Summary
What is a property deed?
Let's start from the beginning. Do you know exactly what a house deed is? You probably have a rough idea, but it's always best to clear up any doubts.The property deed is a legal document signed before a notary that confirms the purchase transaction. Think of it as the receipt for the purchase you've just made.
If you're interested in documenting the purchase of a mobile phone, imagine how important it is when it comes to your home. This deed will include, in addition to the sale itself, the terms and conditions of the transaction, who is involved, and the price.
Registering the property is not mandatory when buying a house, but you will need to do so when signing the mortgage.
What do you need to do to register a house?
The property deed is signed before a notary and then registered in the Property Registry, which is where you can find out if a house is mortgaged or who its owners are, for example.There are four basic steps to register a property:
- You'll have an appointment with the notary , who will review the home purchase agreement and all the supporting documentation. In the case of a mortgage, it's mandatory to visit the notary before signing the loan agreement. During this initial consultation, the notary will ensure you understand the loan terms, know what you're signing and its implications, and will also answer any questions you may have about your mortgage.
- Signing and granting the purchase agreement . The second step in registering the property is signing the deed, which is usually done on the same day you sign the mortgage. This way you don't have to go to the notary twice.
- Payment of costs and taxes . Registering the house involves a series of costs, starting with notary fees and continuing with purchase taxes (VAT or Property Transfer Tax depending on whether it is new or second-hand).
- Issuance of the certified copy . Finally, all that remains is to receive your certified copy of the document. Who keeps the original deed? The mortgage deed remains with the notary, who is responsible for safeguarding the original document and registering it with the Land Registry (you can also do this yourself if you wish). What you will receive is a certified copy, which has the same legal validity as the original.
What documentation do I need to provide?
You must come prepared for the signing. In order for the notary to draw up the deed for the house, you will need to provide the following documents:- Documents that identify the buyer and seller , which includes the ID cards of both.
- Latest IBI receipt , which guarantees that this tax has been paid.
- A simple mortgage registration note , which is a document you must request before buying the house and which serves to prove that the property has no encumbrances or debts, among other things.
- Property title of the house.
- Energy efficiency certificate for the home.
- Earnest money contract , if any.
- Latest paid utility bills , which will also serve to ensure that there are no outstanding debts in that regard.
- Certificate confirming that homeowners' association fees are up to date . If the property is being sold with an outstanding mortgage, the seller must provide a certificate of outstanding debt.
Who should pay for the deeds to a house?
The seller pays the costs of granting the property, and the financial institution pays the mortgage costs.As the buyer, you will only have to pay the cost of the copy of the deed and the mortgage that you will keep.
How is the value of the deed calculated?
The cost of registering the house is the sum of three expenses:- Notary fees are regulated, but can vary depending on the notary you choose.
- Property registration fees.
- The taxes to be paid.
These expenses are directly related to the property's value as stated in the deed, which will usually be the same as the purchase price. In other words, the price you paid for the house is what will later be used to calculate your profit for income tax purposes if you sell the property.
What happens if the writing is for less?
It's a fairly common practice to register a property for a value lower than its actual purchase price. The first thing you should understand is that this is illegal. Those who do this are paying for part of the house under the table, and the main reason for doing so is to pay less tax, both for the buyer and the seller.To put it simply, the taxes you pay when buying or selling a house depend on the price stated in the deed. The lower the price, the less tax both parties will pay.
However, if you register a deed for a very low value that differs from the actual transaction, the tax authorities can investigate the transaction and penalize both you and the seller.
Furthermore, if you later sell the property, you will have to pay more income tax. This is because the profit you make is calculated as the difference between the purchase price and the sale price when filing your tax return.
As always, it's best to do things right from the start and avoid problems, both with the deed and the mortgage on your house.
