11 things you absolutely need to know if you want to buy a property in Mallorca
Why a real estate agent in Mallorca is important to you!
If you decide to buy a property in Mallorca, you must be aware that there are a number of things that need to be thought of before taking this step. Quite a large investment is required for this dream. But not only that, there are also a few things that have to be done and documents checked before buying so that everything goes smoothly when you buy. In the following, we would like to show you all the special features and provide you with a checklist for all previous transactions as well as all important contracts and documents that are relevant for buying property in Mallorca and that you should have done before the appointment with the Spanish notary. If you decide to buy real estate in Mallorca, you should always do this with a broker. They can advise you on the market value assessment of the property you are interested in. Real estate agents are also competent, knowledgeable and can also help you communicate with the seller. For these reasons, there are a few things you should keep in mind when choosing the broker so that the deal can go smoothly. To begin with, give the agent responsible a list of your requirements and also enclose pictures. The broker can then work sensibly and send you offers that meet your expectations. So no time is wasted.
You can pay attention to these guidelines when making your selection:
- The brokerage office has existed for a long time
- The broker / brokerage office has its own well-structured website, on which, among other things, information about buying property in Mallorca or Spain as well as information about its employees and the office can be found
- He has been working in the real estate market for a number of years
Once you have found the right broker, make an appointment. He only receives commission when a house or apartment is bought or rented. In Spain, however, it is the case that the seller has to pay the broker’s commission alone. This will then be offset against the purchase price. You as the buyer must then bring the check for the commission and the original purchase price to the appointment with the notary. Please also note the following in commission matters:
A property in Mallorca is usually offered by several brokers at the same time. For this reason, it may happen that you visit an apartment or house that has already been presented to you by another realtor. In this case, you should inform the previous broker of this fact so that he does not get into disputes regarding the commission. The saying goes: first come, first paint. So the commission is due to the agent who first presented the property to you. Nevertheless, read all of the broker’s documents very carefully to avoid hidden costs. For example, pay attention to the square meter information. When buying real estate on Mallorca, a distinction is made between the built-up area (superficie construida) and the habitable area (superficie útil). The masonry is included in the constructed area. As a result, this can increase by 10% to 15%. Winter gardens, terraces or balconies can also be included in the calculation of living space.
1. The N.I.E. (“Número de Identificación de Extranjero) – identification number for immigrants or foreign citizens
The most important thing about buying property in Mallorca is that you first apply for a Spanish tax number. This is very important for all legally binding transactions such as car purchase, rental agreements, property purchase, etc., because without this number almost nothing is possible on Mallorca. To apply for the N.I.E. contact the immigration office in Palma de Mallorca. Appointments are made exclusively online. If you’re not after Spain, there are also service providers who do these things for you from a fee of € 150.00.
2. You must have or open a Spanish bank account
2. You must have or open a Spanish bank account
3. Financing through the bank
Before buying property in Mallorca you should know that only a small number of banks in Germany finance such a purchase. The risk involved in processing and evaluating is too great. To avoid frustration, it is better to have the property in Mallorca financed by a Spanish bank. German banks usually only offer the option of lending their own property in Germany in order to then finance the property in Spain. Most of the time, you have already decided on a property before talking to the bank. And in Spain, however, in contrast to Germany, an option or renovation contract is legally binding even without certification by a notary. This is regulated by Section 113b, Paragraph 1 of the German Civil Code (BGB). The purchase contract could also be concluded without a notary. However, there would then be no entry in the land register, which means that the “protection of good faith” is no longer applicable
4. The reservation contract compared to the option contract
In this contract, the seller has to keep the property in Mallorca free for the interested party for a manageable reservation fee for a certain period of time. If the interested party buys the property within this time, the fee will be offset against the purchase price or the option fee. This can cost a few thousand euros. The fee is lost if the prospect decides not to buy. In most cases, however, when buying property in Mallorca, opting for an option contract (contrato de opción de compra) is chosen. There is an option fee of 10% of the purchase price. In most cases, this is then deposited in an escrow account by the notary or broker. With this, the buyer of the property has at the same time acquired the right to purchase it within the specified period under the precisely specified conditions. During the period, a lawyer or broker invites the seller to an appointment to sign the notarial deed of sale. If the property is not acquired by the buyer, the option giver receives the option fee. However, if the sales contract is terminated by the seller because he may have sold the property to a higher bidder, he must repay the option fee. In both contracts it must be clearly understandable and stipulated in which cases the down payment is lost if the negotiation for buying property in Mallorca fails. Because if the owner only reveals defects or the like in retrospect, the prospective buyer should not have to answer for them.
