A home is the most expensive item that most of us will ever purchase. That’s why few of us would ever consider doing so without a great legal team behind us, even in our own country. Throw a different legal system, language and currency into the mix and it can all look a little daunting.
But don’t be put off buying the home abroad – the life abroad – that you deserve. When you start to analyse what happens at each stage of the buying processes, most will look quite familiar, even though some of the names may be different. These are the key legal steps if you’re purchasing in France, Spain, Italy and Portugal.
Property law in France, Spain, Italy and Portugal
Unlike the UK and Ireland, in most of Europe, including France, Spain, Italy and Portugal, property law is overseen by a notary.
What is a notary?
They are an official representative of the state throughout the entire buying process. In other words, they have to be completely neutral: they represent neither the buyer nor the seller, but provide impartial direction to both sides.
Their actual role is to ensure the key steps are followed correctly and to draft, authenticate and witness key documents. This gives both you and the seller the security of knowing that every step has been carried out as it should be, and of having a neutral witness to any contracts or requests.
Although they will also carry out some elements of conveyancing, we still recommend that you employ your own lawyer. Moreover, it should be a specialist property lawyer, and if you don’t speak the local language, you need one who speaks English.
Do notaries charge fees?
Although a notary is a representative of the state, they are not civil servants. Instead, they operate private practices, and charge both the buyer and seller fees.
In Spain, notary fees are fixed by the law, based on the number of clauses in the deeds and the value of your property. They are generally below €1,500.
In Italy, they are based on the sale price. The percentage will never be higher than 2.5-3% of the total sale price.
In Portugal, you pay around €153 per transaction. You’ll also pay around 1-2% of the property’s value for conveyancing, and 0.75-1% for registration.
In France, notarial fees are based on a sliding scale of the property value, as below.
|€0 to €6,500||3.945%|
|€6,500 to €17,000||1.627%|
|€17,000 to €60,000||1.085%|
|Above €60 000||0.814%|
You’ll also pay 3.8-4.5% of the value for stamp duty and variable charges for ‘disbursements’ (administrative fees).
What are the main steps of purchasing?
You’ll need to go through five key steps when buying a home in France, Spain, Portugal or Italy.
1. Reservation agreement
Once you have found the right property, you will need to sign a reservation agreement, together with the vendor. This formalises your intention to purchase the property. In return, the seller takes it off the market for a specified period, normally between half a month and a month. This gives time for the initial searches.
You may have to pay a deposit at this point, which could be as much as €10,000 for an expensive property, but should be lower. Before paying any money, discuss with your lawyer under what circumstances this will be returned if the sale falls through.
Now it’s time to start the conveyancing process. This is a series of checks on the legality of the property, such as the right of the vendor to sell the property, title deeds, details from the land registry and boundaries. To what extent this will be done by the notary and which by your lawyer, will depend on the country.
In many countries the notary will not check planning permission near the property (for example, if a block of flats is going to be built), so do beware. Other common issues include country properties, where neighbouring landowners and farmers may have the first right of refusal to buy, or features of the property such as swimming pools and extensions that have not been granted official planning permission.
3. Deposit contract
Before the reservation agreement expires, you will need to sign a deposit contract and pay a sum over, normally 10% of the purchase price. The contract will be drawn up by the agent, lawyer or notary and will normally be signed by all parties in the notary’s office.
The deposit contract includes details of the property and also how the sale will be closed, such as the agreed timescales and payment method.
A deposit contract commits both buyer and seller to the property purchase. Pull out now and you will normally lose your deposit. If the vendor pulls out they will have to pay double the deposit, which is quite a disincentive to gazumping. However, the contract can include, if agreed by all parties, reasons why the buyer can withdraw, such as a failure to get a mortgage or a failed home inspection.
4. Sale contract
Finally, you will then move onto the sale contract. This is the official, final contract between you and the seller, when ownership transfers to you.
Usually, this is a formal process whereby you and the seller will assemble in the notary’s office, and s/he will read out the entire act to you both. When satisfied that both parties understand and have signed the contract, the notary will stamp and authenticate the document.
At this point, depending on the country, you will need to pay certain taxes.
As soon as the act of sale is completed and signed, the notary will need to register and publish it in the Land Registry. Normally, notaries will hold the document in their own office for a number of decades, before transferring it to a state archive.
What legalities should you consider after purchasing?
Once you’re in place in your new home, you may decide to make renovations or modifications, such as to add a home gym or to put in a swimming pool or an annex. This will normally require official planning permission.
Likewise, in some countries, such as Italy, if you do anything that involves water, from putting in a swimming pool to diverting a waterway, you will need a geologist’s report. These rules differ from country to country, so it’s important to take expert legal advice.
It can be difficult to find a lawyer you can trust by simply relying on sales pitches. That’s why Distinction by Property Guides has selected a number of expert, trustworthy lawyers whom our readers have had great success with over the years. We are happy to connect you with them. Simply fill in the form on the right or give us a call on 020 7898 0549 to be put in touch.
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