The purchase agreement can be preceded by a preliminary agreement when both parties are interested but for whatever reason they do not want to make the sale/purchase at that time.

These preliminary agreements are usually of two types:

.- What is known as “arras o señal” which is basically a purchase agreement in which each party allows the other to breach the contract, either by the purchaser forfeiting the deposit or the seller repaying doubled the deposit. This is a real purchase contract and sometimes causes problems when breaching it.

.-An option, this is not a purchase agreement, but the right given to a future purchaser to conclude it at a fixed price at a given time. This is safer for the seller as there is not a purchasing agreement and therefore the seller is free of the obligation once the time of the option has passed.

Usually the purchase agreement takes the form of a notary deed from the very beginning. However, it is not uncommon that the purchase is agreed with the intention of formalising the deal later at the notary´s office, and the contract is signed as a private document between the two parties, both in cases where there is a notary deed, and in cases where no notary deed is ultimately made.

Even though the public or notary deed is not mandatory, it is always advisable to have one made in order to:

– Transfer the ownership to you, if you do not already have it.
– Inscribe the ownership in the Land Registry.

The inscription in the Land Registry is not mandatory either (although sometimes it is, as in the case when a mortgage is issued) but it is extremely advisable to do it anyway because, if you buy from an owner whose property is already inscribed and then you add your own inscription, the acquisition will be protected against any other claimant.

The Land Registry not only informs you about the owner but of all liens and encumbrances that exist on the property.

As the public notary is in contact with the Land Registry, they will let you know the exact status of the property you are buying and it will be safeguarded for you until the inscription is made in the Land Registry.

In the books of the Land Registry, each sheet represents a property, clearly showing all the property’s history with its chain of owners. In this way, the current seller can be seen to have acquired it from the previous owner and so on.

As the inscription is not mandatory, it is not uncommon to find, at least in rural areas, that a property is not inscribed in the Land Registry

In these cases there is much more work to do and care to take.

If the seller gives their own title deed, describing the property exactly as it is in the cadastral cartography ( and consequently, detailing it exactly as it is going to be sold and inscribed) the buyer will be able to inscribe their own acquisition, entering it in the Land Registry for the first time, exactly as it is in the cadastral cartography. (Therefore, the plot must already be recorded in the Cadastro in the name of the seller or of the buyer).

If the seller doesn´t have their own public deed, but is listed as the owner in the Cadastral files, you will also be able to inscribe the property in the Land Registry as your own. For that you will need the notary to accept the declarations of two witnesses who state that the seller does have legal title to the property.

You must be aware that in the last case, the costs and taxes double , so this should be taken into account when making the purchase agreement.

You must also be aware that in both the previous cases, you will not be protected by the Land Registry as outlined above.

Regarding any future owners ( the buyer from you for example) the protection will start two years after the date of your inscription.

It is also possible that the estate is inscribed, but a building constructed on it is not. In such a case you should ask the seller to inscribe the building, and the Land Registry will then check if all the planning consent and insurance was in order, or whether enough time has passed to protect you against any claims for them not having been in place.

Possible Pitfalls

Buying as a Couple

Without a special agreement about under which law the contract is to be ruled, the contract to sell a property situated in Spain will be ruled by Spanish law.

The formalities of the contract will be ruled by Spanish law, and the requirements to inscribe in the land Registry exclusively by the Spanish Law in any case, so the contract will need the public deed. If it is not authorised by a Spanish notary, proof must be provided under the law of the foreign notary or authority who made the deed, that they have the same competences and obligations related to the deed, the parties and the contract as a Spanish notary, which can be difficult to obtain.
The best advice for foreigners buying and selling property in Spain is to do it using a Spanish notary, with powers of attorney if the owner/buyer is not in Spain.

Remember that if you are married you will need the consent of your partner or else you will have to prove under which country’s law your marital status is ruled and that under that law you can sell without your partner’s consent.

If you are married and the property figures in the Land Registry as your exclusive property (because you have inherited it, or bought it before your marriage, or because your partner has declared at the time of purchase that the money to buy was exclusively yours,) you will either need to declare that it is not your main residence or to have the consent of your partner in order to sell.

A peculiarity of Spanish law:

Even though at the time of purchase you have agreed in the contract that a failure to pay by the agreed date will terminate the contract, the buyer can still pay after that date until such time that the seller informs the purchaser that the sale agreement is now terminated, either judicially or by a notary act.

If the purchase has been inscribed in the Land Registry and by this stage the buyer has the ownership, you will need them to go to the public notary in order to get the property back. So that the buyer can’t transfer the property unencumbered to a third party you can inscribe your right at the Land Registry which has the same effect as a mortgage and the same cost. To avoid this situation, it is common to agree the contract in a private document until the payment is complete, and so retain the property for the seller. In this contract, you should take into account what is written above in “preliminary agreement”