Property sales in Ibiza: Advice on the legal process

It is impossible to overstate the importance of appointing a qualified lawyer to look after your interests when you’re buying a property in Ibiza. When choosing a lawyer, make sure that he or she fluently speaks and writes a language that you understand and don’t hesitate to ask questions.

Spanish property law is complicated and there have been some cases of unwary investors being misled by unscrupulous sellers. The fact of the matter is that there is only one person who is entitled to sell you the property and that is the person who is named on the title deed. No matter how tempting the offer might be, never sign anything without the express agreement of a qualified, Spanish-speaking lawyer.

What to expect from your Spanish lawyer

As well as giving legal advice at each stage of the process, your lawyer will check the property registry to investigate any encumbrances or debts registered against the property. If anything untoward is discovered he will advise on how best to deal with it and whether you should, in fact, proceed at all. When completion takes place your lawyer will lodge the title deed with the land registry and then take care of any remaining formalities such as opening accounts with local utility companies in your name and the payment of any transfer taxes.

Legal Advice

Prevention is always better than cure. From now on until and after completion of the purchase, the lawyer will take care and assist you in all the different steps involved in the transaction. Paramount Properties work with English-speaking Spanish lawyers in Ibiza. Choosing the right lawyer is your guarantee that Spanish Legal requirements are met, that the property is registered in the vendor's name and that it is free of any mortgages, charges, encumbrances, debts or other liabilities. Your lawyer will negotiate and discuss the purchase terms with the seller's lawyer. The terms should not be limited solely to price but should cover in detail all your requirements like the completion date, the form of payment, etc...

Once you have appointed your chosen law firm they will explain the procedure involved in buying in Ibiza and the associated costs.

The next step after paying the reservation deposit is to evidence the terms of purchase in writing. At this stage the lawyers will draw up the private contract. It is customary to pay a deposit of ten per cent of the price on exchange of contracts, which is not normally refundable if the purchaser defaults.

Conversely, if the vendor fails to perform his obligations, you will be entitled to the resolution of the contract and claim damages or either demand the obligatory fulfilment of the contract. Before your lawyer exchanges contracts he will have completed his searches and investigations in the Land Registry in respect of the property.

Finally on the day fixed for completion your lawyer will go to the Notary Public to sign the Title Deed, making the final payment to the vendor who will simultaneously pass over possession of the property to you, handing you the keys. At this stage the sale is completed. Immediately after completion, the notary will fax details of the title deed to the local Land Register to inform them of the identity of the new owner so as to prevent the property being sold twice. In this way the Notary and the Land Register act together to protect and guarantee your interests. You will then have to pay the relevant taxes and have the original title deed submitted to the Land Register for registration of your title. Your Lawyer can also arrange for the transfer to your name of utilities and services such as water and electricity and organise their payment through a local bank.

