Expert tips for buyers and sellers: lawyer Sonja Willner explains what really matters when it comes to contracts, documents and ownership checks.
Buying or selling a property in Mallorca is a complex process that requires in-depth knowledge of Spanish law. Unlike in D/A/CH, private purchase contracts are generally valid, notarization is only required for the transfer in the land register and building requirements or inherited burdens can quickly become an expensive surprise.
Lawyer Sonja Willner from Palma specializes in real estate law and has been guiding buyers and sellers through the entire process for many years. In this guide, she explains what pitfalls there are, how buyers can protect themselves and which documents are essential for a legally secure transaction. From the preliminary inspection to the drafting of the contract to the transfer of ownership - a clear overview for anyone who wants to buy or sell a property in Mallorca.
BUYING A PROPERTY IN MALLORCA: WHAT IT REALLY MEANS
Legal basics: What buyers and sellers need to know?
When buying real estate in Mallorca, Spanish laws apply that differ from German real estate law in a number of key respects. Unlike in Germany, for example, private contracts for real estate are valid and do not require notarization.
Therefore, keep your eyes open before you quickly sign something to secure the property.
A legally correct private contract saves later disputes about the obligations of the parties. A good private contract should reflect the agreements of the parties and is the basis for subsequent notarization.
Although this is not binding for the acquisition of ownership, it is binding in order to be able to be entered as the owner in the land register.
Also a deviation here, it is the task of the buyer and not the notary to carry out the land register transfer, this is (although only recommended) not constitutive for the acquisition of ownership.This means that in Spain ownership of the property is transferred upon agreement and transfer, which also explains why the purchase price must always be paid in full at the notary appointment. Buyers usually commission an authority service provider (Gestor) to prepare the tax declarations and apply for the transfer in the land register.
2. process of buying a property in Mallorca
Once the prospective buyer has found a suitable property, the purchase process typically involves the following steps:
▶ Preliminary examination of the documents: proof of ownership, tax certificates, building permits
▶ Private contract: reservation, option or private written purchase contract
Notarial certification: Payment of the purchase price and handover of keys
Tax processing: Payment of the land transfer tax (on the Balearic Islands: 8-13%), which must be paid by means of self-assessment; no notice is issued by the tax authorities, the buyer must determine his tax burden himself (or have it determined) and pay it on time
▶ Land register entry: Entry is only made after proof of payment of the tax
3 Risks when buying real estate and how to protect yourself. The main problems when buying real estate are:
▶ Unclear ownership situation: ownership should be secured under land register law or the seller should prove that all steps have been taken to this end (acceptance of inheritance, etc.); it should be ensured that the rights of third parties, e.g. usufructuary rights, can be extinguished.
▶ Lack of planning permission: Particularly problematic for rural properties.
▶ Encumbrances: Encumbrances due to mortgages or outstanding taxes may exist.
Communities of owners: Outstanding debts of the seller to the community of owners or planned special levies due to renovations, etc.
Poor building quality / defects: although the seller is liable to the buyer for hidden defects for 6 months from handover, who really has the desire, money and time to conduct legal proceedings in Spain?
Provide security:
▶ Check all relevant documents before signing private contracts
▶ Inspection of the building file at the municipality
▶ Involvement of an architect and surveyor
4. Importance of the preliminary contract (Contrato de Arras)
The Contrato de Arras is a preliminary contract, a mutual obligation to buy / sell. Contracts are mainly concluded with a penalty (Arras penitenciales): The buyer loses the deposit if he withdraws, the seller has to pay back double.
Usually 10% of the purchase price is agreed as a deposit, which is not an insignificant amount. Buyers should be sure that the property meets their requirements so that they do not lose this amount in the event of a change of ownership.
