Buying Property in Spain: Risks & Mistakes to Avoid

In recent years, Spain has remained one of the most attractive destinations for foreigners to buy property. Thanks to consistently high demand, a mild Mediterranean climate, and strong legal safeguards within the European Union, the Spanish real estate market offers a truly unique opportunity for investors and homebuyers alike.

Last year alone, foreigners bought nearly 100,000 properties in Spain — around 15% of all transactions. In popular regions such as Alicante and Málaga, this figure rises to 30–40%. At the same time, average property prices in Spain continue to climb confidently: over the past year, the price per square meter increased by 14%, surpassing pre-crisis levels.

However, while Spain is an excellent place to buy a holiday home, retirement property, or an investment apartment, the buying process is not always as simple as it looks. Behind the appealing offers lie various bureaucratic steps and legal details that are easy for newcomers to overlook. To ensure a safe and successful property purchase in Spain, it’s essential to pay attention to the documents, avoid common mistakes, and understand the local regulations.

In this guide, we’ll explain how to buy property in Spain safely, highlight key risks to watch out for, and share tips to make sure your dream home on the Mediterranean coast becomes a true source of joy — and not of unpleasant surprises.

Buying property is always an exciting step toward your dream home. However, being aware of potential legal risks when buying property in Spain and preparing properly can help you secure a safe transaction. Below we’ll explore the main legal pitfalls in the Spanish real estate market and how to avoid costly mistakes.

1. Not Hiring an Independent Lawyer
Many buyers rely solely on the seller’s agent or lawyer, which creates a conflict of interest and increases the risk of financial loss. An independent real estate lawyer in Spain will verify the legal status of the property, review or draft the purchase contract, and protect your rights throughout the entire process.

2. Illegal Constructions and Missing Licenses
It is not uncommon to encounter properties with unauthorized extensions or renovations, which may lead to fines or even demolition. To avoid this, request all permits, licenses, and certificates from the seller and cross-check them with the local Town Hall (Ayuntamiento), the Land Registry (Registro de la Propiedad), and the Cadastre (Catastro). A technical inspection by an architect or surveyor is also recommended.

3. Liens, Debts, and Encumbrances
Before buying, ensure the property is free of mortgages, debts, or legal disputes. This can be verified through an official extract (Nota Simple) from the Spanish Land Registry. Additionally, check for unpaid taxes, community fees, and municipal charges through local tax offices and homeowners’ associations.

4. Contract Errors and Omissions
Even small mistakes in the purchase contract can make the deal invalid or disputed in court. To prevent this, contracts should always be drafted in accordance with Spanish property law and reviewed by an experienced lawyer.

5. Risk of Double Sale
In Spain, some properties are fraudulently sold to multiple buyers if transactions are not registered promptly. To protect your investment, ensure the title deed is registered immediately in your name at the Land Registry.

6. Risks When Dealing with Companies (Legal Entities)
If the seller is a company, the purchase agreement must be signed by an authorized representative. A contract signed by an unauthorized party could be declared invalid. Always check the powers of attorney and supporting documents.

7. Issues with Reservation Contracts (Contrato de Arras)
The “Contrato de Arras” secures the property with a deposit, but terms vary. Pay special attention to the deposit amount, validity period, obligations of both parties, and the refund conditions in case of cancellation. To avoid losing money, have this agreement reviewed by a real estate lawyer in Spain.

8. Illegal Occupants (Okupas)
Spain has faced issues with illegal occupants (“okupas”) taking over empty properties. Eviction can be a lengthy legal process, so verifying the property’s history and occupancy status in advance is critical.

9. Buying Off-Plan Property
When buying a property under construction, always request the developer’s licenses and building permits from the Town Hall, check their reputation, and ensure they provide bank guarantees or insurance in case of bankruptcy. A legal background check of the developer is highly recommended.

10. NIE (Foreigner Identification Number) Requirement
Foreign buyers must obtain an NIE (Número de Identificación de Extranjero) to legally complete the transaction, open a bank account, sign contracts, and pay taxes.

The NIE can be requested in Spain at the Foreigner’s Office (Oficina de Extranjeros) or at a Spanish consulate abroad. The required documents include the EX-15 form, passport, a justification for the request (such as a reservation contract), payment of the government fee, and ID photos.

When buying property in Spain, the purchase price is not the only expense to consider. There are several additional costs and taxes that can significantly increase the overall budget. On average, these additional expenses amount to 8–12% of the property price.

Taxes

• For new builds, the main tax is VAT (IVA) at 10%.
• For resale properties, buyers must pay the Property Transfer Tax (ITP), usually between 7% and 10% depending on the region.

Notary and Registration Fees
Notary services and registering the property at the Land Registry typically cost around 1–1.5% of the purchase price.

Legal Fees

• Hiring a qualified lawyer is strongly recommended to review documents and protect the buyer’s interests. Legal services usually cost around 1% of the purchase price.

Property Valuation
If you take a mortgage, the bank will require an independent appraisal of the property, priced between €250 and €600.

Bank Fees and Insurance
These may include a mortgage arrangement fee (up to 2%), home insurance, and in some cases, life insurance.

Utilities and Ongoing Taxes
After purchase, you will need to pay the annual property tax (IBI) plus regular bills for water, electricity, and gas, as well as community fees if the property is located in a residential complex.

Utility Contract Transfers
When buying a previously vacant property, transferring or setting up new utility contracts may involve additional costs.

✅ Always budget an extra 10–12% of the property price for taxes and additional costs.
✅ Work only with reputable lawyers and financial advisors.
✅ Calculate mortgage-related expenses and bank fees in advance.
✅ Request a detailed breakdown of costs from your real estate agency, including region-specific taxes.