Glossary of Spanish legal terms

Abogado - Lawyer.
Acta - A document prepared by a notary when adding a property to the land register.
Acta de notoriedad - Procedures for registration in the land register if the basic principle of the continuous registration was interrupted.
Afecciones registrales - Noted encumbrances on the property in the land register.
Agrupacion - Combining parcels of land.
Alta catastral – The official value of property, calculated by the town hall for tax purposes.
Arras - Deposit.
Arrendamiento de obra – A contract between a builder and the owner of a property.
Asiento de presentacion - Note of conveyance. Protection of the purchaser for a certain period of time against further registrations.
Boletin de enganche - Certificate for the installation of electrical facilities, which is a precondition for getting access to electrical power.
Certificado bancario de devisas - Certificate from the bank that confirms the purchase price has been paid.
Certificado final de obra - Certificate from the Architect that confirms the construction work has been completed.
Codigo civil - Civil law.
Colegio oficial de arquitectos – Official body of architects.
Communidad de propietarios - Community of owners in an urbanisation.
Condicion suspensiva - A condition under which a juridical consequence only occurs if certain other circumstances and assumptions occur prior to it.
Contrato de arrendamiento - Rental contract.
Contrato de opcion - A contractual option that may be exercised at a future date.
Copropietarios - Co-owners.
Declaracion de obra nueva - The declaration by a notary of the construction of new buildings.
Delegacion de urbanismo – Surveyor’s office responsible for granting building permits.
Demarcacion de costas – The Government department that is responsible for the protection of the coastline.
Derecho de retencion - The right of one party to retain monies paid thus far in the event that one or more contractual obligations are not met by the other party.
Derecho de superficie - Land rights.
Edificabilidad maxima - The maximum construction area.
Embargo - Seizure or retention.
Escritura - A certificate of purchase issued by the notary.
Fianza - Security payment or deposit.
Finca – Plot of land, either with or without buildings.
Finca registral - Registered plot of land, either with or without buildings.
Hacienda publica – Tax office
Hipoteca - Mortgage.
I.B.I (Impuesto Sobre Bienes Immuebles) - Common ground tax.
Impuesto de actos juridicos documentados - Stamp duty.
Impuesto de transmisiones patrimoniales - Purchase tax on real estate, expressed as a percentage of the amount detailed in the escritura.
Impuesto sobre construcciones, instalaciones y obras - Local tax on new constructions.
Impuesto sobre el patrimonio - Property tax.
Impuesto sobre sucesiones y donaciones - Death duty and inheritance tax.
Impuestos municipales - Municipal or local taxes.
IVA (Impuesto Sobre el Valor Anadido) - Value added tax
Ley de arrendamientos urbanos - Urban rental law.
Ley de la propiedad horizontal - Tenants law.
Ley de suelo - Ground law.
Licencia de obras - Building permission.
NIE (Numero Personal de Indentificacion de Extranjero) - Tax identification number for non-residents.
NIF (Numero de Indentificacion Fiscal) - Tax identification number for residents.
Nota simple informativa - Extract from the land register.
Obligacion personal - Unlimited tax obligation for residents.
Obligacion real - Limited tax obligation for non-residents.
Ocupacion maxima - The maximum permitted roof area of a property.
Parcela - Plot of land.
Perito - Person who checks the installation of electrical points etc. and advises on architectural safety matters.
Permiso de obra menor - Permission for small construction works.
Plan parcial - Partial development plan of a community or urbanisation.
Planta - Floor (i.e. in an apartment building).
Plus valia – Tax levied on the increased in value of a property.
Precio - Purchase price.
Procurador - Representative of a party at the court, besides the lawyer.
Propiedad - Property or possession.
Propietario - Owner of property or possession.
Proyecto de ejecucion de obra - A proposal for building, held until permission is granted.
Recepion definitiva - Final acceptance of the construction.
Registro de la propiedad - Land registrar.
S.A. (Sociedad Anonima) - Public limited company.
S.L. (Sociedad Limitada) - Company with limited liability.
Saneamiento - Liability for defects.
Segregacion - Separation of a part of the property.
Separacion a linderos - Minimum distance between neighbouring properties.
Servidumbre de transito – Right of way/access rights.
Solar - Plot.
Suelo no urbanizable - Land protected from building.
Suelo urbanizable - Land that can be built on.
Suelo urbano - Urban or built up land.
Tasa - Rates.
Toma de posesion - Taking possession.
Traspaso - Payment for the transfer of rental or lease contracts - normally for an established business.
U.T.M. - The number of a registered plot.
Urbanizacion privada - Private community or development.
Uso de oficinas - To use as an office.
Usocapcion - Appropriation of a property over a certain period of time( fixed).
Valor catastral - Official value of property, calculated by the town hall and used to generate the rate of ground tax.
Valor comprobado por la administracion - Assumed value of real estate as a base for the property tax.
Valor real - Actual value.
Zona de servidumbre de proteccion - Protected area up to 200 metres inland from the coast certain rules governing construction are in place.