Madrid is a thriving real estate market, but foreign buyers face risks that locals don’t — from language barriers to hidden debts and confusing contracts.
At Borderless Lawyers, we’ve helped hundreds of clients avoid costly errors. Here’s what you need to know.
❌ 1. Signing Contracts Without Legal Review
Many foreign buyers sign the arras contract or reservation agreement provided by the agent — often in Spanish, with seller-biased terms.
📌 Why it’s risky:
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Deposit may be lost if financing fails
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No protection if legal issues arise later
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No cancellation or refund clauses
âś… Solution: Have a bilingual lawyer review or draft all contracts first.
❌ 2. Not Checking Property Debts or Planning Issues
Buyers often skip full due diligence, trusting the seller or agent. But:
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The property may have outstanding HOA fees, mortgages, or taxes
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Illegal renovations or zoning violations can block registration
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The seller may not be the full legal owner
✅ We check the property’s legal status through the Madrid Land Registry and City Hall before you pay any deposit.
❌ 3. No NIE or Delayed Paperwork
Without a NIE (Número de Identificación de Extranjero), you can’t legally buy property in Spain.
Delays in NIE or banking paperwork can cause:
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Missed contract deadlines
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Loss of deposit
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Notary cancellation
âś… We obtain your NIE and set up your Spanish bank account early in the process.
❌ 4. Paying the Deposit Directly to the Seller
Many buyers are told to wire the deposit directly to the seller or an agent without legal safeguards.
đź“Ś Big risk if:
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The deal falls through
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The seller disappears
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You need to enforce refund terms
âś… We use escrow accounts or hold deposits through a legal firm, ensuring recoverability.
❌ 5. No Power of Attorney When Buying Remotely
Some buyers try to manage from abroad but can’t travel in time for signing — and lose their opportunity or delay the purchase.
âś… With a Power of Attorney, we can complete the purchase on your behalf without delays.
đź“Ś Read: How to Buy Property in Madrid Remotely
❌ 6. Not Understanding Post-Purchase Taxes
Once you own property, you’ll owe:
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IBI (annual municipal property tax)
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Non-resident income tax (IRNR) — even if you don’t rent it out
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Declaration of assets in some countries (e.g. Modelo 720 for residents)
✅ We advise on ongoing tax obligations so you’re never caught off guard.
❌ 7. Using the Seller’s Lawyer or Agent’s “Legal Contact”
This is more common than you’d expect — and dangerous.
📌 Conflict of interest: they’re incentivized to close the sale, not protect you.
đź“Ś You may not be informed of red flags, like illegal builds or lack of licenses.
âś… Always use independent legal counsel with no ties to the seller or agent.
âś… Bonus Tips for Safe Property Buying in Madrid
✔️ Get a clear estimate of total purchase costs, including taxes and fees
✔️ Use a lawyer to negotiate contract clauses (timelines, refunds, exit terms)
✔️ Ask about rental restrictions or community rules
✔️ Consider drafting a Spanish will for inheritance planning
✔️ If investing, ask about capital gains tax and deductions for non-residents
🧑‍⚖️ Work With Local Experts, Not Guesswork
At Borderless Lawyers, we act as your legal eyes and ears in Madrid — reviewing contracts, conducting full due diligence, and guiding you from NIE to notary.
📞 Don’t Let Legal Mistakes Cost You Thousands
Let us protect your investment from day one — no matter where in the world you’re buying from.