Duties and rights of the buyer

This information complements the information given in the Housing I leaflet: Buying-Selling, which we recommend you read

The importance of buying a home

 Buying a home is one of the most important investments a person makes during his/her life. It is a complex procedure in which many things have to be taken into account, especially if the purchase is made in a foreign country, with a different language, laws and customs.

 Besides those examined in our previous leaflet, the matters related to buying-selling a home must also include those related to the duties and rights that correspond to the buyer and the vendor on both an economic level (taxes, bank finance, associated expenses, etc.) and an administrative level.

 In any case, we must remember that you can obtain direct advice and information about your case in particular from the various public organisations and offices, as well as the possibility of consulting and commissioning specialised professionals and companies which, in matters as important as the purchase of a home, is particularly recommendable.

Basic rights of the buyer

The buyer of a home has the right to the following:

 To the home being delivered under the agreed terms and conditions. If there are any hidden vices, he/she can claim for them later.

 To require the recording of the purchase-sale on public deed. It is highly recommendable to exercise this right, since a deed formalised before a notary public affords greater legal security and enables a better defence of the parties' interests.

 Not to hand over amounts of money that are not laid down in the private contract or in the public deed of sale. Besides being illegal and subject to tax penalties and other kinds of penalties, these amounts, known as "black-market money", are at great risk of not being recovered if the transaction is not closed or if the contract has to be terminated.

 To freely choose the notary public before whom the public deed of sale is to be formalised.

 Not to meet the expenses that correspond to the vendor.

 To freely choose the bank with which he/she wishes to take out a mortgage, where applicable (subrogation to the vendor’s mortgage loan is not compulsory).

 Either of the parties may be assisted by an interpreter during the signing of the public deed. The cost of the interpreter shall correspond to the party for whom the services are provided.

Basic duties of the buyer

The buyer of a home has the following obligations:

 To pay the price laid down in the private contract or deed of sale. There are many different formulas for paying the price* (see Housing I), but you should always request a written document containing the amounts paid, the concept of the payment, the identities of the person making the payment and the person receiving the payment, the date and the place.

 To pay the corresponding taxes to the various public tax offices. This is dealt with in the following section.

 To pay the corresponding notary expenses: legally, the expenses corresponding to the formalisation of a public deed before a notary public shall be on the account of the vendor and those of the first copy and other notary expenses subsequent to the sale shall be on the account of the buyer, although it is possible to agree otherwise.

 To pay the cost of registering the deed of sale in the Property Register if the decision to register is finally taken. If the sale of the home is formalised on public deed, it is highly recommendable for the said deed to be registered in the Property Register. Among other benefits, this prevents the former owner from using the home as a guarantee of his/her debts. The deed of sale shall be registered in the Property Register corresponding to the town in which the home is located.

 To change cadastral ownership: in a term of 30 business days after the signing of the public deed of sale, the buyer must apply to the Gerencia Territorial del Catastro (Territorial Cadastral Register) for the change of ownership of the acquired property. This application is made on form 901 (urban property) or form 903 (country property). The forms can be obtained electronically or at the cadastral register offices. This procedure can also be carried out in certain town halls.

 To register with or change the name of the subscriber with the utility companies: water, electricity, gas, telecommunications, etc. These companies will provide information as to how the changes can be made and the documentation that is required.

 To notify the Homeowners Association to which the home belongs, where applicable, of the new ownership and of an address for notification purposes.

Taxes related to the purchase-sale of homes

During the sale of a home, the following taxes must be paid:

 New home. If the home is acquired directly from the developer or the builder, the buyer must pay the following taxes:

o Value Added Tax (VAT): as in any business transaction, the buyer shall pay the vendor the amount corresponding to VAT, where the vendor shall then be obliged to pay the amount to the tax office. The percentage of VAT applied to homes is 7% of the sale price, a percentage that is also applied to the purchase of parking spaces and box rooms if they are acquired in conjunction with the home. If they are acquired separately, the rate is 16%.

o Tax on Documented Legal Acts (IAJD): this tax amounts to 1% of the sale price of the home and must be paid to Generalitat Valenciana within the term of 30 business days after the deed of sale is signed. If the acquired home is to be the buyer's usual home, a discount is possible and the rate is reduced to 0.1%. The parking spaces and box rooms acquired together with the home (up to a maximum of two) can benefit from this discount.

