Manual: Delivery of the New Construction Property in Spain

The purchase of a property is a really important and exciting moment in life. It is a moment of joy and projection for the future. At Prime Invest we know that the buying process can be tedious for the average people. Therefore, we want to help you to know the milestones that happen and the steps you must follow from the time the last brick is laid until you finally take delivery of your new home. During this period, certain steps must be taken.

The steps as a construction company for the delivery of a new construction house

Firstly, once the construction work is completed, the Project Management of the construction company issues the Certificate of Completion of Work (CCW) and delivers it to the promoter, this document is also endorsed by the College of Architects. With this certificate in hand, the promoter goes to the Town Hall and presents the Responsible Declaration.

The Responsible Statement has simplified the application process for the License of First Occupancy (LFO) regarding both formalities and time. The responsible declaration is presented to the corresponding City Hall and is a declaration of the interested party to initiate an activity under its own responsibility, ensuring compliance with all the legally applicable requirements. This declaration has the same validity as the LPO, for the purpose of granting public deeds of sale or declarations of new construction for subsequent registration in the Land Registry. 

Once these formalities have been completed, the developer gathers all the necessary documentation and presents it to a Public Notary. At this time, the Record of Completion of Work (RCW) is signed, which certifies that the works and constructions have been executed and finished in accordance with the project and the licenses previously granted. This certificate is registered in the Property Registry and the individual homes are no longer listed as "work in progress" but as "finished work". Normally there is a term of 3 weeks since it is presented until the inscription appears published in the Registry and therefore, it is reflected in the simple note of the property of your house. 

It is at this moment when the process of deeding and delivery of the property begins and when your private contract can be notarized in order to formalize the legal business of the purchase and sale.

The steps to take as a buyer for the delivery of a newly built home

Now that you know, broadly speaking, the procedures that must be carried out before the delivery of a house, let's learn about the steps that you, as a buyer, must follow. 

Imagine that you arrive at a development whose construction is finished. You see the house of your dreams and you decide to buy it. When you buy off-plan, the usual process is to sign the reservation contract, which blocks that house from the market in your favor, then the private purchase contract, and finally the deed in front of a Notary.

When the construction work is finished, it is usual to dispense with the private contract, to sign only the reservation with a reduced amount and to sign the deed within 30 to 90 days. If the buyer is a foreigner, it is essential to provide a Foreigner's Identification Number (NIE) and a Spanish bank account. 

Before the formalization of the sale and purchase in front of a Notary, the buyer must pass a process of Prevention of Money Laundering (PML), which aims to verify that the client has obtained the funds for the acquisition of the property in a lawful manner, this can be demonstrated, for example, by providing the last 3 payslips, the tax return, the deed of sale of another property, etc.. It is mandatory to obtain the approval of the PML Audit before going to the Notary. 

During this process, if you have not visited your completed property, you can make a courtesy visit. We must not confuse the courtesy visit with the post-signing visit, in which the review list is made. 

With the PML process approved, the documentation in order and the courtesy visit done, the big moment arrives: the formalization of the sale and purchase in front of a Notary.

Ways of financing the sale and purchase

Before starting the whole process, you will have had to fill out a form, often called Know Your Customer (KYC), in which you indicate whether you are buying with equity or mortgage financing. Let's take a look at both cases: 

Own Funds

At the risk of falling into obviousness, if you are buying with your own funds, you do not need to contact a bank. It will only be necessary that you can provide the necessary economic documentation that can prove that these funds have been legally obtained.

Let us remember that there is a period of 3 weeks from the promoter presenting the RCW until the inscription is made in the Land Registry and finally it is published. In this period of 3 weeks, it is usual that the buyer, if he wishes, decides to formalize the deed in front of a Notary Public. 

Subrogation or mortgage financing with third parties.

If we choose financing, there are two options: 

• Subrogation to the promoter's loan: the buyer has the possibility of taking the place of the seller and becoming the new debtor of the loan that the promoter requested for the construction of the house. Usually the conditions of this type of financing are more advantageous for the buyer. It must be considered that, when opting for this type of financing, our mortgage will be with the bank that has financed the developer and therefore, we would save expenses such as the appraisal. 

