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Brief Guide on Buying Real Estate Property in Spain

The Spanish real estate property market is an attractive investment proposal, but it’s not without its challenges and complications, which is why choosing the right local legal advisor becomes critical. Fitzwilliam is renown for offering clients all-inclusive conveyance legal advice for a fixed fee of just 1% of the selling price, subject to a minimum fee of €1,500 and a maximum fee of €11,500.



When thinking about purchasing real estate property in Spain a top tier legal advice becomes essential. An independent and unbiased service is required so that purchaser´s interests are not overridden by those from agents or developers.

The following lines include a brief grasp of how real property investment works in Spain.

Asset Deal (or why you should forget about a Share Deal)

It´s still surprisingly common to find buyers who have been somehow advised to perform a Share Deal in order to acquire shares in the company owning the target real estate property. In most cases, they were assured that a favourable tax position would result by proceeding in such a manner.

The above is an example of a poor and utterly unprofessional advice:

Acquisition of shares in companies whose underlying assets are directly or indirectly mainly made up of real estate located in Spain (at least 50% of its total assets) are subject to Real Estate Transfer Tax provided that:

  • the buyer acquires more than 50% of the share capital or increases his controlling stake in the company; and
  • the company does not perform any economic operation on an ongoing basis.

And yes, Spanish Inheritance Tax is payed upon death of the purchaser provided that the assets hold by the company are based in Spain.

Further, acquisition of shares does normally imply having to carry out a due diligence. A due diligence is a process that is carried out by a potential buyer prior to private company acquisitions. From the buyer’s perspective, the purpose of due diligence is to audit the target’s affairs and use information obtained as a bargaining tool in negotiating deal terms.  This can be expensive and time-consuming.

On the other hand, direct investment through an Asset Deal is the recommended and most common way of acquiring property in Spain. In an asset deal, the real estate property is itself the object of the transaction. For the sake of clarity, in this post I will refer solely to Asset Deals.

Signature of the Deed of Sale and Purchase

In Spain it is not mandatory for a sale and purchase agreement to be signed before a public notary, although this is strongly recommended for evidential purposes and to allow the purchase to be registered with the Land Registry. Granting the public deed of sale and purchase before the public notary is also referred as completion.

Before completion, it´s common for the parties involved in the transaction to sign a reservation agreement (contrato de arras), where the purchaser undertakes to purchase and the seller undertakes to sell within a certain period of time. In such cases, an amount up to 10% of the full price is paid by the purchaser.  The mentioned payment is deemed as a payment in advance and shall be deducted from the balance due upon completion. Further, it´s extremely important to notice that, should the purchaser decided to withdraw from the transaction before completion, he would lose any change of reimbursement. On the other hand, in case of the seller being the one withdrawing from the transaction, he will be liable to pay the purchaser twice the amount of the pre-paid amount.

Land Registry Registration

Upon completion, the granted deed should be filed in the Land Registry.

Although registration of ownership is not mandatory, non-registration of the same can seriously jeopardize the buyer´s title in the near future.  This is to say, in case that any third party (acting in good faith) bought the property after completion, his acquisition would be entitled to rely on the information provided by the Land Registry, even if it later turns out that the registered seller was no longer the actual owner of the property.

Seller´s Liability

Under Spanish legislation, the seller of real estate property is liable if, after completion:

  1. it turns out that there are third party preferential rights on the property that may result in the purchaser being deprived of all or part of the same; or
  2. hidden defects are found in the property.

To this extent, it can be easily noticed how different the Spanish legal system is from most common law jurisdictions, where the purchaser carries out the weight of risks when buying property due to caveat emptor principle.

Public Auctions

In the last few years, public auctions have multiplied and have become a most frequent alternative for acquiring real estate property in Spain.

These public auctions, which are carried out by a court or even by a notary, are a consequence of the overwhelming number of foreclosures and insolvency proceedings having place in the country, as the Spanish legislation restraints the creditor from directly appropriating the property granted as security.

Price certainty is one of the most obvious advantages of public auction sales. On the fall of the hammer the purchaser has a binding contract.

Celerity is another attractive quality of public auctions in the current market. When acquiring real estate property at auction there is a set time frame between preparing for the auction, the auction itself and then the date of completion.

The main disadvantage of purchasing a property at auction is that there is often only limited information available on the property and no possibility to carry out comprehensive due diligence prior to completion. It´s important, therefore, to check the Land Registry for information on the existence of any encumbrances before bidding. In case of existing, such encumbrances will obviously tend to drive auction prices down.

Golden Visa

Acquisition of real estate property with a minimum value of EUR 500,000 may grant a temporary residence permit to non-EU/EFTA individuals. In order to qualify for a Golden Visa, the relevant property shall be free of liens, at least up to the minimum value of EUR 500,000.

The purchase of the property could even be carried out through a company, provided that such company is not registered in a tax haven and that the individual applying for the Golden Visa holds, directly or indirectly, a majority of the voting rights in such company.

As a consequence of the acquisition, the purchaser becomes entitled to obtain a Visa valid for one year. Thenceforth, the foreign investor can then apply for a residence permit which is valid for two years and subsequently renewable for five-year periods.


At Fitzwilliam we represent all of the various parties involved in real estate transactions, covering residential property and commercial real estate transactions, property management, funding of commercial land and buildings, construction, planning and leaseholds, among others.

If interested in acquiring real estate property in Spain do not hesitate to contact us. We will help you to ensure that the transaction proceeds as in the most expeditious and advantageous way possible.

2018-01-05T12:01:56+00:00 6 September, 2017|

A word of caution is needed when granting a PoA in the UK referring to powers to be exercised in Spain

During the past few months we have witnessed a great deal of legal controversy regarding the validity in Spain of Powers of Attorney (PoA´s) granted before a British Notary Public. Most public registries in Spain (either Land Registry or the Spanish equivalent to the Companies House) have massively rejected PoA´s notarised by British Notaries. Registrars have deemed them as invalid and null.   

The reason for such a stir in the press can be found in the recent ruling issued by the Spanish DGRN (the public body whose rulings are binding for every Notary of Registrar in Spain) stating that Powers of Attorney witnessed by British Notaries are no longer valid in Spain 

If followed to the letter, this ruling would imply that PoA´s granted by British residents should, from now on, be witnessed only before: 

  1. a Spanish Notary Public based in Spain; or 
  1. one of the two Spanish Consuls in the UK (located in London and Edinburgh) 

The DGRN has based this ruling in the fact that British Notaries do not have the equivalent function of Spanish Notaries. Although this has been historically irrelevant, it is undoubted that it now conflicts quite strongly with Spanish latest legislation. Namely, this collides with section 60 of Law 29/2015, which sets out that no public deed should be recognised in Spain unless the same is granted before a person with equal rights and functions as a Spanish Notary, even when the deed has been previously Apostilled. 

At Fitzwilliam we pay careful attention to detail and make sure that, independently of where it is granted, every PoA is drafted with the utmost careso that this risk can be effectively minimised. 

This is possible thanks to our expertise both in English and Spanish legislation, allowing us to instruct British Notaries for notarising Spanish Powers of Attorney validly and in accordance with the DGRN requirements.  

This makes us capable of providing services to our customers more cheaply, quickly and conveniently. 

2018-01-05T11:46:54+00:00 1 September, 2017|