When buying real estate in Spain, it is not uncommon to face hidden defects that are difficult or even impossible to detect immediately. These may include problems with the roof, plumbing, electrical systems, cracks in the walls, or issues with thermal and sound insulation. Such defects often reveal themselves only after the purchase, creating serious inconveniences for the buyer.

A particular risk involves illegal constructions — unauthorized extensions, internal modifications, or buildings erected without the required permits. These can lead to fines, legal disputes, or even demolition orders.

✅ Order a comprehensive technical due diligence from independent experts before completing the purchase. This should include an inspection of the building structure, utilities, installations, finishes, and compliance with the official floor plan.

✅ Verify that all required building permits and urban planning documentation are in place at the local Town Hall (Ayuntamiento).

✅ Review property details in the Spanish Land Registry (Registro de la Propiedad) and the Cadastre (Catastro) to confirm legal status and check for encumbrances.

For foreign buyers of real estate in Spain, it’s essential to understand the tax system, bureaucratic procedures, and rules for transferring funds.

When transferring money from abroad to buy property in Spain, buyers must provide their bank with documents proving the legal origin of funds (e.g., tax returns, sale agreements, or income statements).

Best Options for Foreign Transfers (US & UK Citizens):

✅ The safest way is via international SWIFT transfers through reputable banks that have strong international networks and low fees. For US citizens, reliable options include Bank of America, Chase, Citibank, etc. For UK buyers, HSBC, Barclays, Lloyds, Santander UK are widely used.

✅ Many foreign buyers also use fintech platforms such as Wise (TransferWise), Revolut, or PayPal to make international transfers at lower exchange rates and fees, provided both sender and recipient accounts are in countries not affected by financial restrictions or sanctions.

✅ To simplify future payments (utilities, property tax, community fees), it is highly recommended to open an account in a Spanish bank (e.g., CaixaBank, Banco Sabadell, BBVA, Santander). Foreigners can typically open an account with a valid passport, NIE (Número de Identificación de Extranjero), and proof of address in Spain.

Many foreigners make the same typical mistakes, which lead to losses and complications. We have gathered a list of the most frequent problems:

• Transferring money to an agency or intermediary’s account instead of the seller’s personal account. This increases the risk of fraud, especially if funds are not secured in an escrow account.
• Ignoring family opinions and personal needs when choosing a property. Buyers often focus only on the attractiveness of the location without considering real living conditions and local infrastructure.
• Declining property insurance. Saving on insurance can lead to significant losses in case of damage or tenant payment risks.
• Signing a preliminary contract without legal advice. This often results in problems with non-refundable deposits, unsatisfactory terms, or restrictive conditions.
• Underestimating additional expenses and regional taxes. Buyers tend to calculate only the purchase price, forgetting about taxes, utilities, and fees, which leads to budget overruns. It is recommended to set aside about 12% of the property value for these extra costs.
• Purchasing property without thorough document verification and due diligence. This can result in double sales, hidden encumbrances, or lengthy court disputes.

How to avoid these mistakes: thorough preparation, involvement of experienced lawyers and financial advisors, and careful review of every detail of the transaction. It is recommended to work only with trusted agencies and reputable professionals with real client reviews.

✅ Verification of the property’s legal status
Make sure the seller is the rightful owner and that the property is free of debts, mortgages, or legal disputes. Request an extract from the Property Registry (Nota Simple) and check cadastral data as well as necessary permits and licenses.

✅ Professional transaction support
Hire a lawyer specializing in Spanish real estate. They will carry out due diligence, ensure the contract is properly drafted, and protect your interests throughout the transaction.

✅ Use of notary services
A notary certifies the transaction, checks documents, and ensures compliance with the law. The notary is impartial and guarantees the legal integrity of the process.

✅ Payment through a bank account
Conduct all payments through Spanish banks to reduce fraud risks and streamline future transactions (taxes, utilities). Bank transfers are backed by banking guarantees.

✅ Registration of property rights
Once the deal is closed, register your ownership in the Property Registry. This officially secures your rights and prevents third-party claims.

✅ Inspection of the property by technical experts
Order an independent technical inspection to uncover hidden defects and verify that the property matches the declared specifications. This prevents unpleasant surprises after purchase.

✅ Planning for taxes and additional expenses
Prepare a full budget in advance, including taxes, notary fees, legal services, and utilities. Allocate approximately 12% of the property’s value for these extra costs to avoid financial strain.

✅ Careful attention to contracts and details
Read all documents thoroughly — especially clauses about deposits, withdrawal consequences, and deadlines — to avoid conflicts, penalties, or unexpected obligations.

Buying property in Spain is both an exciting and important journey that calls for careful thoughtand preparation. To ensure a smooth and safe experience, take your time choosing the right location, visit properties in person, and seek reliable legal and technical help. Be mindful of additional costs beyond the purchase price, and use trusted banks for your transactions. It always pays to consult local experts who know the market well.

Above all, stay patient, double-check every step, and have professionals by your side to guide you through the process.

⭐ Obtain your NIE (Número de Identificación de Extranjero) before starting the purchase.
⭐ Budget for 7–10% Transfer Tax (ITP) on resales or 10% VAT (IVA) on new builds.
⭐ Remember the annual property tax (IBI) and possible non-resident income tax (24%) if renting out.
⭐ Confirm who pays the Plusvalía Municipal (capital gains tax) — usually the seller.
⭐ Work with an independent real estate lawyer to review contracts and documents.
⭐ Use a secure money transfer method via a Spanish or EU‑based bank.
⭐ Register the property in the Land Registry (Registro de la Propiedad) immediately after purchase.

Wishing you a successful purchase and a comfortable life in Spain!