Buy a property in Mallorca

Buy a property – under Spanish law, the purchase contract for the purchase of real estate does not need to be in writing or notarized. However, notarial certification is a prerequisite for entry in the land register. The land register entry, in turn, is essential for the purchaser, as otherwise he will not acquire a stable legal position and, for example, is defenseless against the risk of unauthorized further disposal of the previous owner who is still registered. For this reason, every property purchase in Spain must be notarized.

Although the parties could basically go to the notary immediately, in practice, for various reasons, other contracts are also used in the run-up to the notarial contract.

Once the interested party has found their dream property, there are often a number of questions to be answered: an architect or appraiser should look at the property, negotiate financing with the bank, clarify the contract with the tax advisor or lawyer, and the seller may have to get various documents for the property.

It usually takes a few weeks until the notarial contract is signed, although the parties want to be bound in some way beforehand. The most common forms of contract for this are the reservation contract, the option contract and the private written sales contract.

The reservation contract

If the buyer only has an increased interest in buying, the reservation contract comes into consideration. With it, the seller undertakes to keep the property free for the prospective buyer for a few days for a mostly low reservation fee. If the interested party decides to purchase within the deadline, the reservation fee is usually offset against the option fee or the purchase price.

The option contract

The option contract aims to create a much more intensive bond. In this case, the seller (option giver) grants the buyer (option taker) the right to purchase the property within an option period at a certain purchase price against payment of an option fee. The seller may not sell to a third party within this period. The option fee is often 10% of the purchase price, which is offset against the purchase price in the event of a purchase and otherwise remains with the seller. If the buyer exercises his option right and the seller cannot fulfill his obligation to transfer ownership, for example because he sold the property to a third party at a higher price, it is usually agreed that the seller must repay the option fee to the buyer in double the amount . Whether the buyer also or alternatively has the right to fulfill the contract depends on the wording of the option contract.

The notarial purchase contract

The notarial purchase contract, called „escritura“, is a prerequisite for the new owner to be entered in the land register. In addition to the personal data of the parties, the notarial deed essentially contains the exact description of the property with any encumbrances, the purchase price and the payment modalities. The Spanish notary has a limited catalog of duties when drawing up real estate purchase agreements. He must satisfy himself of the identity of the parties and, on the basis of an up-to-date extract from the land register requested in advance, check whether the information provided by the parties corresponds to the data in the property register. He ensures that the last receipt for the local council tax and, when selling a property in a community facility, the certificate from the administrator and president that the community costs have been paid is available. The notary has to inform the land registry of the notarization within 24 hours at the latest after signing the notary deed.

The Spanish property register, the land register

Simultaneously with the notification of the sale by the notary, a reservation is made in the land register, whereby another entry is blocked for 10 days. If the buyer presents the deed of sale to the land registry within this period, the reservation will be extended by a further 60 working days. After the real estate transfer tax has been paid to the tax office, the new owner can be entered in the land registry.

The information provided is for general information only and does not constitute legal advice. The overview was created with the greatest care. However, any liability for the content remains excluded.