Transaction Flow – NLS Academy

This is the final lesson before your certification exam. Everything you have studied across this course comes together here: legal frameworks, tax obligations, documentation requirements, professional ethics, and client management. We will walk through a complete Spanish property transaction from the moment a buyer decides to make an offer to the post-completion obligations that follow. This lesson is designed to be both a learning tool and a practical reference you can consult throughout your career. Know this process inside out, and you will be a more effective, more trusted, and more compliant agent.

Step 1: Search & Selection

The Viewing Process

By the time you are arranging viewings, your buyer should already be qualified: you know their budget, their financing status, their legal readiness (NIE, bank account, lawyer), and their priorities. Good viewings are focused, not exhaustive. Show four to six properties maximum per day. Any more than that and the properties blur together in the buyer’s memory.

Before each viewing, provide the buyer with key details: price, size, community fees, IBI amount, energy rating, and any known issues. During the viewing, let the buyer explore the property at their own pace. Answer questions honestly. If you do not know the answer, say so and commit to finding out. Never speculate about legal or structural matters.

Second Viewings and Technical Inspections

When a buyer is seriously interested in a property, recommend a second viewing at a different time of day. A property that looks perfect at 11am on a sunny Tuesday may reveal traffic noise at 6pm on a Friday, or a neighbour’s construction project that was not visible the first time. For older properties, villas, or fincas, recommend an independent survey or technical inspection (peritación). This is not standard practice in Spain the way it is in the UK, but it can save the buyer from expensive surprises. A surveyor can identify structural issues, damp, electrical or plumbing problems, and illegal constructions.

Informal Due Diligence Begins

Even before any formal offer, a good agent is already gathering intelligence. Is the urbanisation well maintained? Are the communal areas in good condition? What are the neighbours like? Is there road access, or is the property accessed by a dirt track that floods in winter? Is there an active community of owners? These practical details matter enormously to buyers, particularly international buyers who may not know the area well.

Step 2: The Offer

How Offers Work in Spain

In Spain, a verbal offer is not legally binding. Even a written offer, unless it constitutes a formal contract with consideration (money changing hands), does not typically create an enforceable obligation. This is fundamentally different from some other European jurisdictions. The legally binding moment in a Spanish property transaction is the signing of the contrato de arras, accompanied by the payment of a deposit. Until that point, either party can walk away without legal consequence.

That said, written offers are standard professional practice and serve an important purpose: they create clarity. A written offer should include the buyer’s full name and NIE/passport number, the property address and registro reference, the offered price, any conditions (mortgage, survey, legal checks), a proposed timeline for arras and completion, and how costs will be distributed.

Negotiation

As the agent, your role in negotiation is to facilitate, not to pressure. Present the offer to the seller accurately and completely. Convey the seller’s response to the buyer accurately and completely. Advise both parties on market conditions and comparable data if asked, but do not advocate for one side against the other, even if you are only representing the seller. Your credibility depends on being seen as honest and fair by both parties.

In practice, most Spanish property transactions involve some negotiation. A common pattern is an initial offer 5-15% below asking price, followed by one or two counter-offers, settling somewhere in between. However, in hot markets or for well-priced properties, offers at or near asking price are not unusual.

Subject-to Conditions

Buyers may wish to make their offer subject to certain conditions: mortgage approval, a satisfactory survey, legal due diligence, or the sale of their existing property. These conditions should be clearly stated in writing. The key question for any condition is: what happens if the condition is not met? If the buyer’s mortgage is declined, do they get their deposit back? These matters must be explicitly addressed in the arras contract. Ambiguity here is the source of most transaction disputes.

Step 3: Reservation / Holding Deposit

Once an offer is verbally accepted, it is common practice (though not legally required) for the buyer to pay a small holding deposit — typically €3,000 to €6,000 — to take the property off the market while the arras contract is prepared. This reservation deposit serves a practical purpose: it demonstrates the buyer’s good faith and gives the seller confidence to stop marketing the property and cancel other viewings.

