The legal issues when buying a property on Mallorca

Find out what legal issues you'll need to consider

There are many important consideration when buying a property on Mallorca, our advice is to get a good lawyer who can help you through the process. Here is a brief overview of the process.

As a first-time property buyer on Mallorca, you may be surprised by how different the legal process is in Spain compared to your home country.  Once you have decided that you want to go ahead with a property purchase on Mallorca, it is a good idea to select a reputable lawyer who can take you through the steps involved before making a formal offer.

1. Formal offer

An ‘option contract’ is the first step and usually requires you to pay 10% of the full purchase price in advance and commits both buyer and vendor to the sale. If the buyer does not go through with the sale the deposit may be non-refundable. If the vendor pulls out they usually have to refund the deposit plus another 10% of the purchase price. Your lawyer will usually work hard to ensure the sale goes through and provide translations of all contracts if required. This rule exists to prevent spurious offers and gazumping.

2. Paperwork

An NIE tax number must be held by an overseas purchaser to buy a house, car or many other things. You will also need to provide certified copies of identification – usually your passport.

3. Finance

If you are not a cash buyer it is a good idea to investigate your mortgage options as early as possible. You will also probably need a Spanish bank account to run your property. Your lawyer can advise you with regard to reputable banks if you are not sure. They will also liaise directly with the bank on your behalf to monitor the progress of your mortgage and help you with the required paperwork.

4. Searches

It is very important to ensure that the property that you are buying is officially owned by the vendor, has no debts against it, and is fully legalised. Your lawyer will check this out to help ensure that you are not buying a property with problems.

5. Taxes

Taxation can be quite complicated and the rules change regularly. While you should allow approximately 10% in addition to the purchase price for all costs and taxes your lawyer will advise you specifically. It is worth noting that ‘bargain properties’ may be subject to additional retrospective taxes if the government deems that the purchase price is too low. Taxes differ slightly for resale and new properties.

6. Completion

Spanish law requires that all parties are present with ‘the official notary’ for the final exchange of contracts, including any banks involved with mortgages held by the buyer or seller. All monies need to be paid at the same time and all paperwork must be correct or the sale will not go through. If you are unsure if you can be present for the final date you may opt to give your lawyer power of attorney to act on your behalf. You should also note that buying a new property ‘off plan’ is slightly different and often requires payments in stages.

After the completion there is also quite a bit of paperwork to complete to transfer the utilities and payments for community charges. Sometimes this will be done by your estate agent and sometimes by your lawyer or a ‘gestoria’. Unless you are very familiar with Spain and speak Spanish you will need this help!

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