The Buyer’s Memorandum No. 01

Scope: what this memorandum resolves

This document describes an ordinary purchase of a home by a non-resident individual, with or without Spanish financing. It does not cover land, development, off-plan purchases or the acquisition of the company that owns the property: those are transactions with a different sequence and a different risk, and they are dealt with in separate documents.

It is written to be read twice. The first time in full, before anything is signed. The second time in parts, as the transaction progresses: hence the paginated contents, the timeline and a verification record that can be printed and ticked off by hand. It is general information on the procedure, not an opinion on a specific property.

Timeline of the transaction

A purchase without financing and without Land Registry complications takes between nine and twelve weeks from instruction to registration. The timings that follow are those of the file, not of the market: what is compressed at the start reappears at the end.

Land Registry, planning and encumbrance checks

The nota simple states who appears as registered owner and which encumbrances are registered. It is the starting point, not the check itself: it describes what has been registered, and much of what is later disputed never reached the Registry. A complete verification cross-checks three sources (Land Registry, town hall and comunidad de propietarios) and a fourth where there is a tenant or an occupier.

The order matters. Checks are made before the arras because afterwards the room for negotiation disappears: an unlicensed extension found in August is deducted from the price; found in October, it is absorbed. When the seller will not allow verification before the reserva (the reservation agreement, usually signed with the estate agent and accompanied by a payment, which may already be binding), that refusal is itself information about the property.

Taxation of the purchase and of ownership

Two separate accounts. The first is the account of the purchase: ITP (the transfer tax under the Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados, payable on transfers outside VAT at the rate set by the autonomous community) or VAT plus AJD (Actos Jurídicos Documentados, the duty on registrable notarial deeds), depending on whether the property is resale or new-build, plus notary, Land Registry and gestoría (the administrative agency that handles the tax filings and registration) fees. It is paid once. The second is the account of ownership: IBI (the annual local property tax), community charges, insurance, IRNR (Impuesto sobre la Renta de no Residentes, non-resident income tax, due every year even where the property is never let) and, where applicable, wealth tax. It is paid every year and is the one the buyer tends to discover late. Both are calculated on the specific transaction before the arras are signed, not after.

Arras, private contract and escritura

The arras are not a preliminary formality: they are the first act with financial consequences, and they fix in advance the price of withdrawing. Their drafting decides what happens if the financing does not come through, if an encumbrance comes to light or if the seller does not deliver the property free of occupiers. The escritura, by contrast, is not the moment to negotiate: it is the moment to check that what was agreed in the private contract appears word for word in the draft the notaría sends in advance.

Ownership structure and succession

Buying in your own name, with your spouse, with your children or through a company is not an administrative preference: it determines the tax on the purchase, the tax on ownership, the law applicable to the succession and what it will cost to sell or to transfer within the family. The useful question is not whose name goes on the deed, but what should happen to the property in twenty years’ time. That conversation takes place at the outset, with the figures on the table.

Verification record

The printed version of this table is ticked off in pen. No box is treated as closed without the document that evidences it: the record does not note opinions, it notes papers.

Common mistakes

These are not extreme cases. They are the four that appear most consistently in well-intentioned, well-funded transactions.

Editions and document status

The three formats share the same edition number and pagination. When the document is revised, all three are revised at once, the previous edition is withdrawn and the change is noted in its record. An evergreen document is not updated in silence.