The reservation period is usually short: two to four weeks. During this time, the buyer’s lawyer begins due diligence and the arras contract is drafted. The critical point about the reservation deposit is its refundability. This must be explicitly agreed in writing before the money is paid. Is the deposit fully refundable if due diligence reveals a problem? Is it non-refundable under all circumstances? Is it refundable only if specific conditions are not met? There is no default legal position — it depends entirely on what the parties agree.

As the agent, you may hold the reservation deposit in your client account (if you have one) or it may be paid to the seller’s lawyer. Ensure you have proper documentation: a signed reservation agreement, a receipt, and clear terms on refundability and the timeline for signing the arras contract.

Step 4: Contrato de Arras (Earnest Money Contract)

The Most Critical Document Before Completion

The contrato de arras is the contract that creates binding legal obligations between buyer and seller. It is, in practical terms, the most important document in the entire transaction until the escritura pública is signed at the notary. Getting the arras contract right protects both parties. Getting it wrong can lead to lost deposits, failed transactions, and litigation.

Types of Arras

Spanish law recognises three types of arras, and it is essential that the contract explicitly states which type applies. If the contract is silent or ambiguous, courts may interpret the deposit as arras confirmatorias by default, which has very different consequences from what most parties intend.

Arras penitenciales (Article 1454, Código Civil). This is the most common type in residential property transactions. Under arras penitenciales, either party has the right to withdraw from the contract, but at a cost. If the buyer withdraws, they lose the deposit. If the seller withdraws, they must return the deposit plus an equal amount — in other words, they pay double. This mechanism provides a clear, predictable exit route for both parties. It is not a penalty; it is a legally recognised right to withdraw in exchange for a defined financial consequence. The arras contract must explicitly state that the deposit is paid as “arras penitenciales conforme al artículo 1454 del Código Civil” to avoid any ambiguity.

Arras confirmatorias. A confirmatory deposit functions as a partial payment of the purchase price and confirms both parties’ commitment to the transaction. Crucially, arras confirmatorias do not provide either party with a right to withdraw simply by forfeiting the deposit. If either party fails to perform, the other can demand specific performance (cumplimiento forzoso) or seek damages through the courts. This is a much more rigid arrangement and is typically used in commercial transactions or where both parties want maximum certainty of completion.

Arras penales. A penal deposit imposes a penalty for non-performance, but unlike arras penitenciales, it does not extinguish the obligation to complete. The non-performing party pays the penalty and may also be liable for damages. This type is relatively rare in standard residential transactions.

Typical Deposit Amount

The standard deposit under an arras contract is 10% of the agreed purchase price. For a €500,000 property, the buyer would pay €50,000 at the signing of the arras. This amount is not fixed by law — it is a matter of negotiation — but 10% is the widely accepted convention. Some transactions use a lower percentage, particularly if the buyer has already paid a reservation deposit that is incorporated into the arras amount.

Key Clauses That Must Be Included

A properly drafted arras contract should include all of the following:

Full identification of buyer and seller: Names, addresses, NIE or DNI numbers, and marital status. If either party is acting through a representative, the power of attorney details must be included.
Property description: Full address, referencia catastral (catastral reference number), and registro de la propiedad details (tomo, libro, folio, finca number). The description in the arras must match the Nota Simple.
Agreed purchase price: The total price in euros, clearly stated.
Deposit amount and type of arras: The amount paid, and an explicit statement that the deposit constitutes arras penitenciales (or whichever type applies) under the relevant article of the Código Civil.
Completion deadline: The date by which the escritura pública must be signed. This is typically 30 to 90 days after the arras, depending on whether a mortgage is involved and the complexity of the due diligence.
Distribution of costs: Who pays the notary fees, registro fees, ITP or IVA, plusvalía, agent commission, and any other costs. Spanish custom is that the buyer pays ITP (or IVA plus AJD), notary fees, and registro fees, while the seller pays plusvalía municipal, agent commission, and mortgage cancellation costs. However, these are negotiable.
Property condition: Whether furniture, fittings, or appliances are included or excluded. An inventory should be annexed if the property is sold furnished.
Conditions: Any conditions precedent, such as mortgage approval, satisfactory survey results, or resolution of a planning issue. The consequences of each condition not being met must be explicitly stated.

