The Mallorca Property Buyer’s Guide

Acquiring real estate in Mallorca is a relatively simple process in the present day; however, there are numerous factors to take into account – some may be apparent, while others are less so. Continue reading for an in-depth expert evaluation.

Navigating the Mallorca Property Market

The Internet has emerged as the most valuable resource for individuals seeking to purchase properties, and an online property search typically represents the initial action taken by any prospective buyer.

However, is it advisable to proceed to the next step of reaching out and scheduling appointments with all the agents presenting those properties, especially when these agents are unfamiliar or perhaps not even recognized by the buyer, some of whom may fail to accurately identify themselves on their websites?

Another option worth considering, even while exploring all available resources online, is to prioritize finding a highly qualified and experienced agency that possesses a substantial direct inventory of the type of property you seek. In the Balearic Islands, there are numerous excellent agents to select from, many of whom boast impressive credentials, extensive experience, exceptional product and area knowledge, and a strict adherence to the agents’ code of ethics.

Furthermore, selecting such an agent will guarantee that they will make every effort to dedicate ample time to understand you and your unique needs as thoroughly as possible. They will share their market insights and recent comparable sales that have actually occurred, ultimately leading to the discovery of the perfect property for you. If the desired property is not available in their own listings, they will actively seek that special property through their associates in other agencies, operating on a commission-sharing arrangement.

Choosing a lawyer

LuxuryForSale.Properties consistently advises prospective property buyers in Spain to engage a qualified solicitor for representation and guidance on all tax matters. Once you decide to buy property in this region, even if you have not yet identified that ideal property, building a relationship while in Mallorca can prove to be extremely beneficial if you begin negotiations for a purchase after returning to your home country, as selecting a lawyer from a distance is evidently more challenging.

Today, it is essential to comply with AML (anti-money laundering) protocols when purchasing property in Spain. This compliance is necessary for opening a bank account, hiring a lawyer, and working with agents, as it helps to identify you and verify the legal source of the funds intended for the purchase. For citizens of the European Union, this process is generally straightforward; however, for citizens from Eastern Europe or the Middle East, it may take several weeks in some instances. Therefore, if you are certain that you will be buying a property, it is advisable to address these matters sooner rather than later.

Getting the basics into place

Possessing a lawyer, an NIE number (which is a number assigned to foreigners in Spain), ensuring AML compliance, and having a bank account established enhances a buyer’s negotiating position. This is because the buyer can provide an immediate deposit upon acceptance of an offer, given that all other necessary arrangements will have already been addressed.

Negotiating the purchase

A competent agent will be extremely beneficial in negotiating the acquisition of a property you wish to purchase. It is crucial to keep in mind that if your offer is excessively low, it will fail to attract the seller’s interest and may even be counterproductive. A well-articulated offer typically garners the vendor’s attention. We advise consolidating all your points rather than negotiating in a fragmented manner. If feasible, submit your offer in writing (of course, subject to contract). Points to consider include not only the price but also the deposit amount and your readiness to pay it, the timeline for completing the transaction, your understanding of what is included in the price (such as furniture and fittings, if relevant), and a frequently overlooked aspect – ensuring that all technical equipment and installations are in proper working condition. Additionally, if you have a secondary property in mind, it is advisable to inform the vendor of this situation.

You may also consult your lawyer during the negotiation process to confirm that the terms of the offer align with his or her legal standards, and at times, they may also take an active role in more intricate negotiations.

The purchasing process

The process of purchasing a property in Spain is generally quite simple. The definitive authority in property ownership is the property registry, which will promptly indicate whether the seller possesses the property free from any liens or encumbrances. Typically, unless the full purchase price is paid immediately, a private purchase contract is created that outlines the specifics of the transaction – including the legal description of the property, the purchase price, the payment method, the completion date, the possession date, and so forth. Upon the execution of the private contract, an advance payment is invariably made, which can vary significantly based on the sale conditions and the completion date.

Deposit and insurance

A typical deposit required for completion within a timeframe of 30 to 60 days is generally 10% of the agreed purchase price.

Newly constructed properties that are not yet finished are typically paid for throughout the construction period, and all advance payments prior to completion must be secured, in accordance with LAW 38/1999, by either a bank or an insurance company: should the property remain unfinished by a specified date, the buyer is entitled to recover the amounts paid, along with legal interest.

Furthermore, another regulation mandates that the property developer must secure a ten-year insurance policy concerning any fundamental building defects, with the purchasers designated as beneficiaries.

Title deeds

Upon full payment of the purchase price for the property, the seller will provide the public deed of conveyance (known as “escritura” in Spanish) to the buyer, ensuring it is free from any liens and encumbrances.

This deed is executed in the presence of a Spanish Notary and subsequently forwarded to the tax office for the assessment of Transfer Tax if the property is a resale or second-hand property, or for Stamp Duty if the property is sold directly by the developer.

Following this, it is submitted to the Property Registry for inscription. A provisional inscription in the registry is conducted immediately upon the issuance of the deeds.

Property purchase costs

As outlined in the table below, the overall official expenses associated with acquiring a built residential property are around 10-11% for resale properties or about 12% for new properties, assuming VAT is included in the purchase price, in addition to the lawyer’s fees.

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