5. Obtaining the extract from the land register (Nota Registro)
This must be applied for at the responsible Spanish land registry. Since it is a public register and you have a legitimate interest, you can get it there. A mere interest in buying is enough to get an extract from the land register in terms of buying property in Mallorca. When the extract is obtained for the notarization process, the land register is blocked for a period of 10 days. To apply, it is sufficient to state the location of the property and the name of the current buyer or former owner. He will not be informed that the extract has been obtained. The exact dates of all important relevant documents and the time they were presented are entered in a complete extract. As a prospective buyer, you should note that the owner and seller are the same in the land register.
The land register contains the following information, among other things:
- The registered owner (Titulares Actuales)
- The property description with location, details of the built-up area, size, type of property such as garage, apartment, plot of land, house, etc.
- Entry date
- The way of acquiring the property
- Any encumbrances (such as rights of way or mortgages)
- Any adjacent objects
- The cadastral reference number
The persons who have rights to this property are listed there with their tax number and name. This applies to both legal and natural persons.
6. The cadastral extract (Extracto del castro)
When buying property in Mallorca , the cadastral extract is an important institution. The land registry in Spain or Mallorca is a secondary system that keeps information about real estate and land, their description and boundaries, as well as map position and other information and numbers. The Spanish cadastral office “Catastro” also sets the cadastral value (“valor catastral”) of the property and its taxes. The cadastral plans show you the existing outbuildings, a possibly existing tennis court or pool as well as the structures around the property. The value of the property rises, of course, if a lot has been built there. However, the taxes are then correspondingly high. For this reason, the municipalities like to have aerial photographs taken of the property and the property in order to find out whether any buildings have been erected there without a permit. If such buildings are found, they are entered in the cadastre and taxes are levied. It doesn’t matter whether you have a building permit or not. In summary, it should be mentioned that the structures, plans or parcel sizes specified there are not legally binding. These serve only as benchmarks so that taxes can be calculated. You must also note that the Spanish cadastre is not constantly updated. This means that when you buy real estate in Mallorca, it is important to request the cadastral extract in good time so that a current extract is available for the appointment with the notary. You can now conveniently request the extract online. The application must be made at your own expense. You must also remember to notify the land registry of all developments that you have carried out after purchasing the property, such as additions, extensions, etc. This update request must be made within two months and also at your own expense. If you do this too late, you can face a fairly high fine of up to € 6,000.00.
7. The certificate of the absence of public law construction violations (Certificado de no-infracción urbanística)
You cannot see in the cadastral or land register extract whether your chosen property has already been subject to public law building violations or even a demolition order. The best thing to do is to clarify this with the town hall. If there are no construction violations or a demolition order, you will receive a certificate (Certificado de no-infracción urbanística). It is best to find out how long it will take the town hall to examine the situation and issue the documents.
8. The habitability certificate (Cédula de habitabilidad)
When buying property in Mallorca, you also need a certificate of habitability. This certificate for your house or apartment is issued by the responsible municipality. This will then confirm that your property, which is to be used for residential purposes, is also habitable. It is checked whether the property in Mallorca meets the minimum requirements for sanitary facilities, size and technology. Only with this certificate can you set up electricity, gas, water, sewage and telephone connections, otherwise your property is, so to speak, worthless. If a property is being completed, expanded, renovated or otherwise used for the first time, a so-called first occupancy certificate (Cédula de primera ocupación) is issued. The validity of this certificate is 10 years. The seller often presents the prospective buyer with an invalid or expired certificate. Please note this when buying a property in Mallorca and be sure to request a renewal certificate (“cédula de renovación”) from the seller.
9. The energy certificate (Certificado de efeciencia energética)
Since June 1st, 2013 it is compulsory in Spain to have an energy certificate. Previously, this only applied to new properties in Mallorca, and since then also to existing properties. This means that when you buy property in Mallorca you should request the energy performance certificate from the seller. This is important so that you get an overview of the evaluation of the electricity, heating and cooling consumption. The sum of the overall assessment results from the separated criteria of the efficiency classes. You can find this data on the first page of the energy certificate. The emission of CO2 serves as a unit for the energy consumption. Furthermore, you can find recommendations in the document on how the energy consumption of the property can be reduced. The energy certificate may only be issued by an authorized civil engineer or an authorized architect and is valid for a period of 10 years. With this regulation, the Spanish government wants to ensure that house or apartment owners when buying property in Mallorca regularly take care of the property and invest in renovation and modernization measures. If you are the first owner of the property, you must also apply for an energy performance certificate. Depending on the nature and size of the property, the price for the “Certificado de efeciencia energética” can vary from € 200.00 to € 500.00. When the architect is on site to create the ID, have the land register extract, views and floor plans ready. Otherwise the architect will have to take measurements and will also invoice you for it. Arranging an appointment with an architect very quickly. A phone call to make an appointment is sufficient. You can find out about the corresponding certified companies for the creation of this ID from the Internet, among other places. Once the architect has entered all the data, these are submitted accordingly and entered at the Registro. Please note that no property may be sold or rented without this energy performance certificate. Without this document, the real estate agent’s hands are unfortunately tied when buying property in Mallorca. The energy efficiency level must be specified in the synopsis or, for example, an advertisement on the Internet.
