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Spanish real estate terms explained in plain English

Buying a property in Spain is easy. But remember, your first step will be to find a reliable independent lawyer who is specialized in Spanish land and property law. Unless you speak fluent Spanish, you should find a lawyer speaking your mother tongue in Spain.

More on that here: What is the legal due diligence for your Spanish property?

Looking for a property lawyer in Spain? Check all our partners here!

Disclaimer: This glossary’s goal is to explain the meanings of words and it is not to give advice. Any issue should be reviewed by a tax or legal adviser.

Cedula de Habitabilidad

The Cedula de Habitabilidad or Licencia de ocupación is an administrative document that certifies that a dwelling complies with the minimum conditions of habitability provided for in current regulations and is suitable for use as a residence for people.

Read more on Cedula de Habitabilidad: What is the legal due diligence for your Spanish property?

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Contrato de Arras

The Contrato de Arras is the private purchase contract called as well Contrato Privado de Compraventa.

It takes place after the Contrato de Reserva. You will need to pay your deposit: 10% of the property within 10 days (including your Contrato de Reserva deposit).

As soon as the necessary legal checks have taken place, you will be required to sign the private purchase contract which will state the full price of the property.

Why is it important? Once you signed it, you are committed to purchasing the property or lose the full 10% if you change your mind.

Read more on Contrato de Arras: The 9 steps to your Spanish Property

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Contrato Privado de Compraventa

The Contrato Privado de Compraventa is the same as the Contrato de Arras: it is the private purchase contract of the property. Please read Contrato de Arras for more.

Read more on Contrato Privado de Compraventa: The 9 steps to your Spanish Property

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Contrato de Reserva

The Contrato de Reserva expresses your intent to purchase a property. It removes the property from the market, it is the reservation contract.

In general, you will need to pay a holding fee of €3000 to 6000. Funds are held in escrow for 14 to 21 days and you have the time to do checks on the property during that period. At the same time, a purchase contract will be drawn up and legal checks carried out.

Why is it important? This contract is very important, don’t sign without including provisions so you can exit the contract and get your funds back

The cash ideally held by a reliable third party

Read more on Contrato de Reserva: The 9 steps to your Spanish Property

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Impuesto sobre Bienes Inmuebles (IBI)

Impuesto sobre Bienes Inmuebles or in short IBI is a local tax any owner has to pay on any Spanish property.

Who has to pay for it? Any owner of a Spanish property, local or foreigner.

How do you know? You’ll get a letter after June of any year but some local authorities don’t send it. You owe this tax

Who is the beneficiary? The tax is payable to your local Town Hall. Those are for infrastructure, waste collection,…

Where can I pay for it? Your local Town Hall, a few of them are available online.

How is the Tax Calculated? The IBI is based on the Valor Catastral. The Valor Catastral can be legally adjusted if needed by any Town Hall.

Our tip: by working with a Spanish real estate lawyer, he will make sure that the previous owner paid for it, if it is not the case, you’ll have to pay for him!

What if your property is empty? You owe the tax!

Read more and find all our tips on Impuesto sobre Bienes Inmuebles: The cost of owning your Spanish property, What taxes do you have to pay on your Spanish property?

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Inspección Técnica de Edificios (ITE)

Inspección Técnica de Edificios or in short ITE is an obligation to carry out a Technical Inspection of Buildings if they are old. It falls on the owners. To facilitate this, some City Councils prepare a register of buildings subject to inspection, which is made publicly available for a period of 30 days in the last quarter of the year preceding the start of the corresponding term.

These reports must specifically cover:

• The condition of the structure and foundation.
• The condition of interior and exterior facades, party walls, and other elements, particularly those that could pose a danger to people, such as cornices, projections, overhangs, or decorative elements, among others.
• The state of conservation of roofs and terraces.
• The condition of the building’s general plumbing and sanitation networks.
• The state of existing accessibility elements in the building.

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Licencia de obra menor

The licencia de obra menor is a license that you need from the local authorities if you are doing some small renovation works. So, you will never modify the structure of the property with your reforms.

When do you need a licencia de obra menor? Here are a few examples: changing tiles, renovating the plumbing and electrical installation or changing doors or windows are a few examples.

The licencia de obra menor could be required by the local Spanish administration or “ayuntamiento” to undertake these and other projects. Depending on the size of the intervention, we can distinguish between a minor building permit and a major building permit. It is always better to check with your entrepreneur so you won’t have any issues with our neighbours.

How much does a minor building permit cost? Each local authority will decide the value of the building permits. It may be free as some administrations have abolished it.

If you are looking for a renovation team anywhere in Spain, first, check our network of local renovation experts anywhere in Spain.

In the case of this renovation, a licencia de obra menor was needed: A full kitchen renovation in Barcelona.

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Licencia de ocupación

The Licencia de ocupación or the Cedula de Habitabilidad is an administrative document that certifies that a dwelling complies with the minimum conditions of habitability provided for in current regulations and is suitable for use as a residence for people.

Read more on Licencia de ocupación: What is the legal due diligence for your Spanish property?

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Modelo 210

The Modelo 210 is the form that you will have to fill to pay your national tax that you owe to the Spanish state as an owner of Spanish property as a non resident. In short, it is the Non-Resident Income Tax without permanent establishment or Form 210.

You are renting out your apartment => Quarterly filling, before the 20th of the month following the end of the quarter.

Our Tip: you have items that could reduce this amount, check with your Spanish real estate advisor.

Your apartment is not rented => Yearly filling, before the end of the following year.

Read more and find all our tips on modelo 210: The cost of owning your Spanish property, What taxes do you have to pay on your Spanish property?

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Número de Identificación de Extranjeros

The Número de Identificación de Extranjeros or in short NIE is a unique tax identification number in Spain for anyone who isn’t a Spanish citizen. You will need your own NIE number to purchase property and pay necessary taxes! So it’s wise to apply for this as soon as you start looking for properties. You can get it in person in Spain or via a Spanish Consulate if you don’t have time to apply when you are over there. For your spouse as well if you buy together.

Read more on NIE: Your ultimate guide to your NIE number, The 9 steps to your Spanish Property

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Registro de la Propriedad

It is the official land registry of Spain.

Read more on Registro de la Propriedad: The 9 steps to your Spanish Property

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Valor Catastral

It the official value of a property given by the tax authorities in Spain. National Taxes (Modelo 210) and local taxes (IBI) are calculated with that value.

Read more on Valor Catastral: The 9 steps to your Spanish Property

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Need more help?

No worries we have a network of local lawyers speaking your language and Spanish

Your first step will be to find a reliable independent lawyer who is specialized in Spanish land and property law. Unless you speak fluent Spanish, you should find a lawyer speaking your mother tongue in Spain. Check on HowtobuyinSpain.com. More on that here: What is the legal due diligence for your Spanish property?

Looking for a property lawyer in Spain? Check all our partners here!

The post An A-Z of Spanish Real Estate terms you should need to know appeared first on How to buy in Spain.

What is the legal due diligence for your Spanish property?

Property law Spain

Caroline, our paralegal adviser in the region of Andalusia explains to us how the due diligence works start:

“Once the deposit has been paid, we will request the real estate agency to provide us with the contact details of the vendors lawyer to notify them our representation and to request from them the necessary documentation in order to carry out the appropriate due diligence in which we will verify all relevant aspects related to the property.”

This due diligence work could take a few weeks and always takes place between the reservation deposit and the signing of the private purchase contract.

The due diligence works are different depending on the property purchase: New build or Resale. Here are the main issues that will be checked by your lawyer:

Legal due diligence checklist for a Resale property in Spain

1. The legal identity of the owner/the seller of the property you intend to buy
2. The land registry extract with boundaries and square metres of your land.
3. Check if details match: ownership, features of the property,…
4. Is there a mortgage or a debt linked to the property?
5. Any legal proceeding linked to the building?
6. Check that the property has been granted the corresponding municipal building permit and habitation licence by the Town Hall in question, and respects local urban planning rules.
7. The license “Cedula de habitabilidad” (or “Licencia de ocupación”) provided by the town hall
8. That the property is free from charges
   • All utility invoices paid by the previous owner
   • All community charges paid by the previous owner
   • All previous annual real estate taxes paid by the previous owner
9. Get the energy efficiency certificate from the previous owner
10. Check the history of ownership of the property

How do you settle the IBI tax, “Impuesto sobre Bienes Inmuebles”, between the seller and the buyer?

