Purchase of Real Estate

Reservation Agreement

Once clients decide on the property they wish to purchase, it is common practice to sign a reservation document. The reservation agreement is signed by both the buyer and the seller, or by their representatives on their behalf. Its sole purpose is to formalize the buyer’s desire to acquire the property and for the property to be taken off the market.

Usually clients decide to appoint a lawyer after the reservation agreement has already been signed via a real estate agent. However, other times buyers prefer that their lawyer reviews the wording beforehand to ensure that it complies with what was verbally agreed to with the real estate agents or directly with the seller.

In Málaga and Costa del Sol, upon signing the reservation agreement, an initial deposit ranging between €6,000 and €10,000 is paid. This money shall not be refundable, unless both parties state otherwise. This initial deposit disbursed when signing the reservation serves to buy the time needed to decide whether or not that property is actually going to be acquired.

Feasibility Study and Prevention of Money Laundering

Between 2 and 4 weeks after the reservation agreement is signed, both parties should meet again to exchange the private purchase and sale agreement, which shall be discussed in detail in the next section.

Until then, that is, during the period between the signing of the reservation agreement and the signing of the private contract, the buyer’s lawyer will analyze the feasibility of the operation from a legal and technical point of view, for which he/she should receive all the relevant documents from the seller.

This process entails verifying before the appropriate official bodies legal items such us the name of the actual owner; whether or not there are charges or encumbrances on the property; conditions that may prevent the transfer of the property; all relevant licenses; potential debts with local entities, supply companies, or homeowners associations, etc. The legal team will also collect all the information required to provide the client with an itemized breakdown of regular maintenance expenses for the property.

This preliminary study is critically important, because —to a large extent— the success of the purchase transaction relies on it. A comprehensive analysis is essential to ensure that the entire purchasing process is carried out smoothly and seamlessly, as well as to avoid unwanted last minute “surprises.” Basically, these exhaustive controls allow the legal team to ensure that you are acquiring a property with all the guarantees in place. As a result, we shall be not only protecting your present and future interests, but also saving you a lot of headaches.

All our inquiries related to the property shall be included in a due diligence report that will be shared with the clients. We will also provide our clients with an initial statement of expenses and taxes associated with the acquisition of the property, so that this disbursement can be planned well in advance.

This is also the appropriate time to collect from our clients information related to the prevention of money laundering that we are required to obtain, in accordance with Spanish legislation and Directives of the European Union to this effect. The goal is to verify the legitimacy of funds used to acquire the property, with the ultimate goal of preventing the use of funds that may come from unlawful or fraudulent activities, or that this money —in whole or in part— is used to finance terrorism or to commit crimes related to terrorism.

To this end, clients shall be asked to provide us with a copy of their passports or identity cards, and to complete and sign some basic forms with the following information:

Personal identification information: full name, marital status, nationality, passport or identity card number, occupation, and address.

Economic regime (i.e. self-employed or employed), and name and address of the employer, if applicable.

Purpose/reasons for the purchase of the property: primary residence, second residence or vacation home, rental unit, investment, etc.

Source of income used for the purchase: own or external financing, bank and country of origin of the funds, and original bank account.

Authorization to handle your personal information with regards to our prevention of money laundering obligations.

Ultimate beneficiary, in the event the buyer is a legal person (a company).

The Private Purchase and Sale Agreement

Generally, between two and four weeks after the property reservation agreement is signed, the buyer and the seller shall meet again to sign the private purchase and sale agreement. This document should already include in detail all essential terms and conditions of the transaction, such as a complete description of the property, its purchase price, a list of payments made and other pending ones, charges and encumbrances (if any), an itemized explanation of expenses derived from the conveyance, the reasons for which the contract may be terminated, the date when the deed will be signed, and the name of notary public selected, among others.

In Málaga and Costa del Sol, a 10% of the purchase price is usually paid by the buyer upon signing the private contract. The amount paid as initial deposit should be deducted from this total. The remaining amount to complete the agreed price shall be delivered at the time the deed of purchase is granted.

However, in the event it is a property under construction, purchased off-plan, the developer should establish a personalized payment plan. In addition to the amounts paid as initial deposit and when signing the private contract, the buyer should make regular payments on account when certain phases of construction are reached, and until the time the work is completed. Payment of the purchase price shall be made in installments, just as it is in purchase transactions between individuals, but with a higher number of payments.

Signing the Deed of Purchase

On the day agreed by the parties to sign the deed of purchase, both parties shall appear before the selected notary. During this meeting, the buyer shall pay the rest of the agreed purchase price, and the seller shall deliver the house keys, a gesture that symbolizes the transfer of ownership from the seller to the buyer.

We highly recommend that, prior to this event, clients grant us a power of attorney, so we can represent them and act on their behalf throughout the transaction. This will allow them not to attend in person the signing of the private contract or the deed, which can be a great relief at times of busy schedules or when their availability to travel is limited. Finally, the signing of the deed at the notary´s office in particular can be a lengthy and extremely tedious process for someone not used to these legal formalities.

Once the title deed is signed, our legal team will take care of the procedures leading to its registration in the Land Registry. We will also contact the relevant bodies (Town Hall and local entities, Cadaster Office, homeowners association, etc.) to notify them about the change in ownership.

If the clients so desire, we can also manage the contracting of supplies and services, handle the change of names in existing contracts, assist clients to take out a home insurance policy, or set up a direct payment of municipal taxes and rubbish collection fees.

When all the legal, fiscal, and administrative procedures are completed, Real(i)ty & Law shall provide our clients with a final statement of account. The deeds and other important documentation shall be made available to them, as well as the remaining balance of the initial provision of funds, if applicable.

Taxation on the Purchase of Real Estate

In order to know the taxes that the person who acquires a property has to pay, we must consider who the seller is.

a) In the event the purchase is of a new construction property, acquired from the developer, the following taxes shall be paid:

VAT (Value Added Tax)
Currently, it amounts to 10% of the purchase price.

Stamp Duties
The tax rate varies depending on which Autonomous Community the property is located in. In Andalusia, where Málaga is located, it currently stands at 1.2% of the purchase price.

b) If the property is acquired from an individual, the applicable tax is:

Transfer Tax
The reference percentage for this calculation also varies depending on the Autonomous where the property is. In Andalusia, for example, the current tax rate is 7% of the purchase price, although it drops to 6% when the property is intended to be a primary residence and its price does not exceed 150,000 euros.


Calle Lanzarote n.º 2, Edificio Lorca, 2º B

29631 Benalmádena (Málaga)


Tel.: (+34) 951 409 250

WhatsApp: (+34) 640 089 738

Opening hours:

Monday to Friday, from 8:00 a.m. to 3:00 p.m.

Free initial consultation

We offer all our potential clients a free initial consultation. Understandably, any legal procedure raises doubts. We do not want that a lack of knowledge or inaccurate advice leads to an unwise decision that hurts your interests.

Treat yourself to some peace of mind, and contact us by phone, email, or whatsapp. We look forward to working with you.

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