purchase fees

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jimmyallan
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purchase fees

Postby jimmyallan » Wed Oct 17, 2018 8:55 pm

Hi, looking for some advice, I am due to complete a house purchase beginning of November. I have just received an e-mail from my lawyer instructing me to arrange three bankers cheques to bring along to the notary, one for the owner, one for the owners lawyer and one for the estate agent. I wonder if this is common practice as I am wondering if I will get charged from the bank for each cheque. The total of the three cheques is the complete purchase price.
Thanks in advance,
James

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fincalospinos
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Re: purchase fees

Postby fincalospinos » Thu Oct 18, 2018 7:55 am

This is normal practice, and yes, your bank will charge for each cheque. Normaly between 40 - 60 Euros each, depending on how well you get on with your bank manager.
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costakid
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Re: purchase fees

Postby costakid » Thu Oct 18, 2018 11:16 am

Couldn't you pay the smaller fees on a debit card. One cheque for the house and the rest on card.

jhonie99
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Re: purchase fees

Postby jhonie99 » Thu Oct 18, 2018 1:08 pm

I wouldn't consider it normal! The seller can arrange to pay their own bills.

Alternatively, charge them for the privilege. Make additional deductions from the purchase price for the costs of the cheques to pay their lawyer and estate agent.

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Re: purchase fees

Postby scotty » Thu Oct 18, 2018 4:21 pm

You are paying the estate agents commission ? Don't think that's normal.

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Re: purchase fees

Postby Gasman » Thu Oct 18, 2018 6:15 pm

I certainly wouldnt be paying the seller's lawyer anything. The seller pays his own lawyer - you have nothing to do with that!
The agents fees should have been negotiated, and if previously agreed, then you may well be in for that charge or half of it, depending.
The house price as agreed (when we bought our house some long time ago, the estate agents fees were included in the house price, and I believe it was up to the seller to pass that money to the agent). So your quote "The total of the three cheques is the complete purchase price." seems to indicate that the purchase price does indeed include the house, and any expenses the seller has, eg his lawyer and estate agent.

We made one payment via the notary, paid our lawyer separately when she had finished all the transactions, helping with the IBI etc etc, and paid our "finder" who did some exploratory work for us finding suitable properties and agents prior to the sale.
If they are insisting on three separate cheques, I agree that someone has to pay the costs of the extra two cheques!! Personally I would expect to be paying one cheque for the full amount agreed.

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Re: purchase fees

Postby Miro » Fri Oct 19, 2018 1:14 am

Ditto that, no reason for you to agree to make out 3 seperate cheques - but in my experience, Spanish banks usually charge a percentage fee of the value of the cheque (an outrageous abuse IMHO), so whether it's one cheque or three may not actually make any difference to the cost incurred by you. I would check with your bank first - but if it turns out that it will cost you extra to provide three cheques, either politely refuse, or politely explain that you will deduct the extra cost incurred from the cheque to the seller.
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Re: purchase fees

Postby BENIDORM » Fri Oct 19, 2018 8:31 am

In my experience I've found that the '3 cheque system' has been in use for quite some time and is in some ways a safer way for the buyer, you have better proof that fees have been paid and received by the various parties, but of course the buyer is in the driving seat and if you don't wish to do this then say so.
The main area to avoid is the paying of cash, however if you are purchasing furniture and fittings I would be happy to pay a small amount of cash but would expect a receipt.
As for paying the sellers fees, estate agent and solicitor/gestoria, well again it is quite common practice and again you have the right to negotiate , remember that the seller will have included his selling costs in the asking price and again perhaps it's better to see the 'real costs'.
Estate agents fees can vary greatly and my advice would be to always ask as a buyer or seller how much exactly the agent is expecting to receive and is the figure quoted including vat, and ask for it in writing, some may not like this, but insist .!

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Re: purchase fees

Postby Pamela1 » Fri Oct 19, 2018 9:07 am

We paid one cheque at the notary and that was for the price of the house.We paid our lawyer's fees seperatley.

When we bought our property our lawyer advised that acording to Spanish property law the sellers paid the fees and in our case that is what happened.

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fincalospinos
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Re: purchase fees

Postby fincalospinos » Fri Oct 19, 2018 10:16 am

As long as the total amount of the cheques correspond with the agreed purchase price there is no problem.
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costakid
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Re: purchase fees

Postby costakid » Fri Oct 19, 2018 11:54 am

We paid the balance of the sellers mortgage direct to their bank (my idea) so i knew it was paid off. We paid the rest to the notary so 2 bankers official cheques. You shouldn't be paying there lawyers fees or their plus valia. Are you using an independent solicitor?

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Re: purchase fees

Postby Miro » Fri Oct 19, 2018 7:02 pm

He's not paying the sellers fees (depending on how you look at it - you could say the buyer always pays the seller's costs, since the seller presumably incorporates these into his sale price); he's merely being asked to deduct these fees from the amount he pays to the seller, and pay it to the seller's lawyer and estate agent instead. I'm not sure, but I thought when there is an outstanding mortgage, this has to be cancelled before exchange, which usually necessitates the buyer making a payment direct to the seller's bank?

