9. Community Fees

If the property is part of a community, such as an apartment complex, be prepared to pay the community fees mentioned in the Legal Aspects of Property Buying in Marbella. These cover the maintenance of common areas like pools and gardens.

Types of Community Fees:

Maintenance Fees: For the upkeep of communal areas like gardens, pools, and lifts.
Service Fees: For services like security, cleaning, and waste management.
Special Assessments: For major repairs or improvements.
Administrative Fees: Costs associated with property management and administration.

10. Urban Planning Compliance

Urban planning compliance in Marbella is primarily overseen by the local town hall (Ayuntamiento), which is responsible for ensuring that all construction and property developments adhere to established regulations. Architects and engineers play a crucial role in this process by ensuring that building projects meet all necessary standards. Additionally, third-party inspection agencies are often engaged to verify that the properties comply with building regulations and safety codes.

In the event of non-compliance, the first step is to conduct a thorough inspection to identify the specific issues. Once these issues are identified, it is essential to notify the local town hall to officially report the non-compliance. The next step involves hiring qualified professionals, such as architects or engineers, to rectify the identified issues and ensure the property meets all required standards. After the necessary corrections have been made, a re-inspection should be requested to confirm that the property is now in full compliance with all urban planning regulations. This process helps ensure that properties are safe, legally compliant, and fit for habitation.

Summary

Responsible Organizations:

Local Town Hall (Ayuntamiento): Main body responsible for urban planning and compliance.
Architects and Engineers: Professionals who ensure building regulations are met.
Inspection Agencies: Third-party agencies that verify compliance with building standards.

Steps in Case of Non-Compliance:

Identify the Issue: Conduct a thorough inspection to pinpoint compliance issues.
Notify Authorities: Report non-compliance to the local town hall.
Rectify Issues: Engage qualified professionals to address and fix the compliance problems.
Re-inspection: Request a re-inspection to confirm compliance.

Miscellaneous

Is it possible to buy a luxury property in Marbella without a solicitor? Technically, yes, but this is highly inadvisable due to several significant risks. Without professional legal assistance, buyers may miss crucial checks that ensure the property is free of legal encumbrances, debts, or disputes. This oversight can lead to substantial financial and legal troubles. Moreover, the absence of due diligence mentioned among Legal Aspects of Property Buying increases the likelihood of falling victim to property fraud, even in a market with strict regulations like Marbella’s.

What are the specific risks involved? Firstly, structural defects or non-compliance with building codes may go unnoticed until after the purchase, resulting in unexpected costs and legal challenges. Additionally, despite Marbella’s stringent property laws, fraudulent activities can still occur. This emphasizes the importance of thorough verification processes.

Which properties are most likely to face legal problems? Typically, unregistered properties, illegally constructed without proper permits, or involved in ownership disputes are at higher risk. To mitigate these risks, it is crucial to perform comprehensive due diligence and engage qualified professionals throughout the buying process. This approach ensures that the property is legally sound and that the investment is secure, thereby protecting the buyer from potential fraud and other unlawful actions.

Summary

Buying Luxury Property Without a Solicitor:

While it is possible to buy a luxury property without a solicitor, it is highly discouraged due to the following risks:

Legal Issues: Missing crucial legal checks could result in acquiring a property with legal encumbrances or debts.
Fraud: Increased risk of falling victim to property fraud.
Unforeseen Problems: Lack of due diligence can lead to discovering structural or compliance issues after purchase.

Risks :

Fraud and Unlawful Actions: Despite strict regulations, fraudulent activities can occur. Always ensure due diligence is performed.
Properties with Legal Problems: Avoid properties with unclear ownership, outstanding debts, or ongoing legal disputes.

Properties Facing Legal Problems:

Unregistered Properties: Those not registered in the Property Registry.
Illegal Constructions: Buildings constructed without proper permits.
Disputed Properties: Properties with ongoing legal battles over ownership.

Conclusion

In this post, we aim to provide a comprehensive guide on the legal aspects of purchasing luxury properties in Marbella. We have thoroughly examined all the necessary steps you need to be aware of when buying a property for investment or personal residence. Although most individuals will proceed with property purchases in Marbella through their attorneys, being informed about the legal aspects involved in entering the real estate market in this Spanish city is beneficial.

To this end, we have detailed the legal references, various stages, and associated costs that a buyer should be aware of. MH Casa, a company specializing in the design, construction, interior design, and sale of luxury properties in Marbella, invites you to explore our luxury projects in different areas of Marbella. Additionally, we are here to provide consultation on purchasing luxury properties and investing in Marbella.

Take a look at our projects: