Purchasing a property in Madrid represents, for most investors, the single most significant financial transaction of their lives. Yet many buyers —both domestic and international— sign a purchase agreement without having thoroughly verified the legal, urban planning and registry status of the property. This is where Premium Real Estate Due Diligence comes in: a comprehensive legal analysis that can prevent losses worth tens of thousands of euros.
At Quikprokuo, with over 25 years of experience in real estate law and urban planning in Madrid, we have developed a Premium Due Diligence service that goes far beyond a basic registry check. Our Legal Security Report is the deliverable that ensures your investment is protected from every possible legal angle.
What is Real Estate Due Diligence?
Real estate due diligence is the process of legal investigation and verification carried out before finalising the purchase of a property. Its purpose is to identify any legal, urban planning, tax or technical risk that could affect the transaction or the value of the asset.
Unlike a simple registry check, professional due diligence analyses multiple information sources: the Land Registry (Registro de la Propiedad), the Cadastre (Catastro), current urban planning regulations, municipal licences, the property’s tax status, the homeowners’ association and much more.
Why “Premium” Due Diligence?
Many law firms offer a basic review before a purchase: a simple registry extract and little else. The problem is that a registry extract only reflects part of the property’s legal reality.
Our Premium Due Diligence stands apart because:
- It analyses the entire chain of title ownership, detecting potential irregularities in previous transfers, unformalised inheritances, double sales or co-ownership situations. For more on this topic, read our article on special property sales and the double sale.
- It verifies the complete urban planning status: building licences, first occupancy licence, potential planning infringements, planning designations (compulsory purchase, building lines, green areas). Our team of urban planning lawyers in Madrid has in-depth knowledge of the applicable regulations.
- It examines encumbrances and charges: mortgages, seizures, easements, resolutory conditions, existing leases. We recommend reading our article on clearing encumbrances before a purchase or sale.
- It reviews the cadastral and tax position: discrepancies between the Registry and Cadastre, outstanding IBI (property tax) debts, pending capital gains tax, potential surcharges.
- It analyses the homeowners’ association: minutes, approved or pending special assessments, ongoing litigation, by-laws and participation coefficients. If you need advice on horizontal property matters, we have specialised homeowners’ association lawyers.
- It evaluates the feasibility of intended use: if the buyer intends to change the property’s use (from commercial to residential, from office to tourist accommodation, etc.), we analyse whether planning regulations allow it. See our page on tourist accommodation licences in Madrid.
The Legal Security Report: Your Guarantee Before Signing
The output of our Premium Due Diligence is a professional document called the Legal Security Report. This report presents all findings in a clear, structured format, classified by risk level:
- High risk: situations that advise against the purchase or require mandatory prior resolution (undisclosed charges, serious planning infringements, title problems).
- Medium risk: issues that should be negotiated or made conditional in the contract (pending special assessments, cadastral discrepancies, easements).
- Low risk: minor observations that do not prevent the transaction but are worth knowing about.
The Report also includes specific recommendations: which clauses to include in the earnest money agreement, which documentation to require from the seller, which conditions precedent to establish, and the best negotiation strategy based on the findings.
Who is This Service For?
Premium Real Estate Due Diligence is particularly relevant for:
- International investors purchasing property in Spain without knowledge of local regulations. It is important to note that any foreigner can freely purchase property in Spain — they only need to obtain a NIE (Foreigner Identification Number). Consult our guide on real estate investment in Spain.
- Domestic investors acquiring high-value or legally complex assets: properties from auctions, inheritances, co-ownerships, rural estates with buildings, commercial premises with potential change of use.
- Investment funds and family offices requiring rigorous legal analysis before adding assets to their portfolio.
- Companies acquiring property for their business activities (headquarters, commercial premises, industrial units) that need certainty on licences, permitted use and planning status.
- Private buyers purchasing their main residence who want maximum legal security in the most important transaction of their lives.
