Investment approach
Sending money to Spain to buy property: checks and timing
A large international transfer for a property purchase goes through a source-of-funds check. Prepare the documents in advance so you do not miss the completion date or put your deposit at risk.
When a large sum is sent from abroad to buy property in Spain, the bank will ask for proof of where the money came from, and the notary will record how the purchase was paid for. Prepare the source-of-funds documents before the transfer and send the money several working days early; otherwise it may not arrive in time for the escritura.
A source-of-funds check is routine, not suspicion
Spanish banks and notaries are bound by anti-money-laundering rules. When a large sum arrives from abroad for a property purchase, the bank will ask you to show where the money came from: bank statements, contracts for the sale of assets, tax returns, documents relating to an inheritance or dividends. At the signing, the notary records how the purchase was paid for and may also ask for supporting evidence.
Transfer times and the risk to your deposit
A large international transfer can be held up by a compliance check at any bank in the chain: the sender's bank, an intermediary or the receiving bank. If the money has not arrived by the escritura date, completion has to be postponed, and under the terms of the arras a delay on the buyer's side can cost the buyer the deposit.
So it makes sense to send the funds several working days early and to agree the set of supporting documents with the bank in advance.
Currency risk
If the investor's capital is held in a currency other than the euro, the exchange rate can move between signing the arras and the payment date. The purchase price is fixed in euros, so the buyer bears the full effect of any movement in the rate. Bear this in mind when planning how much to convert.
How DNPI organises this
Before the contract is signed, we go through three things with DNPI Capital investors: how the funds will be transferred, the documents showing where the capital comes from, and the payment schedule. That way the compliance check does not fall in the final week before completion. The general steps of working with an investor are described on the DNPI approach page, and opening an account is covered in our article on a Spanish bank account.
Questions and answers
Can property in Spain be paid for in cash?
The law restricts cash payments in transactions involving businesses. Property is usually paid for by bank transfer or banker's draft, so that the notary can record where the money came from and the route it took.
Which documents are most often requested as proof of the source of funds?
Account statements for recent months, documents on the sale of another asset, tax returns, and documents on an inheritance or gift. The exact list depends on the bank and the amount.