I've Found a Property… What Happens Next?

If you have found The One, and you are ready to make the leap to ownership, I can tell you that the process is surprisingly smooth and straight forward here.

Below is an overview of the process:

1. Due Diligence

As with any property purchase, you must proceed with the same caution that you would anywhere in the world, so starting with basic due diligence, you must first check the land title of the property. Ownership of your chosen property can be verified online via the Land Registry Database. A trusted lawyer or advisor can do this for you and can order an up to date copy of the land title document for you, known here as a Nota Simple.

The Nota Simple will show, at a glance, the cadastral reference of the property, the name of the legal owner, and also will show if there any taxes owing on the property or any financial charges (such as a personal debt or mortgage). The Nota Simple will also confirm the size of the physical property and also the size and location of the land plot so this can be matched against the details you have been given.

2. Deposit Contract

If the Land Title, or Nota Simple, doesn’t show up any anomalies or red flags, and the ownership has been verified, you can then proceed to signing a Deposit Contract, known here as an Arras Contract. The Arras Contract is a binding agreement between buyer and seller, that the buyer will most definitely buy, and that the seller will definitely sell, the said property to each other.

The Arras Contract will specify the terms of the sale and purchase, such as the price, any particular payment schedule that has been agreed, and then a final date of when the property sale and purchase must be transacted by.

Typically, the buyer pays 10% of the purchase price to the seller upon the signing of the Arras contract, with 90% held back until the final execution of the deed, but sometimes if there is a mortgage on the property, the Arras payment may need to be higher, so that the seller can use the funds to cancel (pay off) the mortgage ahead of the execution of the deed.

The Arras Contract should always be checked thoroughly by a lawyer or advisor and should always be signed in the presence of a notary public.

3. Execution of the Deed

On or before the final signing date documented in the Arras Contract, the execution of the deed must take place. The execution of the deed is when the property title deed is legally transferred to the buyer. The execution of the deed must take place before a notary public and the date of the appointment is usually set a little in advance to be sure that all parties (buyers and sellers) can be physically present. Technically you can sign for your property using a Power of Attorney, but in my opinion it is always good practice to be physically present yourself.

The notary’s office will prepare the Deed of Sale (known here as an Escritura) and this deed of sale will contain all of the salient points of the property sale and purchase, such as the full details of buyer and seller, their fiscal and civil status (if you are foreign this will include your visa status), the property price, location and cadastral details, and receipts showing that all property taxes are paid up to date.

Once the deed has been reviewed by both buyer and seller, the notary will invite each party to sign their signature, and usually also a thumb print, before signing, stamping and sealing the deed. At the moment that the deed is signed by both parties, the buyer transfers to the seller the remaining balance for the property. This is usually done in the notary office by online banking – and you will need to let your bank know in advance so that they don’t flag the transfer of such a high amount as fraudulent and block the payment.

The receipt of the balance payment is then added to the deed and then the deed and all accompanying documentation are then filed in the notary’s protocol files as a permanent record of the transaction. At this moment, congratulations, you are now the legal owner of the property!

4. Registration

Following the execution of the deed, you can pay a small administrative fee to the notary’s office in order for them to update the Land Registry with your details as the new owner. Updating the registry can take between 2 to 3 months, and it is necessary. During the 2 to 3 months whilst this process with the registry takes place, the notary will give you a new nota simple called a Copia Simple (basically a temporary title deed) showing that you are the legal owner of the property and this Copia Simple can be used as legal proof of your ownership in the meantime.

In addition, and using the new Copia Simple, you can then have the utilities accounts (water and electric) put into your name.

In summary, always have a lawyer or advisor by your side to oversee the due diligence, Arras Contract and Execution of the Deed, and always sign any agreements and contracts in the presence of a notary public.