Buying property in Spain as a foreigner: the legal pitfalls that can derail a transaction

Buying a property in Spain as a foreigner is not legally complicated, but it is not exactly the same as doing so as a resident. The problem arises when a seemingly straightforward transaction reaches the notary’s office without certain legal, tax or documentary issues having been resolved in good time.

A NIE that does not arrive on time, a discrepancy between the Land Registry and the Cadastre, a power of attorney that cannot be used in Spain, a bank transfer whose source has not been properly documented, or an encumbrance not detected before signing the deposit agreement can delay a sale for weeks. In the worst-case scenario, they can prevent the transaction from being completed.

This is particularly relevant in markets with a high proportion of international buyers, such as the Valencian Community, the Costa Blanca, the Region of Murcia or the Almería coast.

1. Streamlining the reservation without neglecting legal verification

In transactions involving foreign buyers, timeframes are tight: the foreign buyer usually has only a few days in Spain and needs to have the transaction agreed in principle and secured by means of a reservation agreement or deposit before returning to their home country.

To ensure that this speed does not work against the transaction, ideally the legal due diligence and commercial negotiations should proceed in tandem from the very outset. Verifying key issues – such as beneficial ownership, registered encumbrances or the existence of an unprocessed inheritance – in parallel with the negotiations allows the reservation agreement to be signed swiftly and with the peace of mind that no unforeseen issues will arise to block the process weeks later.

Likewise, it must be verified that the land registry description, the cadastral information and the physical condition of the property are consistent; extensions, swimming pools or enclosed terraces that have not been properly documented are a common source of conflict.

2. Leaving the application for a NIE until the end

Every foreign buyer needs a tax identification number to carry out transactions in Spain – the so-called NIE in the case of foreign individuals. The mistake lies in postponing the application until the very end.

When the buyer resides abroad and the sale is handled remotely, the documentation must be organised from day one. This becomes even more important in joint purchases, marriages under foreign property regimes, corporate transactions or acquisitions involving unequal shareholdings, where the structure of the purchase has subsequent legal and tax implications.

3. Leaving proof of the source of funds until the end

This is one of the aspects that most often takes international buyers by surprise.

Whether the funds come from the sale of another property, savings, inheritances, dividends or company loans, specific documentary evidence may be required. If a large transfer arrives a few days before the signing without the necessary documentation in place, the transaction may be held up even if the money is entirely legitimate.

4. Using an inadequate power of attorney

Many foreign buyers do not attend the signing in person and grant a power of attorney for another person to act on their behalf.

When the power of attorney is granted abroad, it must meet the necessary requirements to be valid in Spain. Depending on the country and the document, it may require legalisation or a Hague Apostille and, where applicable, a certified translation. Furthermore, the powers granted must be sufficient for the actions to be carried out.

Discovering a defect in form or content once the buyer has already left Spain may prevent the signing from taking place on the scheduled date.

5. Lack of specificity regarding the inventory and conditions of handover

Not all disputes are purely legal in nature; many arise from misunderstandings about the scope of the purchase.

• In the case of new-build properties, the finishes, white goods or optional packages agreed with the developer must be clearly specified.
• In the case of second-hand properties, items such as furniture, décor or outdoor fittings may give rise to disagreements if a detailed inventory is not drawn up specifying what is included, what is being removed, the state of repair and the conditions under which the property is to be handed over.

What seems like a minor detail can turn into a last-minute dispute when the buyer and seller had different expectations about what was included in the transaction.

6. Ignoring the actual town planning situation

The Land Registry and the Cadastral Register do not replace a municipal town planning check where this is necessary – something particularly relevant in coastal or rural areas with buildings from different eras and accumulated extensions.

Foreign buyers often assume that a property advertised as having utilities connected and having been inhabited for years is fully compliant with administrative regulations.
This is not always the case.

7. Buying for holiday lets without checking the regulations

Many international buyers purchase a property with the intention of combining personal use with holiday lets for part of the year.

Feasibility depends on the applicable regional and local regulations, the specific characteristics of the property and the rules of the owners’ association. Furthermore, from 3rd April 2025, any owner wishing to commence this activity in a property subject to the condominium regime must first obtain the express approval of the owners’ association, in accordance with the terms established by law.

Registration decisions published during 2026 are emphasising the importance of reviewing the owners’ association’s articles of association and the agreements adopted before purchasing a property with the intention of using it for tourist lettings.

It should also be borne in mind that the regulation of tourist lettings is particularly subject to change. Autonomous communities and local councils may amend requirements, impose restrictions or introduce new conditions.

Therefore, if tourist lettings form part of the financial decision to purchase, their viability must be analysed on the basis of the specific property and in accordance with the regulations in force at that time, without assuming that a situation existing today will necessarily remain unchanged in the future.

8. Overlooking the owners’ association’s debts or additional charges

Although the Horizontal Property Act requires the seller to provide a certificate confirming that they are up to date with service charges, unless the buyer waives this obligation, the checks should go further.

The property is legally liable, within the limits established by law, for certain pre-existing debts, but it is also important to check whether any special levies have already been approved for future refurbishments or major works.

A property may be up to date with its payments yet be part of a community that has just approved a project involving a considerable sum.

9. Failing to identify that the seller is a non-resident

There is a particularly important tax obligation that falls directly on the buyer.

When purchasing a property from a seller who is a non-resident for tax purposes in Spain, the buyer must withhold and pay to the tax authorities 3 per cent of the agreed purchase price, using Form 211, as an advance payment of the tax due by the seller.

Failure to verify this circumstance directly affects the allocation of the purchase price and the financial arrangements for the deed of sale.

10. Confusing nationality, residence and tax residence

A British citizen may be resident in Spain; a Spanish citizen may be a non-resident for tax purposes; and purchasing a property in Spain does not, in itself, make a foreigner a Spanish tax resident.

Confusing these situations can affect taxes, withholdings and subsequent obligations arising from the transaction.

Taking precautions before signing

Most property sales involving foreign buyers are completed successfully. However, when a transaction stalls, the cause usually lies weeks earlier: the contract was signed or payment made before due diligence was carried out, inheritance matters were pending, a document was missing, the conditions of handover were unclear, or the details in the Land Registry, the Cadastre and the physical property were not verified to match.

The value of legal advice in a property sale involving a foreign buyer lies not merely in drawing up the deed, but in identifying problems whilst they can still be resolved without jeopardising the transaction.

Experience in markets with a high proportion of foreign buyers confirms that foresight and professional coordination are the best way to ensure that the buyer, seller and estate agents reach the signing stage with the key legal and documentary issues resolved.