International Real Estate Investment: The New Legal Framework After the Golden Visa Abolition
Until 3 April 2025, foreign investors could obtain a residence visa in Spain by purchasing property worth a minimum of €500,000 (the so-called Golden Visa). However, Organic Law 1/2025, of 2 January, on measures for the efficiency of the public justice service, published in the Official State Gazette (BOE) on 3 January 2025, repealed Articles 63 to 67 of Law 14/2013, of 27 September, on support for entrepreneurs and their internationalisation, which regulated this visa. Since 3 April 2025, it is no longer possible to apply for new Golden Visas in Spain.
However, investors who obtained their visa or residence authorisation before that date may continue to renew it under the regulations in force at the time of the original grant, provided the initial investment is maintained. If this is your situation, at Quikprokuo we advise you on the renewal process and compliance with the applicable requirements. You may consult our articles on the Golden Visa and its renewal procedures and on the modifications introduced before its abolition.
Buying Property in Spain as a Foreigner: What You Can Do
To purchase property in Spain as a foreigner you will need:
- NIE (Foreigner Identification Number): essential for any economic or tax transaction in Spain. It is applied for at the Immigration Office (Oficina de Extranjería) or at the Spanish consulate in your country of residence.
- A Spanish bank account: required for the direct debit of taxes and expenses associated with the property (IBI, homeowners’ association fees, utilities).
- A tax representative: non-tax residents in Spain are required to appoint a representative before the Tax Agency (Agencia Tributaria) to fulfil their tax obligations (IRNR, Form 210).
Tax Implications for Non-Resident Foreign Buyers
Purchasing and owning property in Spain as a non-resident has specific tax implications that should be understood before investing:
- On purchase: VAT (IVA) at 10% for new-build properties, or Transfer Tax (ITP) at 6% in Madrid for resale properties. Additionally, Stamp Duty (AJD) at 0.5–1.5% depending on the autonomous community.
- Non-Resident Income Tax (IRNR): if the property is not rented out, tax is levied on imputed income of 1.1% of the cadastral value (or 2% if the cadastral value has not been reviewed in the last 10 years). The tax rate is 19% for EU/EEA residents and 24% for residents outside the EU. The return is filed using Form 210 with the Tax Agency.
- If the property is rented: rental income is taxed at 19% (EU/EEA residents, on net income) or 24% (non-EU residents, on gross income with no deduction of expenses). Quarterly return via Form 210.
- On sale: capital gains are taxed at 19%. Additionally, the buyer is obliged to withhold 3% of the sale price as an advance payment of the non-resident seller’s IRNR, pursuant to Article 25.2 of the Consolidated Text of the IRNR Act (RDLeg 5/2004).
- IBI (Property Tax): annual municipal tax on property ownership, regardless of the owner’s residence status.
Alternative Residence Routes for Foreign Investors
Although the Golden Visa no longer exists, foreign investors wishing to reside in Spain have other legal avenues available:
- Digital Nomad Visa: regulated by Law 28/2022 (the Startups Act), it allows professionals who work remotely for companies or clients outside Spain to reside in the country. It includes a special tax regime with a flat rate of 24% on the first €600,000 of income (compared to the general progressive rates). Extendable to family members.
- Non-lucrative residence: for those who will not carry out any work activity in Spain but have sufficient financial means (currently approximately €28,800 per annum for the main applicant, based on the IPREM index). Requires comprehensive private health insurance. Regulated by the Immigration Regulations (Royal Decree 557/2011).
- Entrepreneur visa: for those presenting an innovative business project of economic interest to Spain. Regulated by Articles 68 et seq. of Law 14/2013 (which remain in force after the Golden Visa abolition).
- Self-employed residence: for those wishing to develop an economic activity on a self-employed basis in Spain, presenting a viable business plan and demonstrating sufficient financial means.
In any case, the purchase of property remains entirely free and does not require legal residence. What has changed is that buying property no longer confers an automatic right to reside. Our Premium Due Diligence protects your investment regardless of your immigration status.
What Risks Does Due Diligence Detect That a Simple Registry Extract Does Not?
The simple extract (nota simple) from the Land Registry is a useful but limited document. Professional due diligence can uncover problems that would never appear in a registry extract:
- Properties without a first occupancy licence (LPO), which may prevent connecting utilities or, in extreme cases, result in a demolition order.