BENIDORM wrote:In my experience I've found that the '3 cheque system' has been in use for quite some time and is in some ways a safer way for the buyer, you have better proof that fees have been paid and received by the various parties.......
....As for paying the sellers fees, estate agent and solicitor/gestoria, well again it is quite common practice


Interesting. I bought and sold a number of properties over the years in Spain, and never came across this! Of course, if the seller is a non-resident, the buyer will retain 3% of the agreed price and pay this seperately to Hacienda, but otherwise I can't really see why it's of any concern to the buyer whether or not the seller's lawyer and estate agent get paid. How does this make it safer for the buyer? These costs are not his obligation. The buyer's contract is with the seller only. In fact, in my experience dealing with Spanish sellers, and usually buyers as well, they simply don't bother with a lawyer anyway, and usually try to avoid estate agents! Perhaps it's more common when buyers and/or sellers are non-Spanish? In this particular case, it would appear that the lawyer and estate agent don't fully trust the seller to pay their fees. It's ironic perhaps, because most foreigners probably don't trust Spanish lawyers and estate agents - whereas in the UK at least, we take it for granted that funds are passed by the buyer to his solicitor, who passes them to the seller's solicitor, each taking their cut before passing the funds on. Probably a Spaniard buying in the UK would be very suspicious of this procedure!
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jimmyallan
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Re: purchase fees

Postby jimmyallan » Fri Oct 19, 2018 8:58 pm

Ha, thanks for all your reply's, I still am totally confused, if you subtract the two cheques ie to the sellers lawyer and estate agent, this would reduce the purchase price on paper, would this have an impact on the valour castral ?
James

Miro
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Re: purchase fees

Postby Miro » Sat Oct 20, 2018 1:12 am

The purchase price is the purchase price: the price that goes on the escritura should be the total agreed sale price. How it's split and who receives what is irrelevant. If the property was jointly owned by two individuals, making out two cheques for half the total each doesn't reduce the amount you pay for the property!

I'm thinking maybe the seller is asking you to split the payment in order to reduce the "on paper" price by only actually declaring the net amount he will receive after paying his lawyer & estate agent, in order to reduce his capital gains tax liability? You don't have to agree to that - unless you previously signed a private contract agreeing to. Of course, if you agree to this, you will pay slightly less transfer tax - but that could have tax implications later on down the line when / if you sell and incur a capital gain yourself.

The valor catastral is the rateable value set by the town hall and is not related to the sale/purchase price. You can find this figure on the latest IBI (rates) bill, which you (or your lawyer) should have a copy of.
Don't worry about what people think, they don't do it very often

"Acquiring a dog may be the only opportunity a human ever has to choose a relative," Mordecai Siegal 1935-2010.

Gasman
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Re: purchase fees

Postby Gasman » Sat Oct 20, 2018 9:23 am

Well put Miro - I agree with all you said there.

Miro
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Re: purchase fees

Postby Miro » Sat Oct 20, 2018 9:59 am

One other thing I would add is that some of the posts here seem to confuse the notary's role slightly: no part of the purchase price is paid "to" or "via" the notary. The notary simply oversees the transaction and ensures that the buyer hands over the agreed amount in the new escritura de compraventa to the relevant selling party/parties.

The notary of course charges for his service, and usually the buyer will pay this charge unless otherwise agreed.
Don't worry about what people think, they don't do it very often

"Acquiring a dog may be the only opportunity a human ever has to choose a relative," Mordecai Siegal 1935-2010.

katy
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Re: purchase fees

Postby katy » Sat Oct 20, 2018 10:54 am

I don't understand the bit about a buyer having to pay estate agents fees :? Never came across it and have bought and sold a few times. We did get 3 certified cheques the last time we sold as the buyer borrowed from two banks and the third a contribtion from buyers parents.

Miro
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Re: purchase fees

Postby Miro » Sat Oct 20, 2018 11:16 am

The buyer always pays the estate agent's fees in a way, it's just that they are normally included in the purchase price (i.e. the seller has allowed for them in his asking price) The buyer isn't usually aware of how much the commission is, since the seller normally pays the agent once the deal is complete. It really is of no concern to the buyer, how much the seller has agreed to pay his agent.

But in this particular case, the buyer has been asked by the seller, let's call him "Jose", to split the purchase price three ways: part to Jose, part to "Manuel", and part to "Carlos". Of course, Manuel & Carlos aren't co-owners of the property, but otherwise it's basically irrelevant that they happen to be an estate agent and a lawyer. Except that I suspect that either Manuel & Carlos don't trust Jose to pay them after the deal is done, and / or Jose wants to only declare his share of the proceeds as the actual sale price, in order to minimise his CGT liability.

As for seperate cheques made out to the seller's lender, like I said before, as far as I'm aware that's perfectly normal, in order for the notary (and the lender!) to be sure that the outstanding mortgage has been cancelled.
Don't worry about what people think, they don't do it very often

"Acquiring a dog may be the only opportunity a human ever has to choose a relative," Mordecai Siegal 1935-2010.

katy
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Re: purchase fees

Postby katy » Sat Oct 20, 2018 11:58 am

We didn't have a lender, mortgage free, it was our buyer who had borrowed from two banks, was during the credit crunch and he had difficulty raising a mortgage, banks had almost stopped lending.

BTW our old house in Marbella is on sale again, he is a Surgeon at the CDS hospital, and now wants to move to USA. Has been on sale for a year or more. I think he thought it was a bargain when he bought and put it on the market for around 700,000 more than we sold it, then reduced a bit a few months ago. He made a few changes, shiny tiles and steps around the pool, tuned the basement into a studio. I noticed in the estate agent blurb the kitchen fittings being described as new, it is the same units we had, they were in Shaker dark blue, trendy then. All he has done is had them sprayed white :lol:

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Re: purchase fees

Postby Pamela1 » Sat Oct 20, 2018 3:43 pm

They are new Katy, theyve been sprayed white! :lol:


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