Buying property in Lanzarote
1) Once you have chosen a property to purchase we prepare the private contract, either a “Purchase” or a “Purchase Option” contract. This will contain all of the agreed “terms and conditions of purchase”, including a time frame for completion, allocation of costs, and penalty clauses in respect of each party in the event of default. The right to purchase the property will be secured by payment of a deposit equivalent to 10% of the purchase price within 7-10 days of signing the contract, from which a small non-refundable portion is paid on signing the contract.
2) Contract duration is generally 2-4 months but any time-frame may be mutually agreed between the parties and stipulated in the contract. Before the private contract expires we will arrange for both parties and/or their legal representatives to attend before the Notary for signing of the legal documents and title deeds. Prior to this, funds must be made readily available for withdrawal from your non-resident account; sufficient to cover the full purchase price plus additional closing costs of approximately 8% (10% where a mortgage is involved). Your solicitor will give you a more accurate figure and breakdown of costs.
At that meeting the balance of the full purchase price is paid to the Vendor by way of certified cheque, bank draft or bank transfer, we will guide you through this process.
Where the vendor is a Spanish company, Spanish citizen or resident, and the purchaser is a non-resident, a certificate of receipt of foreign exchange import/non-resident funds is required, and this is obtained from the paying bank following the completion of the transfer of funds.
3) The closing costs (excluding mortgage costs) are approximately as follows:
6 ½ % purchase tax
½ % land registry - registration costs
½ % notary charges
½ % incidentals such as N.I.E.s, interpreter each mentioned in the paragraphs below (SOLICITORS FEES ARE NOT INCLUDED HERE, some apply a percentage fee although more typically solicitors apply a flat rate which depending on the solicitor you can expect somewhere between €1,600 and €2,200).
4) In the case of a mortgage being raised, the bank will advise you of the total funds required for completion. Those funds would include loan arrangement fee, mortgage registration etc., thus bringing the costs closer to 10% of total purchase price, this is an approximate figure only as financial institutions apply different fees. Should you require a mortgage we can help you locate a suitable bank.
5) We at Location will carry out the initial basic property search at the Land registry, Town Hall, and where pertinent the Community Administration office, to verify that the property is debt free: your lawyer will complete a more detailed search.
6) If you are not resident in Spain, we will assist you in opening the required "non-nesident" account at a bank of your choice, and application for mortgage if required.
7) Non-residents must have a foreigner’s identification number (N.I.E.), and should you decide to purchase a property we can put you in contact with the appropriate gestoria who will process this requirement on your behalf. The fee per N.I.E. is approximately €85 including i.g.i.c. (i.e. tax applicable in the Canary Islands: currently 7%).
8) Purchasers in Lanzarote generally do not request a technical survey of property, but if wanted, a certified survey can be arranged by a registered quantity surveyor (aparejador). It is worth noting that valuation carried out on Bank instruction for the purposes of a mortgage, is not an engineer’s report!
9) The title deeds and legal documents will be in Spanish and so it is obligatory for non-Spanish speakers to use the services of a sworn translator at signing of the public deeds (escritura pública) in front of the notary – either we or your solicitor will arrange for this. The fee for a sworn interpreter should be approximately €85, or where a mortgage deed is included about €130. These prices may vary depend on the length and complexity of documents involved.
10) At the time of completion of the purchase/sale before the public notary, and in order to ensure no debts can be attached to the property, the payment will be made up of various cheques/retentions all adding to the total purchase price and your solicitor/agent will calculate these. These cheques/retentions may include the following items: when the vendor is not a Fiscal (Tax) Resident 3% of the purchase price; the amount that will come due in respect of the vendors PLUS VALÍA; any debts such as local rates (I.B.I.U.); and finally the cancellation of any mortgage and registration of that cancellation in the land registry. It is important to note that the public deeds will reflect the total purchase price and detail the various cheques/retentions that have made up that price specifying the purpose and who is the responsible solicitor/agent/representative.
11) Purchasing your property in Spain comes with ongoing tax responsibilities for which purpose you will need a local tax representative to prepare and submit your future annual tax declaration. For accurate up-to-date information you should either contact a reputable Gestoria, OR follow this link to the web page of the tax authority http://www.agenciatributaria.es/AEAT.internet/Inicio_en_GB/English/Non_residents.
12) We at Location Property Consultants provide a comprehensive service to the purchaser; our fee is usually agreed to and paid for by the vendor. When purchasing a property the services of an independent solicitor should be engaged to process the conveyance on the purchasers behalf; this would include all the legally required paperwork involved in registering your property at the Land Registry Office.
13) Finally, be sure to arrange insurance on your new property to take effect on the day of signing the deeds at the notary office.
You can find contact details for reputable professionals including gestorias, solicitors, insurance companies, banks,
on our web site under the ‘CONTACTS’ tab
LAST UPDATED 18/10/2013
This is an informative guide to purchasing property in Lanzarote; it not a legal document. In the event that you decide to purchase property abroad we recommend that you retain the services of a solicitor who is familiar with conveyance laws in Lanzarote (please refer to paragraph 11 above).