Buying a house is an extremely important step for any person, which indeed requires a lot of attention and study with great care every aspect related to the whole process. Especially when it refers to its essential procedures.

This is why in this post we tell you which are the steps to buy a house that you must care about from the beginning of the procedure and the most important things you should never forget.

Buy a house: legal procedures to consider

Buying a house is a procedure that involves many factors, from purely economic or financial, to the legal aspect. The last one has a great importance to ensure that the contract of sale -as well as each of the processes of the process- is carried out correctly and without errors that may get us into trouble in the future. To do this, keep in mind the following points:

Pre-contract

It is an exclusive document made between seller and buyer. Both must sign it to formalize the sale of the home, so it is considered the step preceding the public deed. This document fundamentally stipulates the characteristics of the property, the date of delivery, the price of the property, if it is settled or there are established quotas, as well as the deposit (advance paid to the seller).

When the transaction is between individuals, all owners must sign. On the other hand, if the seller is a company, it can be signed by the administrator, the agent or the promoter.

Housing charges

Before putting your signature on legal documents, check whether the property is exempt from charges, if it has been repossessed, or if it is mortgaged. This is fundamental since when buying a house, you also acquire all charges.

Public deed at notary

Another of the essential procedures when buying a home is to formalize the purchase by a public notary. Although the pre-contract is valid, it is not enough to register the property in the Land Registry.

Through the public deed, the notary attests to the contract of sale and, in addition, of the conditions established between the seller and the buyer. Here the public representative requests documents such as the specification of how the property will be paid, the cadastral data or the certificate of habitability, among others.

Registration in the Land Registry

Once you have gone through the previous process, the notary public presents the writing document in the Land Registry. Here, it will be inspected by the registrar, who - once verified that everything is correct - will register the property with the name of the buyer. Therefore, it will be the moment when the copy of the deed is delivered.

Change of ownership in the Cadastre

Another of the fundamental steps that must be undertaken by the new owner is the registration in the Cadastre: from the signing of the deed of purchase, there is a maximum period of 2 months to notify the owner’s change in the Cadastre.

The change of ownership in the Cadastre has to be done as soon as possible so that the IBI (real estate annual tax) is transferred to the buyer's name as of the moment of the sale, since the Town Councils use the cadastral data to know who they should request the payment of this tax.

Expenses of the sale

Before facing all this legal process, you should know that each of these procedures involved in a sales contract entails several expenses: municipal capital gain, public deed in the notary, registration in the Land Registry , etc.

The person responsible for covering the purchase and sale expenses is defined in the pre-contract, but it is generally the buyer who pays all the expenses of the notary (in fact, it is usually the buyer who chooses the notary).

Taxes to pay

We remind you that when buying a home, you acquire fiscal commitments as a buyer. The normal thing is that the seller assumes the municipal capital gain and the Tax on Real Estate (IBI); while the buyer would assume the purchase tax.

At this point two cases can occur:

1. If the sale is between individuals, it records the Transfer Tax, which must be paid by the buyer after signing the deed.

2. If the seller is a legal entity and it is a first transmission, in the Canary Islands the IGIC is generated, which currently corresponds to 6.5%. In this case, the buyer does not pay the tax after signing, but the amount of the IGIC is added to the amount of the property price that is paid by the buyer at the time of signing the public deed, and then it is the company (seller) who liquidates that IGIC at the Treasury in the quarterly statement.

IBI

Since the IBI is not a tax that derives directly from the sale (it is an annual municipal tax that is turned over to the owner of the house at a specific time of the year, as it happens with the receipts of the garbage or the supply of water), we will not include it in the section of taxes to be paid; nevertheless, we must know that, at the time of the public deed, the seller must provide the last receipt of the IBI paid. Although this may change depending on the moment in which the sale is made: if, for example, the sale was signed in January 2019, it would correspond to pay the IBI of 2019 to the buyer, since the IBI that could be contributed by the seller would be the one of 2018. If, on the contrary, the sale was signed at the end of the year, the IBI may have already been paid by the seller.

Finally, it is necessary to mention that, if the sale transaction is subject to a bank mortgage, it is the bank that normally uses an agency to perform all the bureaucratic procedures after the deed. For this, the agency (or in default the bank) usually requires a fund provision based on an estimate of the total cost (taxes, registration, fees, etc.), so it will be necessary to provide all personal information as accurate as possible (age, marital status, degree of disability if applicable, family situation, patrimony ...) so that mistakes are not made when liquidating taxes.

As you may have seen, in the process of how to buy a house, the legal aspect plays a fundamental role to corroborate the transparency of the sale and ensure that everything is done according to current regulations. At such an important time, an error can be paid dearly. For this reason, appealing on specialists to guide and advise you in each step is usually the best option. In Proyectos Insulares we offer a comprehensive advisory service for the purchase and sale of real estate that includes all tax and accounting procedures, legal, banking, technical ... to take you correctly throughout the whole process. Contact us!