Common Arras Problems and How to Avoid Them

The most frequent problems with arras contracts are: failure to specify the type of arras (leading to disputes over refundability), unrealistic completion deadlines, vague or missing conditions, incomplete property descriptions, and failure to address the 3% retention for non-resident sellers. Every arras contract should be reviewed by both parties’ lawyers before signing. As the agent, you should never draft the arras contract yourself unless you are legally qualified to do so. Facilitate the process, but leave the drafting to lawyers.

Step 5: Due Diligence Period

What the Buyer’s Lawyer Checks

After the arras is signed, the buyer’s lawyer conducts thorough due diligence. In practice, a competent lawyer will have started some of these checks before the arras is signed, but the full investigation happens during the period between arras and completion.

Nota Simple. The lawyer obtains a fresh Nota Simple from the Registro de la Propiedad. This confirms: the current registered owner(s), the property description (size, boundaries, type), any mortgages (hipotecas) registered against the property, any other charges or encumbrances (cargas), such as easements (servidumbres), rights of way, or usufruct, and any preventive annotations (anotaciones preventivas) indicating pending legal proceedings, embargos, or claims.

Catastral Check. The lawyer compares the property description in the Registro with the catastral records (Catastro). Discrepancies between the two are extremely common in Spain, particularly for older properties and rural fincas. The registered area may differ from the catastral area, or the catastral map may not reflect extensions or modifications. Resolving these discrepancies may require a georreferenciación (geo-referencing) process or a declaration of new construction (declaración de obra nueva).

Urban Planning Check. The lawyer obtains a certificado urbanístico from the town hall (ayuntamiento) to confirm: the planning classification of the land (urbano, urbanizable, or rústico), whether the property complies with current planning regulations, whether there are any open infractions or enforcement proceedings, and whether there are any planned developments or infrastructure projects that might affect the property (new roads, expropriation, etc.).

Community Debts. A certificado de deuda de la comunidad from the community administrator confirms whether there are any outstanding community fees. Under Spanish law, the buyer inherits the seller’s community debts for the current year and the three preceding years. This makes checking community debts essential.

Tax Debts. The lawyer checks that IBI (property tax) is paid up to date and that there are no outstanding tax debts against the property. A certificado de estar al corriente de pago from the ayuntamiento confirms this.

Building Licences. For any modifications, extensions, or constructions, the lawyer checks that the appropriate building licences (licencia de obra) were obtained and that a certificate of completion (certificado final de obra) was issued. Illegal constructions are widespread in Spain, particularly in rural areas and along the coast. An extension built without a licence may be subject to a demolition order, or it may be “regularisable” depending on the age of the construction and the local planning rules.

Energy Certificate. The lawyer confirms that the energy performance certificate is valid and registered. First occupation licence or cédula de habitabilidad is confirmed as current.

Tenants. If the property is rented, the lawyer checks the terms of the tenancy. Under Ley 29/1994 (Urban Tenancies Act) and the more recent Ley 12/2023 por el derecho a la vivienda, tenants may have a right of first refusal (derecho de tanteo y retracto) and significant protections against eviction. The buyer must understand they are purchasing a property with sitting tenants and what that means for their intended use.

Red Flags in Due Diligence

Discrepancies between registro and catastro: Common but must be resolved before or at completion. May require additional procedures and cost.
Illegal extensions or constructions: Can range from minor (an enclosed terrace) to major (an entire extra floor). The buyer needs legal advice on whether the construction can be legalised and at what cost.
Pending legal proceedings (anotaciones preventivas): A preventive annotation on the Nota Simple is a red flag that requires immediate investigation. It may indicate a pending lawsuit, an embargo, or a claim against the property.
PGOU classifications that restrict use: The Plan General de Ordenación Urbana (municipal planning plan) may classify the land in a way that restricts the buyer’s intended use. Rural land (suelo rústico) has strict building limitations. Land classified as protected (suelo no urbanizable protegido) has even more.

