Paying for your home at completion and proving your funds

Terms used

• Cheque bancario — The cheque bancario is a cheque issued by a bank, drawn on its funds, and normally handed over at the signing.
• Cheque conformado — The cheque conformado is a cheque from your own account that your bank certifies has enough funds.
• DNI — The DNI is the Spanish national identity card.
• NIE — The NIE is the tax identification number Spain gives to foreigners.

Key rules

• Cash: Cash payments are limited to 1,000 euros when one side is a business or professional.
• Payment means: Pay by bank transfer or bank cheque so the deed can record the bank and account details.
• Source of funds: Be ready to explain and show where your money came from.
• Reporting: The notary reports purchase data to the authorities and must not tell you if there is a suspicion report.

Pay through your bank, not in cash

Every payment for your home should leave a bank trail. The two normal ways are a bank transfer made before the signing, or a bank cheque (cheque bancario) handed over at the notary's office. A certified cheque (cheque conformado) is also accepted. Most buyers use cheques.

Cash is capped at 1,000 euros when one side is a business or professional, and the notary records the means of payment. Don't plan to bring cash for any part of the price.

What the notary asks of you

The notary must identify you and check where your money comes from. Expect to:

• Show a valid DNI, NIE or passport. The notary keeps a copy.
• Answer questions about your professional or business activity.
• Explain where the money for the price came from.
• Give details of the real owner if you buy through a company or for someone else.

The deed records how the price was paid: the means of payment, the bank, and the cheque or account details. Read that part before you sign. In higher-risk cases the notary may ask for extra proof of funds, and the notary decides what is enough.

Paying from a foreign account

You can pay by international transfer from a bank abroad. Send it so it arrives before the signing, or get a cheque from a bank in Spain instead. Keep your bank statements and the transfer evidence, because they show where the money came from. Large or foreign-currency transfers are reported through the banks.

If you have a mortgage

Your lender usually delivers the loan with a bank cheque made out to the seller and handed over at the notary's office. Sometimes it sends a transfer that day or soon after. Ask your lender in advance which it will do, because it varies by bank and notary office. The seller confirms receipt in the deed.

What the notary reports

The notary sends details of every sale to a central anti-money-laundering unit run by the notaries. The details cover the parties, the price, the payment means and the property. The notary also reports to the tax authority and the land registries as part of normal procedure. If the notary suspects money laundering, the notary must report it and must not tell you.

The notary will give you the exact names and amounts for the cheques or transfers. Ask your bank to prepare them exactly as given. The checklist and documents list below cover what to bring.

Documents you need

• Valid photo ID: your DNI, NIE or passport, issued by the authorities of your country. The notary keeps a copy.

• Bank statements showing where the money for the price came from, needed when you pay from a foreign account.

• Evidence of the international transfer, from your bank, if you pay from a foreign account.

• Details of the person you are buying for or of the company, if you buy through a company or for someone else, so the notary can identify the real owner.

Checklist

• Choose how you will pay: bank transfer or bank cheque (cheque bancario), both from a bank account.

• Ask your bank to prepare the cheques or transfers in the names and amounts the notary gives you.

• Bring your DNI, NIE or passport to the signing.

• Prepare answers about your professional or business activity and where the money comes from.

• Check that the deed shows the payment means, the bank and the cheque or account details before you sign.

• If you have a mortgage, ask your lender how the loan money will be delivered at the signing: cheque to the seller or transfer.

What to watch out for

• Paying in cash: Cash payments are limited to 1,000 euros when one side is a business or professional, and the notary records the means of payment. Going over the limit can bring a fine of up to 25% of the amount paid, and the notary can refuse or report it. Pay by bank transfer or bank cheque so every euro can be traced.

• Unexplained source of funds: The notary must ask about your activity and where the money comes from. Missing or unclear answers can delay or stop the signing. Bring bank statements and ID, and ask the notary beforehand what extra proof they may want.

What if the signing is postponed or funds arrive late?

If completion slips, the contract deadline, the arras type and the cause decide whether your deposit is at risk and what you can do. A short delay that both sides agree to in writing is usually harmless. A deadline that passes with no agreement is where you can lose money.

Check three things first

1. The contract deadline. Look for the date by which you must sign at the notary, and for any final cut-off date. If the date passes without a written extension, the seller may be able to treat you as in breach. That can mean ending the contract, keeping the deposit, or claiming a penalty or default interest.

2. The arras type. The wording of your contract decides what the deposit means:

• Withdrawal deposit (arras penitenciales). Each side can walk away. If you withdraw, you lose the deposit. If the seller withdraws, they must return double. This applies only when the contract says the deposit is the price of the right to withdraw.
• Confirmation deposit (arras confirmatorias). The deposit is a part payment and proof that the contract exists. Nobody can simply walk away. The other side can demand that the sale is completed, or end the contract, and claim damages.
• Penalty deposit (arras penales). The deposit is a set penalty for breaking the contract. The injured party can claim it, and a court can reduce it if it looks excessive.

If the contract has no clear withdrawal clause, courts tend to treat the deposit as a confirmation deposit. Ask your lawyer which type you signed before you assume anything.

3. The cause. Late funds on your side put the deposit at more risk than a delay caused by the seller or the bank.

If your funds or mortgage payout are late

Act before the deadline, not after it.

• Agree a new date in writing. Both sides sign a short extension, and the notary gives a new appointment. A phone call or a message is not enough.
• Bridge the gap. You can use your own funds, a short-term bridging loan, or pay part by bank transfer on the day and the rest later. The part-payment route needs the seller's written agreement.
• Line up the mortgage steps. Lenders usually pay by banker's draft or transfer at the notary on the day of signing. The mortgage offer, the valuation and the notary appointment all have to be ready together. A missing valuation is a common reason for delay.
• Ask for a final cut-off date. If your contract has none, ask for one to be added to any extension, so both sides know exactly when the delay ends.

If the seller does not turn up

Your own position is strong if you were ready to sign.

• Send a formal notice through a notary. This summons the seller to a new date and records that you were ready and the seller failed to attend.
• Then choose. You can demand that the seller completes the sale, or end the contract. In both cases you can claim damages and interest. With a withdrawal deposit, you can also recover double the deposit.
• Check for hidden debts. If the property turns out to have a mortgage, a seizure or other debts, the seller must clear them at or before signing. If they do not, you can refuse to complete and get your deposit back, plus damages. Get an up-to-date nota simple from the land registry shortly before signing to see the position.

What to do this week

1. Read the deadline and the deposit clause in your contract.
2. Tell the seller or their agent in writing as soon as you know funds will be late.
3. Ask your lawyer to draft the extension, with a final cut-off date.
4. Confirm the new date with the notary and your lender.

Frequently asked questions

Can I pay the price from a foreign bank account?

Yes, you can pay from a foreign bank account by international transfer, and notaries accept this. The money should arrive before the signing, or you can get a cheque in Spain instead.

How does my mortgage money reach the seller at the signing?

Usually the lender hands over a bank cheque (cheque bancario) made out to the seller at the notary's office. Sometimes the bank makes a transfer that day or soon after. The deed records the bank and the cheque or account details, and the seller confirms receipt.

What does the notary report about my purchase to the authorities?

The notary sends the parties, price, payment means and property details to a central notary body that checks for suspicious operations. Deed data also goes to the tax authority, the property register and the land survey office (Catastro).