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Guide to Buying a Property in Gibraltar

15-Apr-2016


Buying a property can be both an exciting and daunting prospect.  Our experienced lawyers can help you avoid potential problems and protect your interests throughout.  This guide explains the procedure for purchasing a property and the services you can expect from us. 

Stage 1 – Identifying a property & paying a holding deposit

Once a purchaser (“you” or “your” as applicable) decides to buy a property, a holding deposit is normally paid to the vendor.  In most cases, estate agents represent vendors and they will usually request a 2% deposit, payable by you.  This will take the property off the market.  The 2% deposit will later be deducted from the purchase price. 

Stage 2 – Investigating title & exchanging contracts

The next stage is for you to instruct lawyers who will initially carry out a search at the Land Registry and investigate title to the property.  This is to ensure that title to the property is properly constituted and that there will be no mortgages secured against it on completion.  In addition, Preliminary Enquiries Before Contract are sent to the vendor’s solicitor. The enquiries cover a variety of matters relating to the property such as whether alterations requiring consent or planning permission have been made to the property, whether Energy Performance Certificates have been obtained and whether the vendor has experienced problems with neighbours or the management company, etc.

A purchase agreement is then drawn up by the vendor’s lawyers and delivered to your lawyers for approval.  This agreement will set out the purchase price and the terms and conditions under which the property is being sold.  Until a purchase agreement is signed, negotiations take place on a “without prejudice” and on a "subject to contract” basis.  This means that until both sides have signed the agreement, no binding contract exists for the sale and purchase of the property.  The signing of the purchase agreement by both sides is also known as “exchange of contracts”.

After the exchange of contracts, both sides are under an obligation to go through with the transaction.  If a party does not complete after exchange of contracts, the other side can sue the defaulting party and force him/her to proceed.  The defaulting party will be liable for all costs and consequences resulting from non-completion.

If a purchaser or vendor pulls out before exchanging contracts, he/she will not usually be liable to the other side.  However, if a holding deposit has been paid to an estate agent, they may be entitled to retain a proportion of this.  This will depend upon the terms under which such deposit was paid to the estate agent.  Most estate agents will ask you to sign a memorandum of sale or a reservation agreement.  You should read the terms of these carefully and, ideally, ask your lawyers to review before you sign.

Stage 3 - Completion

The next stage is for your lawyers to draw up a Deed of Assignment (if the property is leasehold) or a Deed of Conveyance (if the property is freehold).   This deed is approved by the vendor’s lawyers and by all parties to the transaction.  These will often include the management company of an estate and the original developer (as lessor).  This deed is the document by which you will become the owner of the property.

Once the deed is approved, a completion statement will be drawn up by your lawyers.  This will include details of the purchase price to be paid, the amount of money being advanced by a bank or building society (if you are taking out a mortgage) and stamp duty and registration charges payable to Government.  At this stage your lawyers will ask you to provide the balance of all required funds needed to complete the purchase of the property.  These funds will be paid into your lawyers’ client account and payment will be made by them to the vendor’s lawyers.

If you are obtaining a mortgage, funds will be requested from the bank or building society by your lawyers.  You will only need to provide the balance of the required monies over and above the amount of the mortgage advance.

Once the deed is executed by all parties and the purchase price paid, such deed, the original historic title documentation and the keys to the property will be handed over to your lawyers.  At this stage completion will have taken place and you will become the owner of the property.

Stage 4 – Registering the deeds & paying stamp duty

All properties purchased for £200,000 or less are exempt from stamp duty.  If you are a first or a second time buyer, the threshold is £260,000 and your property purchase will also be exempt from stamp duty.

In all other cases, stamp duty needs to be paid to the Gibraltar Government.  The deeds to your property also need to be registered at the Land Registry and extra costs are payable to effect this. 

Please use our Conveyancing Calculator to work out your full expenses.


Ben C. Chiappe, Partner.


This article is intended to give guidance only. Specific legal advice should be taken where appropriate.