- Unauthorised building works constituting planning infringements, with risk of enforcement proceedings and demolition orders.
- Article 28 of the Mortgage Act: properties acquired by inheritance that, during the first two years, may be affected by the appearance of an heir with a superior right.
- Unregistered leases that bind the new owner, particularly residential leases protected under the Spanish Tenancy Act (LAU).
- Urban planning designations: plots included in urban development areas, scheduled compulsory purchases, public facilities planned in the General Urban Plan.
- Homeowners’ association debts for which, under Article 9.1.e) of the Horizontal Property Act, the property is liable for the current year and the three preceding years.
Our Process: How We Work
Our Premium Due Diligence follows a rigorous methodology refined over more than 25 years of practice in real estate law and urban planning in Madrid:
- Data gathering: We receive the basic property documentation (address, cadastral reference, title deeds if available) and define the scope of analysis according to the client’s needs.
- Comprehensive investigation: We consult the Land Registry, Cadastre, Municipality (licences, planning, enforcement), Regional Government (heritage, environment), homeowners’ association and any other relevant source.
- Risk analysis and classification: Each finding is analysed in depth and classified by risk level.
- Legal Security Report: We draft the final report with conclusions, risk map and specific recommendations for negotiation.
- Support through to completion: If the client wishes, we accompany them throughout the negotiation, drafting of the earnest money agreement, review of the deed and signature before the notary.
The standard turnaround time for the Report is 5 to 10 business days, depending on the property’s complexity and the availability of information from the various public bodies.
Legal Framework
Our Premium Due Diligence is grounded in current legislation, including, among other legal sources:
- Spanish Civil Code (articles 1,445 et seq. on sale and purchase, 392 et seq. on co-ownership)
- Mortgage Act (Ley Hipotecaria) (principle of public registry faith, Article 28, first registration)
- Land and Urban Rehabilitation Act (TRLSRU) (basic land situations, owners’ duties)
- Horizontal Property Act (Art. 9 on owner’s obligations, association debts)
- Building Regulation Act (LOE) (responsibilities and guarantees in new construction)
- Consolidated Text of the IRNR Act (RDLeg 5/2004) (taxation of non-residents with property in Spain)
- Law 14/2013 on support for entrepreneurs (entrepreneur visa, Arts. 68 et seq., still in force after the Golden Visa abolition)
- Organic Law 1/2025 on efficiency of the public justice service (abolition of the Golden Visa, Arts. 63–67 of Law 14/2013)
- Urban planning regulations of the Community of Madrid (LSCM 9/2001) and the Madrid General Urban Plan.
Case Study: When Due Diligence Saves an Investment
Consider an international investor looking to purchase a penthouse in central Madrid for €850,000. The seller presents the transaction as straightforward: the property is free of charges according to the registry extract.
However, our Premium Due Diligence reveals:
- The penthouse terrace was enclosed and incorporated as living space without a building licence. This constitutes a planning infringement that, while it may have become time-barred, cannot be regularised without a specific administrative process.
- A special assessment of €35,000 has been approved at a homeowners’ meeting for facade rehabilitation, which the seller has not disclosed.
- The property was acquired by inheritance less than two years ago and is subject to the limitation under Article 28 of the Mortgage Act.
Armed with this information, the buyer can: renegotiate the price (a discount of at least €50,000 for the identified risks), require warranty clauses from the seller, or even withdraw from the transaction if the risks are unacceptable. Without Due Diligence, they would have bought blind.
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Conclusion
Real estate due diligence is not an expense: it is an investment that protects your assets. In a property market as dynamic and complex as Madrid’s, and especially in the new post-Golden Visa landscape where international investors continue to buy but without the safety net that a residence visa supposedly offered, having a Legal Security Report prepared by professionals with real expertise in the field is the only way to make informed decisions.
At Quikprokuo, we are not a generalist firm that does everything. We are lawyers specialised exclusively in real estate law and urban planning, with over 25 years of hands-on experience in Madrid. This means that when we analyse a property, we know exactly where to look and what questions to ask.
Discover all our real estate law services or contact us directly to request your Premium Due Diligence.
