Buy property in Spain at auction

Tuesday, 24 January 2006 12:00 AM

Buying an overseas property at auction is becoming a more popular way for British second-home seekers to secure their place in the sun.

But for the novice, an auction in Britain can be a daunting prospect let alone an auction abroad.

Experts at this year's Homebuyer Show have therefore come up with some top tips for people seeking to buy property in Spain at auction.

Firstly, as with any property purchase, auction buyers should ensure they have done their homework before getting involved in the bidding.

Interested parties can view a property up until the day of the auction, and all documentation is made available for inspection ten days before the auction.

Property title deeds, known as escritura in Spain, should be checked by a lawyer at this stage, and it is also important to make sure no utility bills or community fees are outstanding on the property as they can be passed to the new owner to pay off under Spanish law.

Buyers should also check that a property is registered with the Spanish property registry. It is not illegal to buy a property that is not registered, but it may lead to problems in future in proving ownership of the property.

After successfully bidding for a property, buyers pay a deposit and sign a reservation contract with a view to completing the full purchase within 28 days.

Buyers need to pay legal fees and property purchase tax at this stage, which adds up to around ten per cent of the property price.

Inez Rix, director and auctioneer for Direct Auctions, said: "When you buy a property at auction you know you are paying its market value based on what it is worth to the people bidding, and not what an estate agent or owners would like it to be worth, and our fees are just an open commission rate of 2.5 per cent compared to regular estate agent's fees, which can be three times that."

Plots of land, resale houses and apartments, and villas and commercial properties can all be found at auction. The property is often cheap because vendors can be only a step away from repossession and are looking for a quick sale.

But Inez Rix advises second-home seekers against buying properties that have been repossessed.

"Any property taken by the bank will always have some debt or another against it which is likely to be registered to property meaning that you will have to pay the debts to obtain a clear title to the property," he explained.

Experts will be on hand at this year's Homebuyer Show to provide advice on auctions, and it will for the first time include a Spanish auction house alongside traditional property agents.

For more information on the Homebuyer Show go to www.homebuyershow.co.uk or see information on March's property exhibitions

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