Step 6: Pre-Completion Preparation

Mortgage

If the buyer is obtaining a mortgage, the bank will issue a formal binding offer (oferta vinculante) after completing its own valuation and checks. The mortgage deed (escritura de hipoteca) is typically signed at the notary immediately before the purchase deed, sometimes the day before. Since the introduction of Ley 5/2019 reguladora de los contratos de crédito inmobiliario, the buyer must visit the notary at least one day before signing the mortgage to receive an explanation of the terms (acta de transparencia). This is a legal requirement, not a formality.

NIE Confirmation

Confirm that all parties have valid NIEs. If the buyer applied for an NIE during the process, verify that it has been issued and that the number is correct. The notary will not proceed without valid identification for all parties.

Powers of Attorney

If the buyer (or seller) cannot attend completion in person, they can grant a poder notarial (notarial power of attorney) to a representative, typically their lawyer. The power of attorney must be specific enough to cover the property purchase, including the power to sign the escritura, make payments, and handle related administrative acts. If the power of attorney was granted outside Spain, it must be apostilled and, in most cases, translated by a sworn translator (traductor jurado).

Final Property Inspection

The buyer should inspect the property shortly before completion to confirm it is in the agreed condition. For resale properties, this means checking that any furniture or items included in the sale are present, that no damage has occurred since the arras was signed, and that the property is vacant (unless otherwise agreed). For new-build properties, this is the snagging inspection (repaso de defectos), where the buyer identifies any defects or unfinished items for the developer to rectify.

Payment Preparation

Payment at the notary in Spain is typically made by bankers’ draft (cheque bancario) issued by a Spanish bank. The buyer’s lawyer will advise on the exact amounts needed: the balance of the purchase price (total price minus the arras deposit already paid), notary fees, registro fees, and any other costs due on the day. Some notaries now accept bank transfers, but cheques bancarios remain the standard because they provide immediate, guaranteed funds. The buyer should have the funds in their Spanish bank account well before completion day to allow time for the bank to prepare the drafts.

Step 7: Completion at the Notary (Escritura Pública)

What Happens on Completion Day

Completion takes place at a notaría (notary’s office). Both parties, or their legal representatives, attend. Here is the sequence of events:

Identity verification. The notary verifies the identity of all parties present, checking passports, NIEs, and any powers of attorney.
Reading of the escritura pública. The notary reads aloud (or summarises, with the parties’ consent) the full text of the public deed. This includes the property description, the agreed price, the payment terms, the distribution of costs, declarations regarding the property’s condition, and any special clauses. If any party does not speak Spanish, an interpreter must be present (and in some cases, a sworn translator must have translated the document in advance).
Payment. The buyer hands over the bankers’ drafts for the balance of the purchase price. If the seller has an outstanding mortgage, the buyer may issue separate drafts: one to the seller’s bank to cancel the mortgage, and the remainder to the seller. In the case of a non-resident seller, a separate draft for the 3% retention is issued to be paid to the Agencia Tributaria.
Signing. All parties sign the escritura. This is the moment at which legal ownership transfers.
Keys. The seller hands over the keys to the property.
Registro inscription. The notary sends the escritura electronically to the Registro de la Propiedad for inscription. Full registration typically takes several weeks, but the electronic transmission creates a priority entry (asiento de presentación) that protects the buyer’s rights from the moment of signing.

Who Pays What at Completion

The buyer typically pays:

ITP (Impuesto de Transmisiones Patrimoniales) on resale properties: this varies by autonomous community, ranging from 6% to 10% of the purchase price. In Andalucía, it is currently 7%. In the Valencian Community, it is 10%. In Catalonia, it is 10% for properties above €1,000,000 and lower rates below that threshold.
IVA (10%) plus AJD (Actos Jurídicos Documentados, typically 0.5-1.5%) on new-build residential properties purchased directly from the developer. Commercial properties attract 21% IVA.
Notary fees: Regulated by law, based on the purchase price. For a €400,000 property, expect approximately €800-€1,200.
Registro fees: Also regulated, typically €400-€700 for the same price range.
Legal fees: The buyer’s lawyer’s fees, typically around 1% of the purchase price plus IVA, though this varies.

