The Process of Buying a property in Mallorca or Ibiza

Buying or selling a property abroad can seem overly complex when you’re not sure about the paperwork. Preliminary contracts in Mallorca, Ibiza, and Menorca are an important part of the buying and selling process. So, it’s important to take time to understand the terms.

Please note, this article is not intended as legal advice. A reputable, local lawyer can provide guidance with buying or selling your property.

Step 1: Hire a Spanish lawyer

Before you start the buying process, it’s advisable to find a good local lawyer. They’ll help you successfully navigate the ins and outs of the sale, including preliminary contracts and their terms.

With good research and the right lawyer, you’ll be stepping through your new front door in no time.

Step 2: Set up a preliminary contract

Preliminary contracts act like an agreement between the buyer and seller. The terms and conditions are laid out for both parties; the buyer agrees to buy and the seller agrees to sell. This gives both parties time to get everything in order before signing the deeds.

These preliminary contracts are signed towards the beginning of the buying process. At this stage, a deposit is usually paid and held. This is often 10% of the purchase price and in many cases isn’t refundable.

Before signing anything, make sure your English-speaking solicitor has seen the document and explained it to you in full. You may need to translate any documents you don’t understand.

Types of preliminary contracts

One typical agreement is the contrato de arras. These contracts lay out the terms for what happens if the buyer or seller pulls out. If the buyer backs out, they lose their deposit. If the seller backs out, they pay double the deposit back to the buyer.

These contracts are designed to provide security for both parties; neither wants to be responsible for the sale falling through, losing a large amount of money in the process.

However, there are other types of contracts and you may find yourself signing something a little different. For example, you might also come across reservation contracts (documento de reserve), where the buyer pays a small deposit which reserves the property for a period of time (often 30 days). The deposit is lost if the buyer backs out.

Another type of contract you might see is the option contract. We recently published an article about these contracts, detailing how they work.

It’s important to know that, in some contracts, there is no mechanism for backing out. Make sure you fully understand everything before you sign, including the consequences of a sale that falls through.

Step 3 : Don’t forget the taxes whenbuying and selling a property in Spain

If you’re a UK national, the Foreign and Commonwealth Office has comprehensive advice about buying and selling property in Spain. They cover aspects including legal advice, mortgages, tax, rentals, and where to find extra guidance.

Property in Palma de Mallorca

Do I really need a local lawyer in Mallorca?

An independent local property lawyer is there to protect your interests. One part of the lawyer’s job is to do due diligence checks. This includes confirming ownership via the land registry and looking at debts on the property and other actions like:

• Property register checks – to ensure the property description and legal owner match and to find out if there are any charges or encumbrances.
• Planning checks – to ensure the property was built with the appropriate building licence and planning permissions. Or in the case of an off-plan property, to make sure the developer has all paperwork in order.
• NIE Number – This is the Spanish tax number which will allow you to pay taxes in Spain. This document is obtained at the police station. The solicitors members of PropertyLawyers© will assist you with your NIE application in due course
• Private Contracts – A private purchase contract is a contract between the buyer and the vendor. It will be prepared by your lawyer and will contain all the agreed points
• Tax checks – to ensure the current owners are up-to-date on payment of all taxes related to the property in Mallorca.
• Community checks – to ensure the property is up-to-date with payments to the community of owners.

Your Mallorca lawyer will also help you navigate the local system. The conveyancing system works differently to countries like the UK, paperwork can be different, and there are specific fees, permits, and taxes that need to be considered.

What’s more, if you can’t be present to sign all the relevant paperwork, you can use power-of-attorney to authorise your lawyer to do these things on your behalf.

When choosing a lawyer, it’s important to make sure that they speak your language, as well as Spanish/the local language. Language barriers create difficulties at the best of times. But when it comes to signing contracts and negotiating, it’s vital to have an expert who can help you communicate.

Mallorca’s best lawyers are here to help

At Property Lawyers, we’ve helped over 1000 clients find a local lawyer in Spain who’s ready to protect their interests when buying or selling a property. To get started, browse our list of lawyers in Mallorca, Menorca or Ibiza.