One of the fundamental and important parts of Real Estate Law in Mallorca or Catalonia is the purchase and sale of houses, apartments or other real estate. In Spain there are some peculiarities you should pay close attention to, and therefore a good and competent advice when buying a property in Mallorca or Barcelona is essential.
The usual steps regarding a real estate purchase in Mallorca or Barcelona are the conclusion of the Option agreement, the signing of the title deed (Escritura), the payment of all applicable taxes and the registration in the land registry.
Even before signing the Option agreement, it is advisable to consult a lawyer. In most Option agreements, which are used in Mallorca or Catalonia, the buyer’s rights are often not adequately protected. For example, in very few Option agreements there are clauses for the cancellation of the Option agreement by the buyer. This may mean that one loses his Option price or is forced to purchase a property, which might not have been built in accordance with all Spanish regulations and legislation.
The signature of the notary deed (Escritura) replaces the option contract. The notary deed is required so that the necessary registration in the land register can be carried out. The notary deed, attachments included, can easily be over 20 pages long and is written in Spanish, and in many cases there is no decent translation. Porta & Associates will assist you in preparing the notary appointment when buying a property in Mallorca or Barcelona and Porta & Associates can prepare translations in German, Dutch, French or English before signing the deed, so you know what you are signing. Porta & Associates is also working together with German, Dutch and English speaking notaries who read the title deed in your native language.
After signing the title notary deed, the statutory taxes to the Spanish tax authorities have to be paid within a certain time limit.. Typical taxes to be paid by the buyer are the real estate transfer tax (Impuesto sobre Transmisiones Patrimoniales, ITP), Value Added Tax (Impuesto sobre el Valor Añadido, IVA) and / or the stamp duty (Impuesto sobre Actos Jurídicos Documentados, AJD). The notary fees and costs of the Land Registry are also usually paid by the buyer. Porta & Associates can assist you with all of these required tax payments and declarations.
On the sellers side, the tax on earnings (Impuestos sobre el beneficio) and the increased value added Property tax (Plusvalía) are payable. Please note that also a withholding tax of the amount of 3% of the purchase price is to be paid directly to the tax office by the buyer if the seller is a non-resident. Porta & Associates will gladly advise you and tell you which taxes on the house or apartment purchase or sale in Mallorca or Barcelona or elsewhere in Spain you have to pay, and Porta & Associates will help you to prepare and submit your tax returns.
After payment of all taxes, the registration with the Land Registry may take place. Only when the registration in the Land Registry has taken place, your rights are also protected against third parties. Porta & Associates is happy to organize those administrative proceedings for you, so you do not waste your valuable time with the Spanish bureaucracy.
If you buy the property with or from a company, there are additional legal and tax requirements to consider, in particular the tax settlement of the real estate business. An individual consultation is essential here.
Are you planning to purchase a property in Mallorca or Catalonia as part of a foreclosure? Then Porta & Associates recommends our article about forced sales in Spain.
Dr. Dominic John Patrick Porta, LL.M.
German & Spanish solicitor (Rechtsanwalt & Abogado)