The seller typically pays:

Plusvalía Municipal: The municipal capital gains tax, calculated by the ayuntamiento based on the increase in land value since the seller acquired the property. Since the Constitutional Court ruling of 2021 and the subsequent reform (Real Decreto-ley 26/2021), the seller can choose between two calculation methods: the traditional method based on coefficients applied to the catastral value, or the “real” method based on the actual gain in value. The seller pays whichever produces the lower amount, and no plusvalía is due if the property is sold at a loss.
Agent commission: As agreed in the mandate/listing agreement, typically 3-5% plus IVA.
Mortgage cancellation costs: If the seller has an outstanding mortgage, the costs of cancelling it, including any early repayment penalty and the registro fee for removing the charge.
3% retention (non-resident sellers): The buyer withholds 3% of the purchase price and pays it to Hacienda within one month using Form 211. This is on account of the seller’s capital gains tax liability. If the seller’s actual capital gains tax is less than 3%, they can claim a refund.
Capital gains tax: For resident sellers, capital gains are taxed at progressive rates from 19% to 28% (2025 rates, with the highest rate applying to gains above €300,000). For non-resident sellers, the rate is a flat 19%. The 3% retention is an advance payment against this liability.

Post-Completion Obligations

The transaction does not end when the keys are handed over. Several important obligations follow:

Tax payments. The buyer must pay ITP (for resale properties) within 30 days of completion in most autonomous communities. For new builds, IVA is typically handled through the developer, but AJD must be self-assessed. Late payment attracts surcharges and interest.
Change of ownership on IBI. Notify the ayuntamiento of the change of ownership so that future IBI bills are sent to the buyer.
Utility bills. Transfer electricity, water, gas, and internet contracts into the buyer’s name. This requires the new escritura or a copy, the buyer’s NIE, and a Spanish bank account for direct debits.
Community of owners notification. Notify the community administrator of the change of ownership and set up a direct debit for community fees.
Non-resident buyer: annual tax obligations. If the buyer is a non-resident, they must file an annual IRNR declaration. If the property is not rented, they owe imputed income tax (calculated on the catastral value). If the property is rented, the rental income is taxable in Spain. EU/EEA residents are taxed at 19%; non-EU residents at 24%.
Non-resident seller: capital gains declaration. The seller must file a capital gains tax return (Form 210) within four months of completion. If the 3% retention exceeds the actual tax due, the seller claims a refund. If it does not cover the full liability, the seller must pay the difference.

The Agent’s Role Throughout the Transaction

What You Do at Each Stage

Your role as the agent is to facilitate the transaction professionally and keep all parties informed. Here is what that looks like in practice at each stage of the process:

Search and selection: Arrange viewings, provide property information, answer questions, and help the buyer narrow their choices.
Offer: Present the offer to the seller, communicate counter-offers, and help both parties reach agreement on price and terms.
Reservation: Manage the reservation deposit, ensure the reservation agreement is in writing, and confirm the timeline for arras.
Arras: Coordinate between the buyer’s and seller’s lawyers to ensure the arras contract is drafted, reviewed, and signed within the agreed timeframe. Chase progress if necessary.
Due diligence: Stay in contact with both lawyers, alert them to any issues you are aware of, and keep both buyer and seller informed of progress.
Pre-completion: Coordinate the completion date, confirm all parties can attend (or have powers of attorney), and help with practical matters like arranging the final inspection.
Completion: Attend the notary if appropriate, ensure the process runs smoothly, and hand over the keys.
Post-completion: Follow up with the buyer to ensure they have transferred utilities, notified the community, and addressed their tax obligations. Maintain the relationship for future referrals.

What You Should Not Do

There are clear boundaries to the agent’s role, and crossing them exposes you to liability:

Do not give legal advice. You are not a lawyer. You can explain how the process generally works, but specific legal questions — about contracts, taxes, planning issues, or property defects — should be referred to the buyer’s or seller’s lawyer.
Do not give tax advice. You can explain the general tax structure (as covered in this course), but specific calculations and planning should be handled by a tax professional (asesor fiscal) or the client’s lawyer.
Do not draft legal documents. Unless you are legally qualified, do not draft arras contracts, reservation agreements, or any binding documents. Facilitate the process, but leave the drafting to lawyers.
Do not handle client money without proper authorisation and documentation. If you hold deposits or reservation funds, ensure you have a proper client account, clear receipts, and written authorisation from the parties.

