Buying Property on the Costa del Sol: 7 Legal Checks Before Signing a Reservation Agreement
A practical guide for international buyers looking to purchase or invest in property in Spain.
Buying property on the Costa del Sol can be an exciting opportunity, whether you are looking for a permanent home, a holiday property or a real estate investment.
However, before committing to a property and transferring a reservation deposit, it is important to understand what you are signing and whether the property is legally suitable for your plans.
In Spain, the reservation agreement is often one of the first steps in the purchasing process. Although it may appear to be a relatively simple document, it can create significant contractual obligations.
At SOTO REYES LAW, we believe that informed decisions begin with proper legal advice. Here are seven important checks to consider before signing a reservation agreement.
1. Verify the property ownership and the seller’s authority
One of the first steps is to establish who legally owns the property and whether the person offering it for sale is entitled to do so.
A Nota Simple from the Spanish Land Registry (Registro de la Propiedad) is an essential starting point. It provides information about the registered ownership, the description of the property and registered charges or restrictions.
This information should be carefully reviewed and compared with the details provided by the estate agent or seller.
If the property is jointly owned, additional owners may need to participate in the transaction. If the seller is acting through a representative, their authority should also be verified.
Before signing any reservation document, make sure that the identity and legal capacity of the seller have been properly established.
2. Check that the property description matches the reality
The property you are purchasing should correspond to the property described in the relevant legal and administrative records.
This involves comparing the information contained in the Land Registry with the cadastral records (Catastro) and, where appropriate, the actual physical characteristics of the property.
Differences may arise in the registered surface area, boundaries, extensions, terraces, garages or other elements.
Not every discrepancy necessarily represents a legal problem. However, significant differences should be investigated before proceeding.
This is particularly important where a property includes extensions, additional buildings or alterations that may not be reflected in the available documentation.
3. Review the property’s planning status, legality and condition
A property may look perfectly suitable during a viewing, but its legal or planning status may require further investigation.
Depending on the property and its location, relevant checks may include:
The applicable planning classification and permitted use.
Whether the construction and relevant extensions have the necessary authorisations.
The existence of any outstanding planning or building-related issues.
The applicable occupancy or habitation documentation.
Whether the property is subject to any restrictions affecting its intended use.
This is particularly relevant in Andalusia, where properties in rural areas or outside established urban developments may require additional planning and legal checks.
The scope of these investigations will depend on the specific property. Where necessary, legal advice should be complemented by an assessment from an appropriately qualified technical professional.
The legal status of a property should not be inferred solely from its appearance, its existing use or the fact that it has been marketed for sale.
4. Identify outstanding charges and financial obligations
Before committing to the purchase, it is important to establish whether the property is subject to mortgages, liens, registered charges or other relevant obligations.
The Land Registry provides an important source of information, but the investigation should not necessarily end there.
Depending on the circumstances, additional documentation may be required to clarify:
Whether an existing mortgage will be cancelled as part of the transaction.
Whether there are outstanding community fees.
Whether the property is up to date with the relevant property tax, known as IBI.
Whether approved community assessments or other expenses may affect the buyer.
Whether any relevant utility or service obligations remain outstanding.
Some obligations may have legal consequences for the property or the purchaser even if they originated before the acquisition.
The objective is to identify potential liabilities and determine how they should be addressed in the purchase agreement and completion process.
5. Understand exactly what the reservation agreement provides
This is one of the most important stages of the transaction.
Reservation agreements and arras contracts are commonly used in Spanish property purchases. However, they are not interchangeable, and their legal consequences depend on their wording and the circumstances of the transaction.
A reservation agreement may establish the property being reserved, the agreed price, the amount paid, the period of exclusivity and the conditions under which the transaction is expected to proceed.
Before signing, carefully review:
The exact property and purchase price.
The amount and recipient of the reservation payment.
The deadline for signing the subsequent purchase agreement or public deed.
The circumstances in which the deposit may be refunded or retained.
The consequences if either party fails to complete the transaction.
Any conditions relating to financing or legal checks.
Particular attention should be paid to the distinction between different types of arras.
Under Article 1454 of the Spanish Civil Code, arras penitenciales may allow the parties to withdraw from the transaction under the conditions established by law: the buyer forfeits the agreed deposit, while the seller must return twice the amount received.
However, this consequence should not be assumed to apply automatically to every deposit or reservation agreement. The contractual wording and legal interpretation are decisive.
A reservation agreement should therefore be reviewed before it is signed, rather than after a dispute has arisen.
6. Consider financing and contractual deadlines
If your purchase depends on obtaining a mortgage or other financing, this should be addressed before committing to a reservation payment.
A financing application does not automatically guarantee approval, and the failure to obtain a mortgage does not necessarily entitle the buyer to recover a deposit.
The agreement should clearly establish whether the purchase is conditional on financing and what happens if the necessary funding is not obtained.
The same applies to other important deadlines.
Consider whether the proposed timetable allows sufficient time for:
Legal and technical investigations.
Mortgage approval and completion of financing arrangements.
Obtaining documents from the seller or relevant authorities.
Signing the public deed before a Spanish notary.
A realistic timetable can prevent unnecessary pressure and reduce the risk of contractual disputes.
7. Understand the full financial commitment
The agreed purchase price is only one part of the financial commitment involved in acquiring property in Spain.
Before signing a reservation agreement, it is advisable to establish a realistic estimate of the overall acquisition costs.
Depending on the property and transaction, these may include:
VAT or Transfer Tax (Impuesto sobre Transmisiones Patrimoniales).
Stamp Duty (Actos Jurídicos Documentados), where applicable.
Notarial and Land Registry costs.
Legal fees.
Mortgage-related expenses, where relevant.
Community fees, maintenance and other ongoing property expenses.
Potential renovation or adaptation costs.
The applicable taxes and costs depend on factors such as the type of property, whether it is new or resale, the purchase price and the buyer’s circumstances.
It is also important to consider the intended use of the property. A home for personal use, a holiday residence and an investment property may involve different practical and financial considerations.
Understanding the full financial picture before committing to the transaction helps ensure that the purchase is consistent with your expectations and objectives.
Legal advice before signing can make a difference
Buying property in Spain involves several legal, contractual and administrative stages. For international buyers, the process may be particularly challenging when dealing with unfamiliar terminology, documentation and procedures.
The reservation agreement is an important starting point, but it should not be treated as a mere formality.
A careful legal review can help identify potential issues, clarify contractual obligations and ensure that the transaction proceeds on an informed basis.
At SOTO REYES LAW, we provide legal advice and support for international clients purchasing or investing in property on the Costa del Sol.
Our services include property due diligence, contract review, legal assistance throughout the purchase process and coordination of the legal aspects of your transaction.
Planning to buy property on the Costa del Sol?
Contact SOTO REYES LAW before signing your reservation agreement to discuss your property purchase and the legal checks appropriate to your situation.
Planning to buy property on the Costa del Sol?
Contact SOTO REYES LAW for legal advice before signing your reservation agreement.
Email: info@sotoreyeslaw.com
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This article is intended for general informational purposes only and does not constitute legal advice. Every property transaction is different and should be assessed according to its specific circumstances and the applicable law.