Things to check when completing on a purchase.

Hi all.

A friend has just paid a deposit on a 2-bed apartment with seaviews, built in the mid-1990s in Menorca. The purchase price is 123,000 euros and the service charges around 1,000 euros pa. Can anyone point me in the right direction to locate any previous thread or to another site where I can find a checklist for him regarding what he needs to look out for? The estate agents is one he has seen operating on the island for many years and they recommended he use one of two English-speaking lawyers, and he chose one. This has all happened in the last week. My husband and I thought it was a no-no to use a lawyer recommended by the estate agents, but he said how else would he have found an English-speaking lawyer....

One thing I think he needs to be clear about is fees - stamp duty (still 7%?), what he should expect to pay in lawyers' fees (1%? 2%?), notario's fees? Do estate agents charge the buyer in some places? anything else? I'm not asking anyone to draw up all this information here (not unless they want to) - but just to let me know where I can find it. I don't want him to come a cropper - I think I've already got him a bit worried - but I think it at least sounds like he got a good price. The estate agents reckons he could rent it out at peak season for 1,000 euros a week.

Any advice will be appreciated. I aim to print it out and give it to him tomorrow at our coffee shop.

Thanks.

You are correct, never use an estate agents recommended lawyers to buy,  could be that they want the sale to go smoothly...No matter what, could be, "You scratch my back I'll scratch yours", maybe "You get me a sale i give you plenty back-hander",  it might be all innocent....But I doubt my own words on that one when it comes to buying, after all they do tend to tell you when you're selling how quick they can sell your house for you, after no lookers and 18 months up for sale you do start to doubt the words a bit.

As for an English speaking lawyer it has to be so easy just to walk into any lawyers office and ask "Do you speak English, can you put the paper work into English as well"

Same with fee's, just ask the lawyer what they would charge for everything, even ask if it's in writing and fixed.

Every past house I have bought on mainland Spain I have never paid the estate agent any fee's, perhaps Menorca is different on this.

The estate agent is correct when they say the house could be rented out for 1,000€ a week, but as you know "Could be" and "Getting it" are two different things,  ask your friend would the agent tell him if it could only be rented out for 200€ a week.

Sorry if this all sounds a bit to obvious.

Check

That there is a habitation licence

That the apartment has clear title, no debts or emargos

That the complex is legal and not in dispute with local or other authorities

What is the position with community debtors (fees outstanding) gives a good idea as to the financial health of the community

That community fees are up to date on the apartment, if not withhold same from sales price.

That the IBI tax is up to date, if not as above

That the utilities are up to date, if not as above

The catastral value and the value the hacienda put on the property, get the lawyer to work out if any complimentry tax may be levied.

Others

Transfer tax gone up to 8% in the balearics from 2013

Lawyer should be around 1% get a fixed price quote, may get it cheaper.

Other fees around 0.5 - 1%

Dont forget all professional fees are plus vat 

Agent should get commision from seller unless otherwise agreed,

He should get a receipt from the agent for any holding deposit paid (copy and give to lawyer) this receipt should give a idea of proposed timings ie how long before private purchase contract is signed etc

No need to have a private purchase contract but the seller may insist, you can go straght to the Notary without one.

Hope this may be of some help, my experience is limited to the Costa del Sol, fees may differ in Menorca

Great. Thanks for the advice. I will cut and paste it now. I'd forgotten about the complementary tax, so that's an especially important one (although I don't know that he could do anything about it, apart from being prepared for the possibility of it being imposed, I suppose).

The complementary tax, if any, can be calculated before signing on the dotted line.

You find the catastral value of the property (from IBI bill) mutiply that by the coefficient used by the relevent area, you then have what they call the tax base. If this is significantly above the 123k your friend is paying they could potentially be looking for 8% tax on the difference. Since catastral values in many areas have now been revised this is becoming less of a problem.

One further point, if I were buying again, I would go back to the complex on my own without the agent at different times of the day and night also at a weekend. If its a closed complex get in somehow, have a good look around, see how people live, look and hear out for nuisances that you will find hard to live with. Dogs, unruly children, rubbish, abandoned or incorectly parked cars, - check the garage if it has one, always a good measure. When you go with a agent for a couple of short visits you can easily miss something, talk to other residents if you can, get a feel if all is well. 

Act in haste repent at leisure.

Edited to say

Most importantly check out your new neighbours, above, below and to each side - they can make life heaven or hell

Thanks again TeamGB. I have added the details about the complementary tax to the sheet of advice to give to him. I'm sure he'll be very grateful for all  this extremely helpful advice from these knowledgeable people at EyeOnSpain. 

Well, I just met our friend and my husband went through the compraventa - the Spanish and English versions, which seemed fine - we pointed out that only the Spanish one counts.

I also went through TeamGB's checklist, especially noting the complementary tax.

And I mentioned he should use a currency dealer and could save himself an easy thousand or more, as he was going to send the money directly from his bank.

I also said he should make sure he has the agreement of his Spanish bank - he has had an account set up for him - that they aren't going to steal 500 euros or more, by levying a ridiculous 0.5% commission for receiving his money in euros (they can't use the spurious argument that that has something mysterious to do with the exchange rate if it arrives at their end already in euros).