Recommending Independent Professionals

Throughout the transaction, you will refer clients to other professionals: lawyers (abogados), tax advisors (asesores fiscales), mortgage brokers, currency exchange specialists, surveyors, architects, and gestores (administrative agents). Always recommend independent professionals. A lawyer recommended by the agent who represents the seller is not independent from the buyer’s perspective. Ideally, maintain a list of trusted professionals you have worked with, but always offer the client the option to find their own.

Documentation You Should Keep for Compliance

Maintain a complete file for every transaction. This should include: the buyer’s identification documents and qualification notes, the seller’s identification documents and listing agreement, the Nota Simple, all offers and counter-offers (in writing), the reservation agreement and receipt, the arras contract, correspondence with both parties and their lawyers, evidence of AML checks (source of funds documentation), GDPR consent forms, and your commission invoice. Under Spanish anti-money laundering law (Ley 10/2010), you are required to retain transaction records for a minimum of ten years.

After Completion: Maintaining the Relationship

The best agents understand that completion is not the end of the client relationship — it is the beginning. A buyer who has a positive experience will recommend you to friends, family, and colleagues. An international buyer who purchases a holiday home today may want to buy an investment property next year, or their neighbours back home may start looking in Spain after seeing their photos on social media.

Follow up after completion. Check that the buyer has settled in. Help with practical questions if you can. Send a brief message on the anniversary of their purchase. These small gestures cost you nothing and build the kind of reputation that generates referral business for years to come.

Summary: The Transaction Timeline at a Glance

Offer accepted — verbal or written agreement on price and basic terms.
Reservation deposit (€3,000-€6,000) — property taken off market, 2-4 week window.
Contrato de arras signed — 10% deposit paid (less any reservation deposit), binding contract with defined exit terms, 30-90 day completion window.
Due diligence — lawyer checks Nota Simple, catastro, planning, community debts, licences, tenants.
Pre-completion preparation — mortgage finalised, NIE confirmed, powers of attorney prepared, final inspection, bankers’ drafts ordered.
Completion at the notary — escritura pública signed, balance paid, keys handed over, registro inscription initiated.
Post-completion — taxes paid within 30 days, utilities transferred, community notified, ongoing tax obligations understood and addressed.

Key Terms for Review

Arras penitenciales (Article 1454 Código Civil): Deposit allowing either party to withdraw — buyer forfeits deposit, seller pays double.
Arras confirmatorias: Deposit as partial payment, confirming commitment without a right to easy withdrawal.
Arras penales: Penalty deposit; non-performing party pays the penalty and may also be liable for damages.
Escritura pública: The public deed signed at the notary that transfers legal ownership.
ITP (Impuesto de Transmisiones Patrimoniales): Property transfer tax on resale properties, 6-10% depending on autonomous community.
IVA + AJD: VAT (10% residential, 21% commercial) plus stamp duty (0.5-1.5%) on new-build purchases from developers.
Plusvalía Municipal: Municipal capital gains tax paid by the seller, based on the increase in land value.
3% retention: Amount withheld by the buyer from a non-resident seller’s proceeds, paid to Hacienda on account of the seller’s capital gains tax.
Nota Simple: Official Land Registry extract showing ownership, description, and charges.
Referencia catastral: The unique reference number identifying a property in the Catastro (land registry for tax and mapping purposes).
Anotación preventiva: A preventive annotation on the Land Registry entry, warning of pending legal proceedings or claims.
Poder notarial: A notarial power of attorney allowing a representative to act on behalf of the buyer or seller.
Oferta vinculante: A binding mortgage offer from the bank, setting out the final terms of the loan.
Cheque bancario: A bankers’ draft, the standard method of payment at property completions in Spain.

You have now completed the full NLS Academy certification course content. The 40-question exam will test your knowledge across all modules. Review your notes, revisit any areas of uncertainty, and remember: in practice, the most successful agents are those who know the process thoroughly, communicate clearly, and always act in their clients’ best interests within the boundaries of their professional role. Good luck.