Buying properties in Spain (II): key technical steps for Polish investors

According to the latest figures by Registradores de España, the number of properties in Spain bought by Poles in 2023 exceeded 3,000, beating last year's record. Properties on the Iberian Peninsula are enjoying unwavering popularity, both for holiday second homes and for investment purposes. This article will focus on the signing of the sales contract and the financing options for buying a property in Spain.

A formal culmination of the sale is signing of the public title deed (escritura pública) by both parties in front of a notary, followed by the registration of the deed in the property register (Registro de la Propiedad). Immediately after signing the deed of purchase, the notary is obliged to send the document to the register and start the registration of the new purchaser. If the buyer is not able to appear at the notary in person, he can appoint a notarized representative for this purpose.

Prior to the meeting with the chosen notary, it is advised to prepare the NIE number, documents confirming that taxes have been paid for the property and that it is up to date with all the required municipal charges, the energy efficiency certificate for the property, the concluded deposit or reservation agreements, as well as the draft sales contract, and possibly documents relating to the mortgage obtained. Additional documents may be required for a new property that has not yet been occupied. All documents should be drawn up or translated into Spanish. A few days before the scheduled date for signing the deed of purchase, the notary and the lawyer will notify the client's name to the Land Registry, stating that they will be proceeding with the deed of purchase on that date. From that point onwards, the possibility of making any other entry in the register for that property is blocked.

It is worth remembering that, unlike in Poland, in Spain a contract transferring ownership of real estate concluded in the form of a private document (contrato privado) is valid, with the additional provision that either party may at any time demand that the contract be concluded in the form of a notarial deed. The option of the private document is not advisable because may bring legal problems before any third party in relation with its ownership in the future and additionally a notarial deed is also necessary to register the deed in the Land Registry or to obtain a mortgage.

There are various options for financing the purchase of a property in Spain. When paying for the purchase with already owned funds, one should be aware that in Spain there are relatively low limits on cash transactions (the equivalent of €1,000 when the party is an entrepreneur, €2,500 for transactions between non-business Spanish residents) - which excludes making a purchase in this way.

If we want to avoid high commissions and difficulties when ordering foreign transactions, a reasonable option is to open a Spanish bank account. The procedure for opening an account does not differ significantly from the Polish market standards – a NIE number must be obtained in advance and all the necessary documents need to be translated into Spanish. There are options available on the market for permanent residents and non-residents (in this case a certificate of non-residence in Spain will be required to open the account, it can be obtained from the local police unit or through a foreign consulate).

It may come as a surprise to a Polish buyer that some notaries still require the use of so-called certified bank cheques, issued by the bank, when making payments. However, if we are using services of a law firm, most of them offer the option of transferring the payment to their account and then requesting a cheque issued on our behalf. This solution often saves extra on commission (law firms negotiate more favorable terms with the bank).

Non-residents can obtain a mortgage in Spain (again, the process of obtaining a loan as well as the documents required are very similar to those in Poland). However, they must consider that they will be required to have a higher own contribution (non-residents can expect a loan of a maximum of 50% - 60% of the value calculated on the basis of a valuation by an expert approved by the bank) and loans are also granted for shorter periods. If a loan application is submitted, two contracts are signed at the notary: purchase deed and mortgage.

The Warsaw office of Garrigues, the largest law firm operating on the Iberian Peninsula, offers its clients comprehensive legal support in the process of buying property in Spain, at every stage of the investment and also in Polish. We invite you to contact us to learn more about our offer, as well as to read our previous article in this series, and the next one which will be published soon.