Also: correct me if I'm wrong, fellow EyeOnSpainers, but isn't 1,800 euros too much for a notario to charge on a purchase of 123,000 euros? Does a notary do anything other than sit behind a posh desk, dressed in a posh suit, laboriously reading the whole document out as though you're illiterate, and then not even face any liability if there are legal problems further down the line? I've said he should ask his lawyer to get a cheaper deal than this, either with the same notario or by going to another one. Am I wrong? (I seem to remember always paying in the hundreds and not thousands to these men (always men in my experience) whom we are all supposed to look up to for some reason unknown to me).

Thanks.

Stop him eggcup!

Many of the big money brokers offer to guarantee no receiving fees if you use thier service, Monycorp being one.I would rather go with one of these than trust the word of a bank.

The notary fee you have quoted is ridiculous on a 123k purchase it should be around 615€ plus IVA. There are only two notaries listed on the Assocaition of Notarys website in Mencorca - I will send them to you by PM.

On the back of Euro inflation figures today the pound as gone up to 1-23 interbank, suggest he fixes his price if he is definitely going ahead.

Thanks TeamGB.

I thought I smelt a rat with the notary fees (looks like a backhander situation) - as I remembered always paying around the 600 mark. As he is someone I only see in my coffee shop and he said he should be there again on Friday, there should be plenty of time to sort out the notary fees - he is due to sign on 1st July. I have already told him to query them with his lawyer (who is charging 1%, which seems fair).

Regarding the currency dealers, we suggested HIFX as we have used these for years. But he seemed worried about whether he could trust them. All I could say is that we've used them for years and recommended them to a friend who also used them, no problem. Is there any other reassurance I can give him - e.g. are they backed by the FSA (I seem to remember they're not) or some other organisation?

If this is any help but I used HIFX many years ago for the one and only purchase through them, if I remember you set up an account with them, transfer the funds, they then transfer when your ready to the Euro account, hope I have this the correct way around because I only ever used them the once due to the problems and messing about they gave me.

With my other purchase's I transferred the money straight from my UK bank into the Spanish bank myself, and wrote a cheque out to the seller.

If memory serves me correct by using HIFX to transfer funds I only saved about £75.00 against the direct bank transfer, and to be honest for the small messy problems HIFX caused me it wasn't worth the trouble at all, of course as we know many thousands that have used them have had no problems at all.

Basically to say it might be worth the asking what the bank will do for you in regard to exchange rates, and transfer of large-ish funds.

Just a thought.

PP. Apparently they are backed by the FSA,  well now at least, also quite a large posting about them on here from a few years back.

Both Moneycorp and Hifx are 'Authorised payment institutions' according to the FSA

Baz has just jogged my memory.

Unless things have changed recently you are unable to send the competion money to the Notary by electronic bank transfer (madness in this day and age) you have to go to the bank, get them to draw up the necessary bank cheques and physically take them with you (lawyer will give you a schedule of cheques needed). If you are not prepared this can result in quite a large cost, negociate with them beforehand, if all else fails tell them you will take out home insurance with them, it worked for me, cut the cost in half

Yes, Baz.

My husband deals with the currency exchange and he explained the process to the buyer. I think it's possible to save a considerable sum on 100,000 euros - just 1% and it's a thousand and I think the difference between what you get from your bank compared to via the currency dealer can be greater than 1%

My husband told him to get a quote for the 112,000 euros he needs from HIFX (it'll be more with all the fees....) and then ask his bank what he will pay in pounds to them if he purchases the money from them. That should clear it up.

I think the banks make their inflated fees by people being worried about being ripped off by currency dealers - especially as it's not clear how the currency dealers are regulated.

According to XE the interbank rate £/€ is currently 1.22838

You will normally get a better price on amounts over £100k - you really should be able to negociate to within 500 pips so looking at 1.22338 - no other fees and no receiving fees in Spain. That would be the target price today.

Wow. I'll be quoting that. He said he got 1.19 from the bank when the rate was 1.23 - for the 10% deposit he paid - so they pocketed around £400 on that one (or he paid £350 more than he needed to).

Wow. I'll be quoting that

Yes do, you should be able to achieve a margin of 500 points/pips of the bank rate if you are changing £100K

You can get 1-19 from the kiosk on Fuengirola sea front :-) - you only need change a tenner

You have been quoted  1,000.eu rent per week this is absolute rubbish don't forget if you intend financing you purchase by renting your apartment out to holidaymakers you will need to have a turistica licence apparently on the Spanish islands thay a like gold dust to obtain if you don't not have one you will not be able to rent the apartment out .

Actually, he did say he didn't fancy renting it out, so that issue hasn't affected his decision to buy too much, I think.

Going back to a message which crossed in the post - I must have been typing the same time as TeamGB, is it the case then that when you go to the bank and say you want a bankers draft of, say 112,000 euros to take over to the notary, they make you take it in smaller amounts and/or charge you something for the cheques? And how long in advance should you ask for these (I'm also wondering how he'll do this from Wales), as my understanding is that the buyer is flying out to sign and I don't know if he'll be arriving the day before or a few days before....

(I don't think he's aware of how hard we're all working on this!)

One of my sellers insisted on a bankers draft, which I got from the bank on the same day, no problem, for the full amount of that purchase, the only thing I did have a small problem with was when I asked for cash out  also, which I had ordered a few days before, they didn't have the amount on the day,  if it's a large cash withdrawal might pay to email the bank a good couple of days, perhaps a week before to order it and keep check that they do have it in place. 

Don't think the amount of the bankers draft mattered to the cost it came to, but it did cost me, think 30€

http://www.eyeonspain.com/blogs/costaluz/6196/legal-tip-614-nice-free-guide.aspx

Nice free guide on buying property in Spain!