08 Paying for the Purchase
We have already said that the deposit should only be paid to the estate agent or a lawyer, and then only into a Bonded Client’s Account, so that the funds can only be released to the vendor once the documents have been signed at the notary. The best way of paying the balance is by banker's draft.
If the vendor is a resident in Spain, this can be in euros and can be handed over at the notary’s office when the documents are signed, providing you are happy that all charges have been paid and warranties in the contract have been fulfilled.
If the vendor is non-resident, and if it has been agreed that payment is to be in a foreign currency, it is a Spanish legal requirement that payment must be made outside Spain. In this case you should deposit the bankers draft (payable to the vendor) with the estate agent or a lawyer, so that it can be handed over once the escritura has been notarised.
Although payment has not technically been made outside Spain, the notary is told that payment has already been made (for example, in London if both parties are English). As he does not see the payment, he assumes that what both parties have told him is correct and he does not ask any further questions.
If the buyer is non-resident, and the payment is to be in euros, it is a legal requirement that a bank certificate be provided to prove that the funds have been brought into the country in foreign currency and converted into euros. The notary will require to see this certificate. The tax authorities require this in part to prove that the non-resident has not earned the funds on the black-market in Spain, and in part to prove that they are not the result of money laundering.
Remember also that if the vendor is non-resident, you have to deduct 5% from the purchase price, and deposit this with Hacienda on account of the vendor’s 35% capital gains tax liability. This is done using Form 211 and your Spanish solicitor can handle this.
See Chapter 10 for more on paying property taxes.