• Mortgage Loan with other entities: the other option would be to apply for a new mortgage with the financial entity of your choice. 

Once you have decided which financial entity is going to manage your mortgage, it is time to move forward with the processing of your mortgage. To do this, you will need to submit documentation about your personal, employment and tax situation, which will be essential to carry out the feasibility study and risk assessment. As a general rule, a bank usually takes between 15 and 45 days to give you an answer. 

Once you are informed if the mortgage is approved, we move on to the appraisal, registry verification and final approval. But before signing the mortgage, the current law aims to ensure that the interested parties understand what they are going to sign. For that, a process has been implemented: 

1. Delivery of the ESIS (European Standardized Information Sheet) and the SWS (Standardized Warnings Sheet).
2. Delivery of the draft contract, with all costs itemized.
3. Complete information regarding the costs of the operation, and to whom they correspond.
4. Written submission of the conditions and guarantees of the possible contracted insurances.
5. Signed statement by the borrower: this signature will ensure that you have received all the previous information and that has been explained to you.
6. Mandatory and counsel of a Notary to be chosen by the borrower. This last counsel of a Notary will corroborate that you have fully understood the contracts, products, interests, bonuses, and other obligations and rights that you have as a borrower.

You are now ready to sign the purchase and mortgage deeds and become the owner of your new home! In the following section we will explain how the deed process of your new home is and how it will be handed over to you.

How is the process of deeding and delivery of the property?

Preparation of the public deed of sale

For the preparation of the deed of sale for the notary it is necessary that each party involved is responsible for having collected and provided at the time of signing, the necessary documentation to identify themselves and be able to complete the deed successfully. 

Documentation to be presented by the buyer at the Notary's office

The documentation that you must present will depend on if you have made the purchase as an individual or if you have acted as a legal entity. Depending on your case, you will have to present one documentation or another. We have detailed each one of the documents for both cases. 

For individuals

• Original identification document of all the buyers involved: DNI and in case of being a foreigner, Passport and NIE. 
• Marriage contracts or a supporting document in the case of being married in a different regime from the primary legal of your nationality (translated and apostilled).
• Power of attorney, if applicable (translated and apostilled).
• Proof of all payments made to the property up to the date of the deed, detailing the account numbers of origin and destination, as well as the holders of the same.
• Nominative bank check in favor of the selling company. With the full amount of the pending amount to be paid upon signature of keys and check stab.
• Proof of payment of the provision of funds for the future liquidation of the Owners' Community.
• The client must bring the original of the endorsement of the guaranteed amounts.

For legal entities

• Original of the deed of incorporation.
• The power of attorney. 
• The corporate tax ID number CIF.
• The National Identification Document (DNI) of the signing attorney-in-fact. In case the acquiring party is a foreigner, they must present their valid passport and NIE. 
• Certificate of Ownership Title. 
• Proof of all payments made to the property up to the date of the deed, detailing the account numbers of origin and destination, as well as the holders.
• Nominative bank check in favor of the selling company. With the full amount of the pending amount to be paid upon signature of keys and check stab.
• Proof of payment of the provision of funds for the future liquidation of the community of owners.
• The client must bring the original of the endorsement of the guaranteed amounts.

Documentation to be presented by the seller at the Notary's office

• Valid ID card of the signing attorney-in-fact.
• Power of attorney authorizing him/her to sign on behalf of the owner company.
• Deed of Horizontal Division or title deed.
• License of First Occupancy or Responsible Declaration.
• Proof of payment of IBI of the previous year of the unit of sale (or of the plot, if there are no individual ones).
• Certificate of being up to date in the Community.
• Energy Certificate of the building.
• Cadastral reference of the house (or of the parent property, if not individual).

