Once you have chosen your property, it is time to start the formal process of paying for the property and transfering its title to your ownership. But firstly you need to fomally sign an agreement to purchase with the seller. This normally carried out using a variety type of contracts that operate in the purchase of a property in Spain. They are:

Reservation Contract (Documento dereserve)
With this contract you pay a deposit to reserve a property for a specified period of time – usually 30 days. If you back out at the end of this period you may lose your deposit. If you proceed with the purchase, the vendor is contractually obliged to sell you the property at the agreed price.

The deposit is usually between 1% and 2% and counts towards the final price of the property. Developers often use this type of contract when selling off-plan. Even though the deposit is relatively small (compared to the overall property price), you should not sign this contract without checking with your lawyer.

Deposit Agreement (Contrato de Arras)
This contract requires that you pay a deposit – normally 10% of the agreed price, when the contract is signed. If you fail to go through with the purchase you will lose all of your deposit to the vendor. But if the vendor backs out before signing the deeds, you receive back double the deposit. This contract makes it expensive for either side to back out, but at the same time it does leave the door ajar should either side wish to do so.

This is the contract you are most likely to be asked to sign if you buy a resale property from a private individual.

Option To Buy Agreement (Contrato de Opción de Compra)
This type of agreement gives the buyer the exclusive right to buy a property within an agreed time frame. The option does not have to be exercised, but it is usually agreed that if the option is not exercised, the buyer loses the money paid for the option.

Private Sales Contract (Contrato Privado de Compraventa)
The private sales contract specifies in detail (price, dates, contents, etc.) the terms of which the transaction will take place. Unlike a deposit contract, there is no backing out of private contract unless both sides agree to it.

Completion of Sale
Completion of the sale only takes place when you sign the public deeds in front of a notary public (notario), and pay the vendor in full. This is when the property becomes officially yours, though you still have to register your title in Spain’s property register (registro de la propiedad).

Signing the deeds before the notary, know in Spanish as the Escritura Publica, has to be done by everyone involved in the sale – buyers and vendors (or their legal representatives). This is normally when final payments are made to the vendor.

As a buyer at the Escritura you need to take along a valid ID document, such as your passport, and payment - such as a banker’s draft - if there are any payments still outstanding. Depending upon the notary and the region, you may also need a foreigner’s identity number (NIE number), which is obtained from the Spanish police. An NIE number can take several weeks to obtain, so be sure to look into this issue in good time.

The notary will verify the identity of everyone involved in the transaction, and read the deeds out loud in Spanish, so that everyone present understands the terms of the sale. Your lawyer should accompany you to the signing to make sure that there are no last minute changes without your agreement. Once the conveyance has been signed it should be sent to the Registro de Propriedad to be registered. Once this has been done (and in some areas it may take up to a year) your title becomes final.

Within 30 days of the Escritura you have to pay the taxes related to the purchase, after which you are strongly advised to inscribe your title deeds in the land registry. Your lawyer should help you carry out these formalities.

Please bear in mind that the escritura is the only document which will guarantee your title. Any other kind of deed or contract you may be persuaded to sign will have little effect. Any legal redress may be a very, very long time coming.

The legal process described applies as much to the city as to the country and should be followed through carefully. The Spanish legal system is largely inoperative due to delays of many years and the Tribunal Supreme (Supreme Court) has a backlog of thirty five thousand cases. Local courts may take five or ten years to get round to an average case. If you do not have a local to intervene, you might seriously have to take your life expectancy into account when contemplating legal action.

On the other hand, many thousands of foreigners have bought properties in Spain, followed all the legal processes and have had no problems whatsoever.

Insurance
From the signing of the final contract the buyer is responsible for the insurance of all the buildings on the property. It is a criminal offence in Spain not to have your property insured.

Fees and Charges
The buyer pays all legal fees, costs and registration taxes which average 10% of the purchase price.

Things to watch for:
Before getting involved deeply in the buying a property have in your mind that the property Register should be inspected twice. You should check it at the start of the purchase and again at the end just before you register your ownership of the property and complete the purchase. In checking the register you will be looking for one or two nasty possibilities:

* Registration. If you are buying a new property the builder will have to register it at the Ayuntamiento. This should be checked. Alternatively the registration of an older property should be checked against the Registro de Propriedad (property registry). If your intended property has no deeds, one of your first expenses may be to have the deeds drawn up which can be very costly.
* Tax arrears. If the owner has not paid certain taxes, the law allows a charge to be placed on the property. This will be recorded on the title. If you purchase such a property you will become liable for the arrears. The same applies when buying a second-hand car - you would be liable for any outstanding fines, or annual car tax payments which may be outstanding. This system is enforced for any property sale from a motor cycle to a luxury mansion.
* It is perfectly legal in Spain for a builder or property owner to take out a mortgage (hipoteca) on the property you are interested in while you are negotiating its purchase or even after you have done so. If this occurs, you, again, will find yourself liable to repay the loan, as has happened to many unwary buyers.