Notary requests property information from the Property Registry
Agency: Property Registry
According to the law (Art. 175 of the Decree dated on June 2, 1944), the notary is obliged to duly inform the parties, be aware of the ownership and encumbrances on the property, and consult the Property Registry books before executing the deed. The consultations can be done on-line at www.registradores.org and the printout from the internet is valid.
This document is an “Informative Land Registry Extract” containing the same information as an Ownership and encumbrances Certificate, and bearing the same responsibility of the Registrar in case of mistake as a formal certificate would provide. This is an information product specifically foreseen by the Mortgage Law to answer the Notary’s requests of Information related to registrable acts and contracts. The Notary submits an electronic request and receives the information also by electronic means. From that moment and for the next ten days, the Registrar must inform the Notary about any Document submitted to the Land Registry related to the same property, within the maximum term of 24 hours since such document was submitted to the Land Registry Office. This procedure is aimed at preventing any surprises or unexpected situations while the contract is being formalized.
Article 28 of “Act 24 /2005 on reforms to foster productivity”, orders the direct and on line access from notaries to the register books in order to obtain information and register the notarial deeds. This obligation was stated by the former Act 24/2001. Nevertheless, up to now registries have not implemented this law and notaries still have to ask information via “telefax”, according to article 354-a of the Mortgage Act of 8 February 1946 and the implementing Regulations of 14 February 1947.
Time and cost: 1 day, EUR 9.02
Notary obtains cadastral description
Agency: Cadastre
The Notary would search the land parcel corresponding to the property object of the transaction to identify the area of the land whether there are any buildings in the property and the cadastral value for tax purposes (for property transfer tax/value added tax, for municipal capital gains tax and for real estate tax).
No cost if the “Graphic Consultation” is submitted on line. But it does not include neither the name of the owner nor the cadastral value of the property. Those data can be obtained at a cost of 1€ or 2€ (depending on the extension of the certificate) via the notarial platform SIGNO that includes both the name of the owner and the cadastral value of the property.
The Notary has special access to the Cadaster database. If parties check this information by themselves, they still can verify boundaries, size and buildings, but they cannot obtain information on ownership and cadastral value. In order to obtain this information, they have to request an extract for a fee.
Time and cost: Less than 1 day (online), if obtained electronically
Execution and delivery of the public deed of purchase of the property
Agency: Notary
Property transfers are valid with a private contract between the parties, plus the handing over of the possession of the property to the buyer (ie. the “traditio” through, for example, the handing over of the keys to the property to the buyer). However, in order to make the property transfer opposable to good faith third parties, it has to be registered at the Land Registry, and in order to be registered, the contract between the parties has to be notarized. Additionally, if the buyer acquired the property in good faith, his title over the property would be indefeasible after registration.
Notary fees are set according to a cumulative scale:
- Property value up to EUR 6,010.12: EUR 90.151816;
- For the excess amount between EUR 6,010.13 and EUR 30,050.61: 4.5 per 1,000;
- For the excess amount between EUR 30,050.62 and EUR 60,101.21: 1,50 per 1,000;
- For the excess amount between EUR 60,101.22 and EUR 150,253.03: 1 per 1,000;
- For the excess amount between EUR 150,253.04 and EUR 601,012.10: 0.5 per 1,000;
- For the excess amount between EUR 601,012.11 and EUR 6,010,121.04: 0.3 per 1,000;
- For the excess amount above EUR 6,010,121.04 the fees are determined by agreement between the notary and client.
The Real Decreto Ley 8/2010, of May 20 2010, modifies the Real Decreto 1426/1989, of November 17th 1989, establishing notary fees. The 2010 decree establishes a 5% discount for notary fees. According to Royal Decree 45/2007, the notary must issue an authorized copy of the deed on the same or next day and send it to the Registry electronically, unless otherwise requested by the interested party.
The documentation shall include:
- Power of attorney granted by the seller and ID of the person in favor of whom the power was granted.
- Power of attorney granted by the buyer and ID of the person in favor of whom the power was granted.
