Vogue Properties as your real estate agent in Mallorca, will guide and assist you through the buying process of your chosen property in Mallorca. The process of buying a property in Mallorca is relatively straightforward and not too dissimilar from that of other European countries. Saying this, it is important to understand the steps involved.
After you have successfully selected your desired property to buy and your offer has been accepted either of the following contracts will be drawn up:
Reservation Contract – is a simple contract that has the effect of reserving a particular property for a limited period of time. Typically not longer than 30 days. On making the reservation, a fee will become payable. If the full option contract is then signed within the reservation period, the reservation fee is then deducted from the purchase price agreed. If it is not, then the reservation fee is forfeited and the property is placed back on the market.
Purchase Contract – This contract will outline the details of the property, the names of the buyer and seller, the deposit, the agreed price and the date on or before which the contract must be completed. It is customary that 10% of the purchase price be paid at the time the contract is signed. At this stage it is strongly recommended to employ the services of an independent solicitor or “Abogado” as the contract is legally binding on both parties. Your appointed solicitor will carry out the necessary searches and legal enquiries. These include the land registry searches to confirm that the sellers own the property being sold, if there are any charges or an existing mortgage on the property and any further general enquiries including planning and legalities.
You will also need to:
The transferring of legal ownership on completion of the purchase takes place in the Notario’s office. The Notario (Notary Public) is a public official who has been appointed to perform certain legal duties in the district. He will prepare the conveyance document (Escritura de Compraventa). Although the Notario will generally request a Land Registry search immediately prior to the signing, he does not carry other searches and investigations (this is done by your appointed solicitor). He has no responsibility in the event of a misrepresentation by the buyer or the seller. Once the Escritura de Compraventa has been signed before the Notario all taxes must be paid and the Escritura de Compraventa should then be presented to the Land Registry for registration.
It is important to add approximately between 10% – 12% of the purchase price to cover the cost of buying the property.
This figure takes into account the following:
Transfer Tax: This is the equivalent to stamp duty. On the 1st January 2013 the Government of the Balearic Islands agreed a revision to the Property Transfer Tax. This tax was 7 – 10%. Once the Governments decision was published in the Official Bulletin of the Balearic Island the new amounts will be staggered between 8 – 10%.
Notario’s Fee: The Notario will make a charge for the drafting of the Escritura de Compraventa. It would be advisable to calculate approximately between 600€ – 800€ (please note the prices are guide prices only and note exact).
Land Registry Fee: These fees are charged by the Land Registry for dealing with the registration of the title. It would be sensible to allow approximately between 600€- 900€ (please note the prices are guide prices only and note exact).
Plusvalia Tax: This is primarily the seller’s tax payable to the Townhall. It is based on the notional increase in the value of the land, excluding the buildings erected on it, from the date it was bought to the date of the sale.
Legal Fee: The legal fee may vary but on average the cost is approximately 1.2% of the purchase price for a properties in Mallorca.
After Exchange: Once you become the legal owner of a property in Mallorca it is important to ensure that all final matters of the transaction are taken care of by your lawyer or at this stage your appointed fiscal representative. Points to take into consideration are:
• Name change of utilities and Townhall taxes into your name and method of payment set up as direct debit. The previous owner is obliged to give you copies of previous bills.
• Be informed about wealth tax and property owners income tax based on income from your property.
• Setting up a will.