Payment of a Property
...what are the procedures of paying a property?
If finally an agreement is reached with the seller, normally a deposit is paid and a contract signed in which a date for the formal transaction and public registry is fixed. (Sometimes the stipulated date takes into consideration the date the seller buys another property and moves). During this period, contact is made with the chosen bank so that it can send a person to value the property. The purpose of this valuation is to determine the maximum amount loaned for the mortgage. This is normally around 80% of the valuation.
Modes of payment
...which is the most suitable mode of payment?
If we are going to apply for a mortgage to buy a property, normally the whole price is paid at the signing at the notary, unless a previous reservation payment has been made, in which case this amount is deducted from the quantity to be paid.
If there is a previous debt attached to the property, the seller will reimburse the difference between the price and the pending capital of payment, since the amount of the pending debt, will be retained to pay to the Bank and thus to cancel the previous mortgage.
Pay cash down
...is it a good idea to pay cash down for a property?
This should only be considered if the property is totally free of debt in the Registry, since if there is some debt (mortgages, embargo...), then it should be discounted from the final price. It is only advised if the official documents are signed before a notary, as the buyer is subject to immediate protection via the communication on the part of the notary of the transaction to the corresponding authorities.
Buying a new property
...what amounts must I pay before formalizing the deed of sale?
When a partial payment is made against the price of a property, "bought on plan", since the building has not yet been constructed, (payment is normally about 20-30% of the price made by means of periodic payments during the time the construction of the property lasts), the promoter is obligated by law to provide an insurance that guarantees the refund of the payments made plus the legal interests in the case of breach of contract.
Private contract is signed
...is it necessary to pay the total or is it possible to postpone?
If a private contract is signed then the full price is not usually paid, only a percentage (10 %), until the moment of the public registration. So the seller is able to guarantee the remaining amount by means of a clause stating that if the buyer does not pay the remaining amount then the seller can reclaim the property.
...is it worth taking out the same mortgage as the seller?
If a loan has been taken out by the seller to construct the property then the debt can change hands and the buyer then becomes responsible for the debt. The bank or building society changes the name of the debtor by means of the buyer taking out a mortgage. The seller generally obtains favourable conditions and avoids having to pay the costs of cancelling the loan and the buyer avoids having to pay the costs of opening a mortgage account. For this it is necessary for the bank to accept the buyer as the new debtor.
...what guarantees does this offer?
The public registry of the transaction is the act that turns the buyer into proprietor and that serves as a title deed in the Registry of the Property. The reason for this is to have a written record of the deed holder and whatever costs or debts the property may incur. This is recommendable because it gives certain legal guarantees, and obligatory when applying for a mortgage.
...who oversees the documentation of the inscription of the property?
To finalise the purchase, the Escritura de Compra Venta (Deeds) are signed in front of a Public Notary. If the seller is not a Spanish Resident, then the buyer will withhold 5% of the purchase price, payable to the Spanish Tax Authorities within one month of the sale. This 5% is retained towards the Capital Gains Tax liability of the seller (If the seller's liability is more than this, then he will be liable for the difference, if it is less, then he can claim a refund). Capital Gains Tax now stands at 18% for both non-resident and resident sellers.