Ratificacion | 5% retention | Reservation Contract

GLOSSARY OF CONVEYANCING IN SPAIN > Index

Buying and selling property in Spain often means having to turn your hand to a wide range of things.
Each of them uses terms and abbreviations that can be difficult to understand.
We hope this glossary will give some plain English explanations to some of the most common
conveyancing terms.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Please, select the first letter of the word from the list above to jump to appropriate section of the glossary

RATIFICATION (RATIFICACIÓN): It is just a process whereby you confirm the purchase and give an original signing for filing at the Land Registry. It has to be made at the Notary (in Spain or in your home country -In this case the document will also need to be legalized with the Hague Apostille-).

RESERVATION CONTRACT (CONTRATO DE RESERVA): Once your estate agent and lawyer have discussed the purchasing terms and conditions with the seller and an agreement has been reached, the next step is to formalise this verbal understanding through a written contract. This document is known as the Reservation Contract (Contrato de Reserva) and should be signed by both you or your representative and the seller.

RESERVATION DEPOSIT (DEPÓSITO DE RESERVA): It is standard practice in Spain for this Reservation Contract to be accompanied by a sum of money which is paid by the buyer to demonstrate to the seller that there is a real intention to purchase. This money is known as a Reservation Deposit (Señal de Reserva) and usually amounts to between €3,000 and €12,000. Once this deposit has been paid, the property is taken off the market and the price is frozen for a specified period of time; usually about 30 days.

5% RETENTION: Unless you have owned the property for more than 10 years as at the 31st December 1996, when you come to sell the property the buyers lawyer will retain 5% of the purchase monies and pay those to the Treasury of the Tax Office on account of your potential liability to Capital Gains tax. If your Capital Gains Tax liability amounts to less than the 5% retention you can, following completion, complete and submit tax form 212 within 90 days and request a refund of the excess. The refund should be made within 90 days of submission of the completed form. On the other hand, if your Capital Gains Tax amounts to more than 5%, you need to complete tax form 212 and submit this to the tax authorities with the extra payment within 30 days of the sale.

Frequently Asked Questions on Spanish Law


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