If the act involves a buyer who is not an Andorran national or a resident in Andorra, the Law on Foreign Investments in Andorra establishes that the sale agreement must be signed before a notary, otherwise it will be considered invalid, and that the notary has to be Andorran (owing to his knowledge of Andorran legislation, especially regarding Foreign investments, and the certainty that he/she will notify the Register of Foreign Investments of the sale).

Strictly speaking, under the Andorran legal system, Andorran nationals or residents in Andorra are not obliged to sign a sale agreement before a notary, but I believe that the percentage of agreements signed before a notary in Andorra is almost 100%, because notaries assure a very high-level legal service and, moreover, entry of the sale in the Notarial Register of Sales, since they are the only ones who have access to this Register. 

Clearly, the signature before the notary offers increased guarantees to the sale agreement.

If the agreement is not signed before a notary, one cannot be sure that the property is in the seller’s name in the notarial Register, that the sale is not subject to limitations or that there are no charges over the property. If all this information is not in the notarial registers and nobody can prove it, these limitations are not applicable to the purchase.

Moreover, there is still public faith that protects notarised acts (and not others), and the guarantee that the act has been read out and that the parties have agreed to it. 

Normally, at the notary’s practice there are at least three rooms: one for the contingent settlement of any mortgage(s) against the property to be sold; the other, for the sale; and lastly, the third for the contingent financing of the purchase.

If there is only the sale to be performed, the notary reads out the documents, the parties ask questions that the notary answers and lastly they all sign in agreement.

If financing is involved, the procedure is the same but takes place in another room, with the bank, to safeguard notarial secrecy.

Likewise for the settlement of any mortgage(s) against the property to be sold.

In Andorra, when you purchase property, normally there are no charges over it, since mortgages are settled prior to the signature of the sale agreement.

In Andorra, the notarised sale agreement entails,

For the seller:

* Handing over possession, which generally occurs concomitantly with the same act, by means of a specific clause. In this case, the buyer has all the possession rights handed over by the seller, he/she has the same right as the seller to access the property.

* The guarantee offered to the buyer:

* Of possession, that is to say, the seller owns the property and can therefore transfer it without any problems; in the opposite case, the buyer always has the possibility to claim it.

* Hidden flaws, including legal (mortgages and other charges) and material (humidity, construction flaws…) ones;

* so that the seller can guarantee the buyer that the property has no flaws.

* For the buyer:

Pay the sale price, generally done concomitantly when signing before the notary. Otherwise, the sale agreement sets out in detail the payment terms and related guarantees, both personal guarantees and security and a mix of the two.

In Andorra there are no public rights (of first refusal, preferential) applicable to sales. 

In Andorra, in application of Roman law, ownership is transferred to the buyer when the notarial agreement is signed, through two legal institutions: the title (the sale agreement) and mode (the transfer, at least symbolically in the sale agreement, of ownership of the property to the new owner).

Normally, in Andorra the buyer pays 10% of the price when signing the preliminary purchase-sale agreement and then pays the seller the rest of the price when signing the final agreement before the notary.

Certainly, it is also possible that the property has already been paid fully when signing before the notary. In accordance with the Andorran money laundering law, this has to be backed by banking documents, as is also the case when payment is made concomitantly with the signature of the sale agreement.

Otherwise, the price may be paid, either fully or in part, after signing before the notary. This option, scarcely used, does not affect the buyer’s duty to justify the source of the money used, in accordance with the law on money laundering. This payment may be guaranteed personally or by means of security, such as a mortgage against the purchased property.

In Andorra, mortgages taken on sold property are generally removed immediately before the sale. The notary makes sure there is no mortgage when the sale agreement is signed and the buyer purchases without mortgage.

One can purchase WITHOUT prior MORTGAGES, without prejudice to the fact that, after the sale, the buyer may constitute other mortgages against the property.

In Andorra, the taxes due for the sale of real estate are:

• For the seller, value-added tax (VAT).
• For the buyer: Real Estate Transfer Tax (ITP) or the General Indirect Tax (IGI). One or the other, not both.
• The value-added tax, paid always by the seller, taxes the difference between the transfer price and the purchase price, and this by using discount coefficients. 
• It drops from 15% of this difference the first year to 1% the ninth year. Starting from the 10^th year since the transfer and acquisition, the value-added tax is no longer applied. For those involved in the transfer of property who do not reside in Andorra, there is also a withholding tax amounting to 5% of the total value of the transferred property, throughout the period of application of the tax (10 years) as a guarantee of the final payment of the tax. This guarantee is then paid back at the seller’s request.
• For the buyer, the rate is 4% of the sale price, in the case of Real Estate Transfer Tax; and 4.5%, in the case of the General Indirect Tax.
• One or the other of these taxes is applied, depending on whether the person transferring the property is a professional or not. In the first case, the General Indirect Tax is applied, while in the other, the Real Estate Transfer Tax.
• All the rates are derived from applicable Laws. As a result, they are all published in the Official Bulletin (BOPA), freely accessible online (www.bopa.ad).

The taxes are calculated using software provided by the Government.

This software is provided to notaries who are in charge of the settlement, collection and payment of real estate taxes. If, exceptionally, the tax is applied to a private agreement (e.g. preliminary agreements prior to the signature before the notary), the Government is in charge of tax collection

In Andorra, the seller grants possession of the property to the new owner (handing over of keys) immediately after the signature of the sale agreement before the notary.

In this way, the transfer is finally formalised and the buyer becomes the new owner, with a title (sale agreement) and mode (granting of possession).

The notary notifies the sale agreement to the Ministry of Finances, as well as the Municipality(ies) where the property is situated (Land Registry), the notarial archive of titles and charges and, if foreigners not residing in Andorra are involved, the Register of Foreign Investments.

The notary sees to all these notifications. However, the buyer has to go to the municipal office to provide his/her bank details in order to easily and conveniently pay the property taxes due.

The notarial title used by the seller is cancelled by the new title of the buyer. In this way, the seller cannot sell the property again or dispose of the sold property in any other way.

Moreover, registration in the Land Registry allows Municipalities to apply the yearly property taxes.

Lastly, the Register of Foreign Investments makes it possible to have increased control over this sort of investment.