- The public deed that transferred the property, which shall indicate the following information: (i) Company tax identification and registration numbers; (ii) Means of payment used in the transaction; and (iii) Cadastral reference.
Time and cost: 2 days, EUR 728.08
Notary’s fees (decreasing scale): EUR 730 for a property of this value (minus 5% discount)
- For property values not exceeding EUR 6.010,12: EUR 90,151816.
- For the excess amount between EUR 6.010,13 and 30.050,61: 0,45%.
- For the excess amount between EUR 30.050,62 and 60.101,21: 0,15%.
- For the excess amount between EUR 60.101,22 and 150.253,03: 0,1%.
- For the excess amount between EUR 150.253,04 and 601.012,10: 0,05%.
- For the excess amount over EUR 601.012,10 until 6.010.121,04: 0,03%.
Payment of the Transfer Tax (ITP) and obtain the confirmation of payment at tax authority
Agency: Autonomous Community of Madrid’s Tax Office
First transfers of property or transfers made between entrepreneurs are subject to VAT and Stamp Duty. Second and subsequent property transfers are not subject to VAT, but to the Transfer Tax (“Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados”, ITP).
For the Doing Business case study, as it is assumed that the buyer is a company and the property is in Madrid and has been transferred at least once in the past, the applicable tax should be the Transfer Tax (ITP). The ITP is paid at the relevant tax office within 30 working days after the date of granting of the notarial deed of transfer (a copy of the transfer deed is to be attached to the transfer tax liquidation form).
In some autonomias, like Madrid, Catalunya, and Andalucia, the tax may be paid online, although the buyer needs to obtain a stamp from the tax authority confirming the payment for ITP and capital gains tax.
However, it has to be noted that under certain circumstances (e.g., that the acquisition of the property is within the scope of the usual activities of the acquiring company), the acquiring company can choose to make the transaction subject to transfer tax or VAT. The VAT paid would become a credit that the company would deduct from subsequent transactions, such as those related to the normal business of the company.
Time and cost: 1 day, EUR 77,553.17 (6% of purchase price (ITP))
File and pay the municipal capital gains tax (“Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana”) and obtain receipt
Agency: Municipality of Madrid
In order to register the property transfer in the Property Registry, the parties must attach a receipt to the transfer deed proving that the transaction has been submitted to the Municipal Tax Authority in order to file and clear the Municipal Capital Gains Tax (“Impuesto sobre el Valor de los Terrenos de Naturaleza Urbana”). This procedure can be completed online at the website of the Municipality of Madrid.
Notaries can also communicate the transaction to the municipality online. The municipality sends an e-mail to the notary confirming the reception.
The tax to be paid for the IVTNU is not used to calculate the cost of this procedure.
Time and cost: Less than 1 day (online), Capital Gains Tax is not included in the cost of this procedure
The public deed is registered at the Land and Property Registry
Agency: Property Registry
The notary submits the public deed to the Land Registry. The Land Registry will review and register the transfer within the legal time limit of 15 business days. If the Procedure takes more than 15 business days, the fees will be reduced by 30%, unless there is an objective reason for the delay.
With the introduction of technology and online Procedures due to Law 24/2005 of November 18, in particular section II on electronic registration, the time to register is in the process of being reduced. The average registration time is currently at 8 calendar days.
The documentation to be presented to the Land Registry shall include: (i) Public deed; (ii) Proof of VAT or ITP payment (attached to the sale purchase agreement); (iii) Proof of stamp duty payment (in the case that VAT applied and not ITP); and (iv) proof of payment of the municipal capital gains tax.
Time and cost: 8 days, EUR 431.61
According to decree 1427, the cost is calculated as follows:
- Property value up to 6010.12 euros, 24.040484 euros.
- 0.175% of the property valuebetween 6.010,13 and 30050.61 euros.
- 0.125% of the value between 30050.62 and 60101.21 .
- 0.075% of the property value between 60101.22 and 150253.03 euros.
- 0.03% of the property value between 150.253,04 and 601.012,10 euros.
- 0.02% for values above 601.012,10 euros.
5% discount is applicable to the cost. Also, an administrative fee of EUR 9.02 is added to the cost.
