Obligations of a seller in a property sale contract in Spain
In Spain, the process of selling a property is governed by specific laws and regulations, which outline the obligations of the seller in a contract of sale (contrato de compraventa). Understanding these obligations is crucial for ensuring a smooth and legally compliant transaction.
Understanding the Contract of Sale
The contrato de compraventa is the final document signed before handing over the keys of the property. It includes critical information like the selling price, penalty clauses, and the final payment date. Various types of contracts may be involved, such as the Promesa de Compraventa and Contrato de Arra, which contain promises regarding the property sale and agreements on the selling date.
Penalty clauses in these contracts apply to both the seller and the buyer. These clauses ensure that neither party can withdraw from the contract without incurring costs. In the case of the seller’s withdrawal, they must typically pay double the deposit amount.
The payment terms are clearly defined in the contract, with the buyer obliged to pay the property price at the time and place stipulated in the contract.
Formalisation of the Contract
The contract can be formalised as a private document or a public document authorised by a notary. Registering the property with the Spanish Land Registry is crucial for making the contract effective against third parties. Recommended but non-compulsory steps include a letter of intent, preliminary negotiations, and a pre-contract or promise of sale, culminating in the final contract of sale.
Essential Documents for Selling a Property
1. Deed Summary (Nota Simple)
The nota simple specifies the owner of the property, its characteristics, and any debts or charges, such as mortgages. It is a critical document requested by buyers and notaries.
2. Energy Performance Certificate
Mandatory since 2013, this certificate details energy consumption and efficiency and is required for any transaction or rental agreement.
3. Certificate of Habitation (Cédula de Habitabilidad)
This document confirms that a property complies with legal requirements for habitation.
4. ITE Certificate
The ITE certifies the overall structure and habitability of the building or block where the property is located.
5. Property Tax Receipt (IBI)
Proves that property taxes are up to date and is obligatory for the notary when signing the contract of sale.
6. Utility Receipts
Recent receipts for electricity, water, and gas are required to show that payments are up to date.
7. No Debts with Community of Residents
A certificate proving no unpaid community costs is necessary, especially when selling an apartment or house within a community.
8. Certificate of Zero Debt
Shows that any mortgage on the property has been paid off.
9. Original Contract of Sale
The escritura de compraventa which transferred ownership to the seller is needed during the sale process.
10. Identity Documents
Spanish nationals need a DNI card, while foreigners require a NIE number.
Non-Essential but Recommended Documents
- Reservation Contract: The contrato de arras or contrato de reserva, while not essential, is common and can strengthen the seller’s position during price negotiations.
- Floor Plans: Helpful for prospective buyers to visualise the property, though not typically requested by a notary.
- Statutes of the Community of Owners: Provides clarity on rules and costs associated with the community of owners.
Role of a Notary
A notary is often involved in the sale process, providing security and legal assurance. They ensure that any future issues or contract breaches can be resolved through the original contrato de compraventa. For the seller, a contract signed by a notary can expedite proceedings if the buyer does not pay and can be used to resolve any disputes after the date of transfer.
Sellers in Spain must navigate a range of legal obligations and requirements, including various documents and compliance with specific clauses in the contract of sale. Adhering to these obligations ensures a legally sound and smooth property transaction.
Expanded Overview of Seller Obligations in Spanish Property Sales
Liability for Hidden Faults
In Spain, the seller may be held liable for what are known as “hidden faults.” If, after the sale, a court determines the property was in a significantly worse condition than the buyer could reasonably expect, impacting the residential environment or the purchase price, the seller may need to provide compensation. However, the principle that properties are sold “as viewed” does limit the buyer’s chances of successfully suing for compensation.
Condition of the Property
Spanish law requires buyers to conduct a thorough examination of the property they intend to purchase, often with professional assistance. Sellers should understand and accept this without objection.
Sellers must be aware of a 3% retention of the declared value, known as the ‘Retention,’ which is a tax obligation. Although it’s the seller’s responsibility, the buyer’s fiscal representative often handles the process. If the seller hasn’t paid annual taxes, the 3% retention is kept by the Treasury Department. However, if taxes are up-to-date, sellers can reclaim this amount when filing for Capital Gains Return.
Capital Gains Return
This tax is calculated based on the profit made from the sale (the difference between the purchase and sale prices). Deductible expenses must be justified with official invoices. The remaining amount after deductions is subject to tax, especially for non-residents of Spain. The seller is responsible for paying the amount, usually facilitated by a fiscal representative.
A current Habitation Certificate (Cedula de Habitabilidad) is mandatory for selling a property. It confirms the property’s compliance with habitation requirements and must be renewed every five years (legally valid for ten years). Sellers are also liable for any costs associated with reconnections of utilities.
Additional Essential Documents for Selling a Property
Document Proving Lack of Debts with Community of Residents
If selling a property within a community of residents, it’s essential to provide a certificate proving no unpaid community costs.
Certificate of Zero Debt
This certificate from the bank proves that the mortgage on the property has been fully paid off. It’s essential for the contract of sale.
Original Contract of Sale
The escritura de compraventa that transferred ownership to the seller is necessary during the sale process.
The seller must provide their identity documents, such as a DNI card for Spanish nationals or a NIE number for foreigners.
Non-Essential but Recommended Documents
1. Reservation Contract
The contrato de arras or contrato de reserva outlines the agreement between seller and buyer following initial price negotiations. It sets a date for the full house transfer and includes conditions such as obtaining a mortgage.
2. Floor Plans
While not typically required by a notary, floor plans can assist prospective buyers in visualizing the property.
3. Statutes of the Community of Owners
These statutes detail rules and costs associated with the community of owners and can clarify any doubts a buyer may have.
Selling a property in Spain involves several critical responsibilities for the seller. These include preparing essential documents, understanding tax obligations, ensuring the property is in a suitable condition for sale, and adhering to legal requirements. Proper preparation and understanding of these obligations can lead to a smoother transaction and minimize legal risks.