Granting or applying for a loan.

If you intend to grant a private person or a Spanish company a loan, it is essential that you draw up the agreement in a notary deed, because Spanish Law gives preference and a special efficiency in terms of its enforcement, to a credit that is construed in a public deed. Also remember that the Notary will check the legality of the transaction and that all the necessary requirements concur, including the mandatory reporting of your investment as non-resident to the Spanish Authorities, if necessary.

If your loan is going to be guaranteed with a tangible security, such as pledge of shares or a property mortgage, then it is even more essential to formalise the agreement in a notary deed.

The Notary will draft the deed of the loan and its security. He will verify that all the requirements on capacity and legitimation are complied, demanding all the necessary data, and in the case of mortgage, he will obtain the same information on the registration as in a purchase or sale (SEE "Buying a property in Spain"), checking that there are the appropriate authorisations or licences, etc.

If you are going to receive a loan from some Spanish credit institution, the agreement will normally - and always when there is a mortgage - be executed in a notary deed.

The Notary will check that the financial conditions offered in the binding bid have been effectively compounded in the deed and that none of the legal causes agreed represent any modification or alteration in such conditions. He will also verify the effective cost of the operation (APR) in fixed interest loans.

He will caution the borrowers about the scope of what they are signing and the obligations they assume, implementing an information work which in long-term contracts of this kind is of prime importance.
Lastly, remember that you may examine the draft deed at the Notary office three working days before signing, provided this is going to take place at the bank institution.