The purchasing process can be divided into four distinct phases:
1st Stage – Obtaining and Analyzing the Documentation of the Property in question
Having chosen the property to buy, it is advisable to hire a lawyer who can advise you throughout the process, review the property documents and visit the competent entities to obtain them:
i) In the Finance Office:
- Verify that the property is properly registered on behalf of the seller and that it is free of any tax liability;
- Check seller’s solvency;
- Obtain the land register that has the cadastral article number, the address of the property in question, the identification of the borders (north, south, east, west), description of the property, total area including floor area and built area, and the respective evaluation date;
- The property value of the property is determined by the assessment made in accordance with the IMI (Municipal Property Tax) Code and is of crucial importance since it serves as the basis for calculating the municipal tax rate.
ii) In the Land Registry:
– Obtain a property certificate / updated property. It is undoubtedly the most important document since, in addition to confirming in which name the property is registered, it also indicates the existence of possible burdens or charges to third parties, as well as if the property is subject to any type of mortgage , bondage, attachment or judicial process. It also confirms the address of the property, the areas and if these correspond to those that are reflected in the building register. It is still possible to obtain the legal history of the property, including details of previous owners, dates of purchase and sale, among others.
iii) At City Hall:
- Confirm that the property is properly licensed for its purpose (residential, commercial, services or other);
- Obtain the dwelling license that identifies the holder of the dwelling, the file number and the building permit that gave rise to the housing permit and the identification of the respective architects and engineers involved in the construction of the property;
- In the Chamber, the lawyer will also confirm the location of the building and any legal restrictions on construction, obtaining for that purpose the architectural plans (“As Built” plants) – or certified copies – approved by the City Hall. constructed property is consistent with the submitted plants.
2nd Stage – Preparation of the Contract-Promise of Purchase and Sale (CPCV)
After analyzing all the documentation of the property and preconditions and restrictions associated with the purchase of the same, the CPCV is elaborated. This is the agreement by which both parties – by mutual agreement or unilaterally – promise to sign a definitive future contract (deed). In this sense, the CPCV must reflect all the underlying conduct and obligations of the transaction (essential and accessory clauses, preliminary or precedent conditions that may have been established, price, payment terms and deadlines, signature date, guarantees, sanctions and all the conditions laid down – safeguarding the interests of both parties.
3rd Stage – Finalizing the Purchase and Sale of Property (Deed)
The definitive contract of purchase and sale – public deed – is usually executed in the notarial office but can also be executed by means of a particular document. This is a contract that allows the transfer of the property from one owner to another upon payment of the agreed price and has the following effects: (i) transfer the owner, (ii) establishes the obligation to pay the price.
The responsibility for completing the formalities and covering the related expenses lies with the person named for this in the promise to buy and sell. In the absence of such a clause, the seller is responsible for obtaining all the necessary documentation for signature of the office, except for documents whose responsibility falls on the buyer, such as: identification documents, powers of attorney and proof of payment of the Municipal Tax on the Onerous Transmission of Real Estate) and Stamp Tax – issued by the judicial authorities. The person responsible for the organization of the deed must inform the other party of the date, time and place by the agreed means or by any other means that guarantees an acknowledgment of receipt.
Documents normally required for the signature of a deed relating to an urban property include (i) Property Certificate containing the description of the property and proof of the right of the seller to sell it, (ii) proof of the land registry, (iv) Housing License (or use) or proof of exemption, (v) Housing Technical File when applicable, (vi) Energy Certificate and (vii) documents certifying the identity of the parties.
4th Stage – Registration of Property Purchase
After purchasing the property, it is necessary to inform the local Finance Bureau so that the new owner becomes responsible for the respective taxes and duties that are borne by the property. Such communication must be accompanied by a copy of the deed. It is also necessary to register the purchase at the Land Registry Office (your lawyer will deal with these issues).
Although not mandatory, we always recommend the use of a lawyer specializing in real estate law in order to streamline this whole process and ensure their interests.