 Second-hand home. In the case of a second-hand home or the subsequent transfer of a home, the following taxes must be paid:

o Tax on patrimonial transfers (ITP): this tax amounts to 7% of the sale price of the home and must be paid to Generalitat Valenciana by the buyer within the term of 30 business days after the deed of sale is signed. In both this case and that of the IAJD, if the Administration considers that the price on the deed does not correspond to the real price of the home, it shall require the buyer to pay the underpaid tax. This is called a "complementary settlement".

o Tax on the increase in value of urban land (IIVTNU), or municipal capital gains tax: this is a tax collected by the local authorities of the town in which the home is located, applying a percentage to the increase in value of a home from when it was bought to when it is sold. The percentage varies according to the town. In some towns, this tax is not paid if one year has not passed between the acquisition and the subsequent sale of the home. In principle, the party responsible for the payment is the vendor, although it is possible to agree that the payment be made by the buyer. It must be paid within the term of 30 days after the signing of the public deed. If the vendor is not resident in Spain, the party responsible for paying this tax is the buyer.

o Non-Resident Personal Income Tax (IRNR): when the vendor of the home is not resident in Spain, the buyer must retain 3% of the sale price and pay it to the State tax office by means of form 211 within the term of 30 business days after the signing of the deed of sale.

Mortgage loan

 When you want to buy a home and do not have sufficient money to pay the price, you can apply for the capital you need from a bank. As a guarantee that the money loaned will be returned, the bank will ask you to bind the home bought to the loan. This bond is made by means of a mortgage. This is what is known as a mortgage loan.

 If you need to apply for a mortgage loan, you should visit various banks to compare their offers. You can subrogate to the former owner’s loan, in other words, take his/her place.

 When taking out a mortgage loan, you must consider the following:

o Interest rate. Whether it is variable or fixed and, if it is variable, which is the most common type of interest rate, determine the indicator in accordance with which the modifications will be made (Euribor, Mibor, etc.).

o Term in which the loan is to be repaid.

o Commissions and amount of the repayments. There are different types of commissions for a mortgage loan and their percentages, and even their elimination, can be negotiated. These commissions include a commitment fee and commissions for partially or fully paying off the loan.

o You must also consider that the bank may want to require other types of obligations, such as the following: the payment of salaries into the account, direct debiting of bills, taking out insurance policies, etc.

 You must take into account that the amount finally loaned by the bank will be approximately 80% of the value given to the home. There are also other expenses that must be taken into consideration:

o Tax on documented legal acts: 1% of the amount guaranteed, not the amount effectively loaned, in other words, it includes the amount applied for, interests and costs.

o Commitment fee: this normally amounts to 1% of the amount loaned.

o Valuation of the home and study of lien.

o Insurance premiums associated with the loan.

o Notary and register expenses. Mortgage loans must necessarily be constituted on public deeds and must be registered in the Property Register. If the loan is for the acquisition of a home, it is usually signed before a notary public at the same time as the deed of sale.

Reference legislation

 Civil Code.

 Mortgage Act, adopted by Decree of 8 February 1946.

 Notary Regulations, adopted by Decree of 2 June 1944.

 Mortgage Regulations, adopted by Decree of 14 February 1947.

Offices and registers

 Notaries public and Property Registers of Alicante, whose addresses can be found on the following websites.

 Conselleria de Territorio y Vivienda (Department of Land and Housing). Territorial Department of Alicante. Avda. Aguilera nº 1, CP 03007. Tel. 012. Fax 965 936 777. Open to the public from Monday to Friday, 09:00 to 14:00, and Tuesdays and Thursdays from 17:00 to 19:00.

 Conselleria de Economía, Hacienda y Empleo (Department of Economy, Taxes and Employment). Territorial Department of Alicante. C/ Churruca nº 25, CP 03003. Tel. 012. Fax 965 126 414. Open to the public from Monday to Friday, 09:00 to 14:00, and Tuesdays and Thursdays from 17:00 to 19:00.

 Gerencia Territorial del Catastro en Alicante (Territorial Cadastral Register in Alicante). C/ Reyes Católicos nº 39, CP 03003. Tel. 965 135 890. Open to the public from Monday to Thursday, 09:00 to 17:30, and Fridays from 09:00 to 14:00. Cadastral Information Line: 902 37 36 35, open from Monday to Friday, 09:00 to 19:00.

 Department of the corresponding local authorities with competencies in the area of taxation.

Useful websites

Website with information about notary activities and the addresses and telephone numbers of all the notaries public of Spain.
www.notariado.org

Website with information about the functions of the Property Register and the addresses and telephones of all the Property Registers of Spain
www.registradores.org

Department of Land and Housing
www.cma.gva.es

Conselleria de Economía, Hacienda y Empleo (Department of Economy, Taxes and Employment)
www.gva.es/c_economia/web/html/home_c.htm

General Department of the Cadastre
www.catastro.minhac.es

Spanish Tax Department (Administración Estatal de la Agencia Tributaria) website:
www.aeat.es

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