10. The appointment with the notary
What happens at this appointment? The notary will check your or both parties’ documents for completeness, which are required to buy property in Mallorca These include the tax number, identities, the current extract from the land register and, if applicable, the extract from the commercial register. He also checks whether the habitability certificate, the property tax receipts, the certificate of payment of the community costs issued by the administrator and the energy certificate are available. The notary also checks the origin of the check. The following documents are required for the notary appointment on the part of the buyer and seller:
- The current extract from the land register (Nota registro)
- Identification documents that are valid for three months or more • The Spanish tax number (N.I.E.) obtained
- The registered deed of sale of the seller
- A new building permit (Licencia d’obra nueva), the clearance certificate (Licencia d’primera ocupación), is required for new buildings
- Receipts submitted by the seller of the last property tax paid in Spain (IBI)
11. The notarial purchase contract (Escritura Pública de Compraventa)
This is mandatory so that you can be entered in the land register (Registro de la Propiedad) as the new owner. In contrast to Germany, a Spanish notary has only limited obligations. In Spain it is sufficient if he only presents the essentials from the document to the parties. He also needs to take care of the execution of the documents. This includes, for example, tax payment or entry in the property register and is usually done by Gestorías (administrators or agency for handling official formalities) or lawyers. In addition to the general data on the parties, a sales contract document contains the purchase price, an exact description of the property including any charges that may be present, as well as the payment modalities, where it is listed who has to bear which costs. If all documents are complete at the notary appointment, the notary – if you have not already done so – will order the current land register excerpt from the property register. Once all documents have been checked and found to be positive, an appointment is made with the notary to sign the sales contract with the seller and buyer. During the appointment, the notary checks the identities of the seller and buyer and compares the information with the current extract from the land register. If these agree, he informs both parties of their obligations and rights. He then discusses the notarial purchase agreement with you. When both parties have signed, the check is presented by the buyer to the seller. He then gives the key to the buyer. When buying a property in Mallorca, the buyer – in this case you – immediately receives a copy of the purchase deed (“Copia Simple”), which he can take with him. This therefore only receives a copy once, as the notary will use the original after the certification The office will be informed in advance by fax about the notarization. For the entry in the land register not only the original deed is required, but also the taxes must have been assigned to the tax office. After about half a year you can then receive the original of the deed of purchase and place it with your records.
Also note: Above all, it is very important that you never get involved in a sub-securitization when buying property in Mallorca. In this case, the purchase price was partly paid in cash, which enabled a reduced purchase price to be entered in the purchase deed, which was then officially paid by check. However, this approach was beneficial for both parties. The seller could save the profit on the non-notarized portion of the purchase price and the buyer could save the real estate transfer tax, which was around 8% to 11%. But if the property in Mallorca were to be sold again, the seller would have to pay a whopping 19% tax on the book profit, as there is no speculation period in Spain. Some time ago, however, the Spanish state put a stop to this with Law 58/2003, Article 57. In this way, tax authorities can estimate the property value against fraud and demand a higher real estate transfer tax and additional taxation of the additional profit from the buyer even four years after the property was acquired. However, so that the tax office does not demand horrendous sums of money from you, an appraisal of the property can be submitted so that you can refute that the tax office’s estimates were set too high. Ultimately, a sub-securitization would be noticed after this process at the latest. A sub-securitization when buying real estate in Mallorca would therefore only be worthwhile in the short term and in the end you actually pay for it.
We hope that we have been able to provide you with sufficient help with this guide. We are real estate agents and are happy to help you personally with the process of purchasing your dream property on a dream island. As the situation and laws are constantly changing, we cannot accept any liability for the completeness or correctness of our contribution. Please contact us personally so that we can soon congratulate you on your new property and make your dream come true.