Our legal adviser in the region of Catalonia, Juan, explains that the annual real estate tax or “Impuesto sobre Bienes Inmuebles” (IBI) is a townhall tax that is charged at the beginning of the year for the full year. So, when a property is sold, it is common to agree between the parties to share the tax proportionally, depending on the date of the purchase.

Pay attention to the pre-emptive rights from the administration

Our legal adviser in the region of Catalonia, Juan, ask to give special attention to properties for which the seller is the SAREB since there could be a preferential acquisition right over the property, benefiting the City Council or another Public Administration. If these pre-emptive rights have not been considered previously, and the appropriate communications have not been made to the Public Administrations to enable them to exercise their rights, there may be problems in the purchase, afterwards. Another important keep in mind before buying a leased property: is the possible preferential acquisition right of the lessee.

If you want to read more on that subject, our legal partner in the region of Alicante, Juan Carlos, wrote two interesting papers on that subject: What should you pay attention to when buying a property in Spain? and How to protect yourself against Hidden defects on a Spanish Property? Property survey in Spain

Legal due diligence checklist for a new build (or “off Plan”) property purchase in Spain

1. Get a planning Certificate for the plot from the town hall and check for building restrictions on the plot or any potential negative developments to come.
2. Does the promoter have an individual bank guarantee to cover your payments?
3. Was there a permission to develop the plot at the Land Registry?
4. Is the developer registered at the Mercantile Registry?
5. Has the representative of the developer the legal power to represent the company?
6. That the property is free from charges: (mortgages, liens, encumbrances, etc.)
7. Has the developer an insurance covering damages caused by structural defects to the building?
8. That the construction specification or quality specifications are made available to the buyer and included in annexe to the purchase agreement.

Our legal adviser in Barcelona, Juan, also reminds us that the developer is legally obliged to guarantee the amounts received before the construction is finished.

Once the construction has been finished a few items should be checked

• Get the certificate that the works were properly done in accordance to the plans: The property must be registered in the land registry with the correct details, as “completed house”.
• The builder supplies the Final Works License: the ten years Insurance (Insurance which covers during ten years the structural defects of the building), and the Certificate of Habitation.
• Community areas: The community areas like Golf Courses, commercial areas, pool, gardens, must be completed, or in the process to be.
• It is very important to “read” the community rules to see, for example, if your neighbour can run a business which can disturb you, or if dogs are allowed, etc.
• Community charges: This kind of properties can have high expenses for maintenance. It is very important to know them in the initial steps of conveyance.
• Get the licence of first occupancy also known as “Licencia de Primera occupación”.
• A final check by a chartered surveyor?
• Urbanisation charges and works: There are some areas, overall in Denia and Javea, in which the property may have pending urbanisation costs and urbanisation works to be finished, and on account of the owner! So, please, take duly care with this.

If you want to read more on that subject, our legal partner in the region of Alicante, Juan Carlos, wrote this interesting article: What should you pay attention to when buying a property in Spain? and we wrote this one as well that could be of interest Buy a new build property in Spain.

This article: “Part III. Legal due diligence on your Spanish property” is part of an extensive article covering the legal and tax aspects of property acquisition in Spain:

Introductory paper: Why do you need independent legal and tax partners for your property acquisition in Spain?
Part I. Buying a property in Spain: Is a Spanish Notary enough? Why is an independent Spanish lawyer strongly advised?
Part II. Buying a property in Spain as a foreigner: Are you allowed to buy a property in Spain as a foreigner? Do you need a Visa? Who is buying? How do you finance?
Part III. Legal due diligence on your Spanish property
Part IV. Tax aspects related to your Spanish property: acquisition, ownership and sale of your Spanish property
Part V. Inheritance, Estate Planning and Granting a Will in Spain

For easiness of reading, it is split into five different articles: they could be read one after the other or separately.

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