Protocol for signing a deed in front of a notary public

What is the protocol to follow when signing a deed in front of a notary public? We will tell you in five simple steps:

1. First of all, the notary will proceed to the reading of the deed of sale.
2. Once the reading is done, the seller will sign first, secondly, the buyers, and finally, the notary.
3. The buyer will deliver to the seller the check with the rest of the amounts to pay and will return the original of the Guarantee.
4. The person representing the seller will hand over the welcome briefcase, which contains: the different keys and controls, the supply bulletins and the rest of the documentation of the property and a USB with the user's manual of the property. The buyers will sign the document confirming receipt of the keys and other documentation. 
5. The parties may ask the notary's staff for a simple electronic copy of the deed of sale, which they can receive instantly.

What are the costs involved in the deed of a first transfer property?

One of the expenses to consider are the notary's fees. They are regulated at state level, so they will charge according to the tariff set in addition, these expenses depend on the sale price of the property.

It is also necessary to consider the expenses of inscription of the title in the Registry of the Property, again, the expenses are fixed by the state regulations and depend directly on the price of the property.

In addition, it is necessary to count on the legally exigible taxes, in the case of purchase of housing of new construction the most important is the VAT, that in the entire peninsula has a tax rate of 10%, and to which it is necessary to add the tax of Documented Legal Acts that in Andalusia is 7% and is the tribute applicable to the notarial documents.

The only optional expense is the administrative fee. The client can entrust the liquidation of the taxes and the registration to an agency, in this case, they fix their own rates, or process it by themselves.

Steps to be taken after the signing of the Public Deed of Sale and Purchase

Once you have signed the title deed and your property has been delivered to you, there are some formalities that you must and/or can carry out, such as the contracting of utilities, the registration in the community of owners, the after-sales service or the responsibilities and guarantees of residential buildings. We detail each of these steps.

Supplies contracting

For several years, the commercialization of electric energy has been liberalized, which means that in order to contract it, you can contact any of the energy commercialization companies in the market and do it with the one that provides you the option that best suits your needs.

We strongly recommend you to contract the individual supply services as soon as possible, as well as testing the installations, always before moving in/ first occupancy of the property.

Generally, to contract any individualized service, you will be asked for:

• The name of the person contracting the service. 
• The title deed of the property.
• D.N.I / N.I.F of the contracting party.
• The installation certificate issued by the installation company.
• License of first occupation.
• CUPS code. 
• The designation of a current account or savings book in which to direct debit the payment of the consumption receipts. 

Community of owners

The buyer must notify the administrator of the residents' association of his condition as the new owner of the recently acquired property, giving him his contact information as well as the current account or savings book in which to direct debit the payment of the community receipts.

After-sales service

All the promoters will provide the buyer with a customer service department where they can be attended to.

Even if your property fulfills all the quality procedures, we recommend that you make a first revision of your property before moving and/or furnishing, in order to detect any pending incidence.

Once you have all the supplies in your home and you have been able to check its condition, a visit will be coordinated with the technical department of the developer to review any possible incidents. 

The technicians in charge of the visit will contact you to visit your home and take note of the incidents recorded, and then proceed with the repair.

The workers in charge of the repairs will keep a work report. Please check that the information on the report is correct. Date and sign the report if you accept the repair work carried out. Fill in the remarks section if you are not satisfied with the repair, detailing the reason for your disagreement. 

Liabilities and warranties

The guarantees applicable to residential buildings are defined in the Law 38/1999, of Building Ordinance (L.O.E.), guarantees whose term begins from the date on which the Act of Reception of Work is signed (Art. 6.5). These are the guarantees to which you are entitled:

• For one year, material damage due to vices or defects of execution affecting elements of completion or finishing of the works.
• For three years, material damage caused to the building due to faults or defects in the construction elements or installations that cause non-compliance with the requirements of habitability.
• For ten years, material damage caused to the building due to faults or defects affecting the foundations, supports, beams, slabs, load-bearing walls or other structural elements which directly compromise the mechanical resistance and stability of the building.

The household appliances installed in your home are covered by the warranties given by the manufacturers of the equipment, specified in their instructions for use, which in the European Union is a minimum of two years (according to Directive 1999/44/EC on the sale of consumer goods and guarantees, art. 5.1).