There is often a lot of pressure – there are many interested parties who say that if you don't sign and pay now, the property will be gone. That may be true, at the moment Mallorca is a seller's market, many interested parties, few offers. BUT, I tell all my clients who want to buy a vacation property - you don't need the property to have a roof over your head. A vacation property should be fun and relaxing. Don't let yourself be rushed. Of course, it's a shame if the property is gone after all, but if you don't take a few days to look through the documents, you're taking a risk.
5. property inspection: what needs to be considered?
Buyers should check the following documents:
▶ Extract from the land register: Proof of ownership and encumbrances; the description in the land register should always be compared with the actual situation
Building permits and, in particular, building approvals from the municipality
▶ Proof of tax and community costs
Minutes of the owners' associations: these give a good impression of the "mood" in the building community and the payment behavior of the co-owners
▶ Tenants: Buying does not mean renting - if there are tenants in the property, it is important to clarify how long their contract is still valid - in case of doubt, the seller should be obliged to reach an agreement with the tenant to move out before the notary appointment
6. subsequent legalization: what is possible?
Many properties, especially in the outdoor area, have been built or extended without full approval. There is currently the possibility of re-legalizing such properties in the outdoor area. However, this does not apply without restriction and must be checked by an architect in each individual case. If the seller insists that legalization is possible, this should be included as a condition in the private contract and then clarified with a separate architect.
It is particularly important that there are no ongoing building regulations proceedings against the property. Here you should not rely on oral assurances, but insist on proof of a certificate from the municipality on the one hand and the Agency for Territorial Protection of Mallorca (ADT) on the other. The costs of legalization should also not be underestimated; depending on the size of the property, they can be well over 100,000 euros.
It is repeatedly pointed out that a property is grandfathered and therefore no longer a problem. What does grandfathering mean?
Grandfathering means that building code violations are time-barred and no more penalties or demolition orders can be issued by the authorities. However, this does not make the development legal. The buyer must be aware that they must like the property as it is. In case of doubt, they will not receive planning permission for any alterations.
Properties with grandfathering may be maintained, but not modernized. Anything that goes beyond maintaining the current condition, e.g. repairing the roof, replacing a broken window, etc., is not permitted and may result in a fine and a building clearance order being issued. Example: You would rather have floor-to-ceiling windows – is not possible; you would like to build a conservatory – is not possible, you would like to insulate the house from the outside – is not possible, the pool should be moved to another location or redesigned – is not possible, underfloor heating should be installed – is not possible, etc.
If you purchase such a property, you must be very cautious about visible changes, if you are caught, you will be fined and demolished.
In order for building law violations in the outdoor area to be protected, the construction work must have been completed by 2010. Due to a change in the law in 2018, later construction work no longer enjoys grandfathering and a penalty and building ban can be imposed for this at any time.
Buying a property in Mallorca requires more than just the right property– basic knowledge, careful examination and professional guidance are crucial to avoid risks.
If you are well prepared and rely on experts such as lawyer Sonja Willner, you can go through the purchase process safely and in a structured manner - without any unpleasant surprises.
Sonja Willner, German lawyer / Spanish abogada
Calle Velazquez 10, Entlo. 1 - 07002 Palma de Mallorca
Tel. +34 871 180 197 - www.willner.legal
TIPS FOR A REAL ESTATE SALE WITH NO REVENUE
Both buyers and sellers should be accompanied by experienced lawyers, which guarantees a clean and correct transaction and secure contracts.
Buyers should:
▶ Prepare all documents
(extract from the land register, tax certificates,
certificate of habitability, energy certificate)
▶ Property protection if you want to sell a property
which is located in the conservation zone, permits may be required
from the cultural heritage protection authority - this can take time and should be
be initiated in good time.
▶ An experienced estate agent can help you obtain the necessary documents and negotiate with the necessary documents and negotiations with the buyer.
Buyers should:
▶ apply for the N.I.E. (identification number for foreigners) promptly
▶ Consult a building surveyor and architect
▶ Do not make any rash decisions
and above all do not sign anything that you do not understand
and have it legally checked
▶ Clarify financing options
