Buying property in Spain can be an exciting experience, whether you’re searching for a holiday home, investment property, retirement residence, or permanent relocation opportunity on the Costa del Sol.
However, understanding the legal process is essential to ensure a smooth and secure transaction.
In the latest episode of our Deep Dive Series, Keith from Target Property Spain sat down with Javier Fernandez of Mael Abogados to explain exactly what happens behind the scenes when purchasing property in Spain.
Why You Need a Property Lawyer When Buying in Spain
Unlike some countries, property transactions in Spain involve a series of legal checks, contracts, registrations, and compliance requirements that must be completed before ownership can legally transfer.
An independent lawyer works exclusively in the buyer’s interests and helps ensure:
- The seller legally owns the property
- There are no outstanding debts or charges attached to the property
- Planning permissions and licences are in place
- Contracts protect the buyer’s interests
- Funds are transferred securely
- The purchase is correctly registered after completion
Step 1: Obtain an NIE Number
Before purchasing property in Spain, foreign buyers will need an NIE (Número de Identificación de Extranjero).
This identification number is required for:
- Purchasing property
- Paying taxes
- Opening a Spanish bank account
- Connecting utilities
- Setting up mortgages
Without an NIE, the purchase process cannot proceed.
Step 2: Choosing the Right Ownership Structure
One of the earliest decisions buyers should make is how the property will be owned.
Common ownership structures include:
- Individual ownership
- Joint ownership
- Company ownership
The right option will depend on your personal circumstances, future plans, tax considerations, and inheritance objectives.
Seeking legal and tax advice before proceeding can help avoid complications later.
Step 3: Reservation Agreement and Deposit
Once a buyer finds the right property and agrees a purchase price, the next step is typically signing a reservation agreement.
A reservation deposit removes the property from the market while legal checks begin.
At this stage, your lawyer starts investigating the property and reviewing all relevant documentation.
Step 4: Due Diligence and Legal Checks
This is arguably the most important stage of the transaction.
Your lawyer will typically verify:
Property Ownership
Confirming that the seller is the legal owner and has the authority to sell.
Outstanding Debts
Checking for:
- Mortgages
- Embargoes
- Community debts
- Unpaid taxes
Planning and Legal Compliance
Ensuring the property:
- Has the correct planning permissions
- Has been legally constructed
- Meets current regulations
These checks help protect buyers from expensive surprises after completion.
Step 5: The Arras Contract
The Contrato de Arras is a private purchase contract signed before completion.
This agreement outlines:
- Purchase price
- Completion date
- Conditions of sale
- Deposit amount
At this point, the buyer usually pays a larger deposit, typically around 10% of the purchase price.
Step 6: Understanding Buying Costs in Spain
In addition to the property purchase price, buyers should budget for:
- Property Transfer Tax (ITP)
- VAT on new-build properties
- Stamp Duty
- Legal fees
- Notary fees
- Land Registry fees
Understanding these costs from the outset allows buyers to plan their budget accurately and avoid unexpected expenses.
Step 7: Buying with a Spanish Mortgage
If financing is required, additional steps will be involved.
A lawyer can assist by:
- Reviewing mortgage documentation
- Explaining lender conditions
- Ensuring compliance with legal requirements
- Coordinating with banks before completion
Mortgage-related costs and requirements may differ from those in a buyer’s home country.
Step 8: Power of Attorney Explained
Many overseas buyers choose to grant a Power of Attorney (POA).
This allows their lawyer to:
- Sign documents on their behalf
- Complete transactions remotely
- Deal with utility transfers
- Handle post-completion administration
Power of Attorney can significantly simplify the buying process for international purchasers.
Step 9: Completion Day
Completion takes place before a Spanish Notary.
On completion day:
- Final documents are signed
- Funds are transferred
- Ownership changes hands
- Keys are released to the buyer
Many buyers are surprised to learn that Spain traditionally uses a banker’s draft (cheque bancario) for completion funds rather than a standard bank transfer.
This provides certainty and security during the transaction.
Step 10: What Happens After Completion?
The process doesn’t end when you receive the keys.
Your lawyer will continue to assist with:
- Registering ownership
- Paying applicable taxes
- Utility transfers
- Community registrations
- Administrative formalities
This ensures the property is correctly recorded in your name.
Step 11: Rental Licences and Investment Considerations
Buyers intending to generate rental income should understand the legal obligations associated with holiday rentals.
Depending on the property and location, licences and compliance requirements may apply.
This is particularly important for buyers investing on the Costa del Sol.
Step 12: Spanish Wills and Inheritance Planning
One topic often overlooked by foreign buyers is estate planning.
A Spanish will can:
- Simplify inheritance procedures
- Reduce delays for beneficiaries
- Clarify ownership succession
Property owners should seek professional advice to ensure their assets are structured appropriately.
Common Mistakes Buyers Make
According to Javier Fernandez, some of the most common mistakes include:
- Not using an independent lawyer
- Failing to budget correctly for purchase costs
- Not understanding tax obligations
- Ignoring inheritance planning
- Signing documents without proper legal review
Proper professional advice can help buyers avoid these pitfalls.
Watch the Full Interview
For a detailed explanation of the legal buying process in Spain, watch our full interview with Javier Fernandez from Mael Abogados.
Need Help Buying Property on the Costa del Sol?
At Target Property Spain, we help buyers find the right property and connect them with trusted legal, financial, and relocation professionals throughout the purchase process.