Find here the necessary steps to buy your new property in Mallorca.
Before reading on, let me tell you that I will be happy to help you in the process of buying your new property in Mallorca.
I am part of a team specialising in foreign investment, transfer of properties, NIE number application, tax advice, verification of charges and liens on property and legal estatus of the properties on the market.
Steps to take to get your new property in Mallorca
1.- Choose the property you are going to buy.
Rustic or urban. Big town or small village. With only 3.640 sq Km Mallorca has so many possibilities and despite the fact in one hour driving o will be able to cross the island from not to the other side, the location of your new property, will determinate your way of live there.
TIP NUMBER 1. Don’t be in a hurry. Surely the seller or Real Estate Agent will assure you that there is another person interested in acquiring the same property. They will want you to believe that either you buy it immediately, or you lose the house of your dream.
Don’t play that game and don’t sign any papers until you’re 100% sure it’s the property of your dreams.
2. Be sure the property it’s legal
Although it may be hard to believe, in Mallorca you can buy a property by signing the deed before the Public Notary, you can register it in the Land Registry and Cadastre and still be an illegal property.
Don’t let the seller or the Real Estate Agent (which works for the seller) guarantee you the legality. In the event that everything is not all right, the seller will not tell you and if the seller wants to hide something from you he will also hide it from the real estate agency.
3.- Be sure property it’s free of charges and encumbrances.
Legality isn’t the only thing you need to worry about. The property you are going to buy must be free of debts such as mortgages, pending payments to the community of owners, urbanization payments or other debts that may encumber the property.
On the other hand it is necessary to verify that it is up to date in the payment of rates and taxes.
TIP NUMBER 2. Hire a Lawyer. A Real Estate specialist. Being sure you buy what you are looking for (and not what vendor what to sell) will save you a lot of trouble on the future.
3.-Make an offer.
Once you’re sure you want it, make sure the seller knows you’ve decided on his/her property.
Your offer will be the starting point of the negotiation and it is very important that you define: the price, when you want to sign the deed and those things that are indispensable for your offer to continue standing. For example, make it clear that the offer is subject to the property being legal, being free of charges and being given the documentation that proves that it really is so.
4.- Draft the Option Contract.
The option contract is not mandatory, so this step can be skipped and go directly to the signing of the public deed.
Even so, in most cases an option contract is signed and a period, normally two months, is left between this and the signing of the purchase deed.
During this time the buyer can prepare the funds if he does not have them or manage a mortgage.
On the other hand, the seller will be able to prepare the required documentation, lift the charges and if necessary empty the property in order to deliver it to the new owner.
The clauses of this contract are binding on both parties and therefore it is important that all conditions of the future purchase are negotiated and included here.
The seller, when signing, pays the option premium which is normally 10% of the purchase price. As this contract is binding, it is a penalty for those who fail to comply with it. If the one who does not comply is the seller must return the duplicate option premium. That is double of 10%.
If the defaulting party is the buyer, the option premium will remain in the hands of the seller.
Both parties therefore risk the same.
TIP NUMBER 3. Leave a clause that allows you to terminate the Option Contract in the event that between the signing of the Option and the signing of the Purchase Deed you discover any illegality in the property.
5.-Sign the Purchase Deed
Purchase deed has to be signed in front of a Public Notary. Notary will make the deed in Spanish and will translate it to you.
6.- Pay taxes.
From the moment you sign the deed you have 30 days to pay taxes.
7.-Inscribe the property in the Land (Property) Registry.
It is not obligatory but highly recommended. The Land Registry is the one that protects you from third parties. It is public. No one can buy the property registered in your name without your consent.
8.- Inscribe yourself as a owner in Cadaster, Community of owners, and changes supplies.
9.- Pay anual taxes.
As a new owner you will pay Land Tax, Garbage Tax, Non Residents Tax (model 210) and in case your assets in Spain will be over 700.000 you will also pay Wealth Tax.