made depending upon the stage reached in building
the premises, e.g. once the foundations are
in, when the roof is on, when the interior
works have been completed, etc.
It is sometimes acceptable to hold back a
small percentage of the final payment until
any outstanding minor works are carried out.
To this end, it is a good idea to prepare
a “snagging
list” with the constructor so
you are both in agreement on any such works.
By the same token, make sure you get a detailed
and itemised list of expenditure before the
works commence so everyone is happy who is
paying for what and when. The constructor
will be applying for the relevant Certificates
and Licences prior to commencing building
work and as the property is constructed, and
again the cost of these will be detailed and
included in your Contract.
It has recently become law that all constructors
must take out an insurance against serious
defects or their company going bankrupt
before the building has been completed (much
like a NHBC Certificate in the UK).
Because these insurances are so new, they
often take months to arrange, which could
delay completion of the property, so it
is worth checking that your constructor
has this aspect in hand so it is not left
until the last minute.
 |
Constructors
usually
pass the cost of this insurance on to
the purchaser, and it is quite a significant
amount, so also ensure this has been
accounted for in your expenditure list,
or is included in the contract price. |
 |
In
order to sign the Escritura de Obra
Nueva & Compraventa (Deed
for a New Property)
at the Notary’s Office, the following
documents are required; the Building
Licence, a “Fin de Obra”
(End
of Works)
Certificate, the Architect’s description
of the new property, and the 10 year
Insurance Certificate. As there can
be delays in obtaining all these documents,
owners sometimes arrange with the builder
that they move into the property prior
to signing the Escritura. |
It is possible
to sign an Escritura
of Compraventa (Deed
of Sale/Purchase) at the same time as the
Obra Nueva, and these documents are often
merged into one. However, do bear in mind
that notary and property registry fees will
still be applicable for each transaction,
albeit in one invoice.
Some builders pay the cost of the Obra Nueva
Escritura themselves, so this is another
point to check with your constructor.
You can sign an Escritura
for just the land your property is going
to be built on, and a subsequent Escritura
for the Obra Nueva once the property is
built, but the usual method is to wait and
sign when your house is complete, to avoid
the higher rates of VAT charged when purchasing
a plot of land alone. For example, if you
buy a plot of land and sign an Escritura
on just this plot, you will pay 16% IVA.
If you subsequently build a property on
the land and sign a separate Escritura for
the Obra Nueva, there will be a further
7% VAT
to pay on the property construction. However,
if you wait and sign everything once the
house is complete, you will only pay 7%
on the total price. Furthermore, if you
have a garage or swimming pool built after
the property has been constructed and registered,
the IVA will be separate and set at 16%.
In addition, and separate from the IVA
tax, once you have signed the Escritura,
you will have to pay a Government
Registration Tax which is 1% of the
declared value of the new dwelling for non
residents, and 0.1% for residents.
Once the premises have been built, and the
Escritura signed, the constructor will arrange
for his electrician and plumber to prepare
a Boletin (report)
in order that the electric and water contracts
may be drawn up. The Boletin accompanies
the Cedula de Habitabilidad (Habitacion
Certificate) application that must
be lodged at the Town Hall. The
Town Hall will inspect the new property
to satisfy themselves that (a) it has been
built in accordance with the plans submitted
by the builder and (b) the property is of
a requisite standard for habitation. They
will then issue the Cedula.
It is at that point that the electric and
water contracts can be drawn up in the new
owner’s name. Once again, these new
meters and connections must be paid for,
so make sure they are shown in the expenditure
list you receive from the builder. This
is another area that can take months to
arrange, and until that time you will be
on a temporary building supply, so check
with the builder as to how bills will be
paid (i.e.
are these included in his services, or will
he be passing the costs on to you).
 |
It is
recommend you see the assistance of
a gestor or qualified individual if
you are buying a new property, as apart
from the complexity of this particular
type of transaction, it is good to have
an impartial third party who can liaise
between yourself and the constructor
if necessary. |
If you are considering buying a plot of
land with a view to building at a later
date, or land that has an existing old property
on it (usually
known as a “finca”) it
is vital that you seek advice, as checks
must be made that the land is urbanizable
(i.e. can be
built on) - there are no minimum
size requirements by the Town Hall to inhibit
building, and general services such as water,
electric and sewage can be provided, but
note that they may be expensive to obtain
if they are not nearby.
See Also
Taxes
for the Buyer and Seller
Buying
a New Property
An
Example Purchase
General
Advice
News/Features:
Property/House & Garden
Property
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