A "new build property" refers to a property that has never been sold before. These properties are typically sold directly by the developer and they are usually part of larger developments. New build properties offer modern features and design, customisation options, warranties, energy efficiency and modern infrastructure.
The process of purchasing a newly built property in Spain involves several steps, from finding the right property to completing the legal formalities. Here’s a detailed guide to help you navigate the purchase of a new build property.
1. Choose Your Property Type
You choose a property type that best suits your requirements based on plans that indicate scale, provide room dimensions and show the precise location of fixtures. They should also specify the total built and usable surface areas, including those of porches and terraces. It is very important to have detailed plans ("planos") and specifications ("memoria de calidades") included in the contract you sign.
2. Reservation Contract
If you are happy with your choice, you will sign a reservation contract and make a payment (usually around 3,000 to 6,000 EUR depending on the agreement) to take the property off the market (generally for up to 30 days). This reservation fee is part of the total purchase price and is not refundable unless specific circumstances arise. Also, property developers and builders who receive down payments for homes under construction are obliged by law to guarantee the amounts received until the work has been completed, through a bank guarantee or insurance policy.
3. Due Dilligence or Legal Investigation
After the signing of the reservation contract, your lawyer will check all documentation of the developer/builder like the Land Registry records and the Cadastre, bank guarantee, licenses, and insurances.
4. Private Purchase Contract
If the legal investigation and the negotiations are positive, then your lawyer will check the Private Purchase Contract. This agreement document determines all conditions, rights and obligations for the rest of the process for both parties, including the final purchase. You are expected then to sign the contract and pay between 20%-30% of the purchase price that, in addition to the reservation fee, will be deducted upon completion.
5. Stage Payments and Construction
After this point you will be expected to make the agreed upon stage payments which are usually between 10%-20% of the final amount and will also be deducted upon completion.
6. Title Deed
This final stage is reached once construction is completed. Before proceeding with the signature of the Title Deed, and to check if the developer/builder complies with all conditions of the Private Purchase Contract, your lawyer will request and check the following official documents:
- ✓ End of Building Certificate (Certificado de Final de Obra)
- ✓ First Occupation License (Licencia de Primera Ocupación / LPO)
- ✓ Technical certificates for electricity and water (Boletín de agua y energético)
- ✓ Mortgage cancellation deeds
- ✓ Insurance guarantee of the developer
- ✓ Keys and technical documentation/instructions
Once everything is correct, the Title Deed is signed before a Public Notary with both parties and their lawyers/representatives present. You will also be expected to pay the remaining instalment of the sales price.
7. Snagging
At this point, it is highly recommended that you hire a qualified surveyor to carry out an inspection of the property, creating a “snagging list” of any defects so the developer can correct them.
8. After Sales and Service Contracts
As soon as everything is signed you will legally take possession of the property and you or your lawyer should prepare for:
- ✓ Payment of all corresponding taxes and fees such as VAT (if not paid when signing the Title Deed), Stamp Duty and Notary, Land Registry and Legal fees.
- ✓ Submitting the Title Deeds to the Land Registry (inscribe your title in the property register) and Cadastre (you will need to inform the cadastre of your purchase and payment details for annual IBI tax)
- ✓ Setting up the contracts for electricity and water
- ✓ Ensuring all original paperwork of the purchased property is handed over to you: stamped Title Deeds, Nota Simple, Cadastre registration, proof of tax payments, official bills, service contracts, etc.
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By following these steps and working with professional real estate agents, lawyers and financial advisors, you can successfully purchase a new-build property in Marbella while minimizing risks.
Would you like to know more? Please contact me if you would like further guidance on this subject or want to know anything else about acquiring your ideal property in Marbella and living its lifestyle.
