We have all heard stories of people who have fallen foul of the Spanish property laws. They are very different to the UK and vary throughout the mainland and islands. Buying a property anywhere in Spain can be a fraught with unexpected legal and bureaucratic hurdles that require specific skills, local knowledge and experience to protect you and your investment from avoidable costs and risks.
What is required to purchase a property in Spain?
Firstly, you must have a Spanish tax identification number (NIE) in place, and, ideally, a Spanish bank account open and operational before completion. The NIE operates as an identification number for Spanish non-residents, and must appear on all tax returns, and quoted in all communications with the tax authorities.
It can be obtained from any Police station (in Spain) or from the Spanish Consulate and then duly activated before the Spanish Tax Authorities. Must clients manage to complete this process themselves whilst others prefer to instruct us, as it can be a daunting process.
We can ensure that you set yourself up correctly from the start in order to identify the extent of your property related Spanish tax liabilities and take best advantage of the double-taxation agreement between the UK and Spain to minimise your tax bill in the future and avoid delays in the process.
On completion of your purchase you will be required to sign a Deed of Transfer before a notary public in Spain (or in the UK provided the local land registry accepts this). We can save you time by acting on your behalf by way of a Power of Attorney granted by you in your home country, authorising us to act on your behalf in Spain. You can also benefit from the services of our in-house notary public who will ensure that your transaction goes swiftly.
As with any property purchase, there are various essential costs to be incurred during the process. These may vary from one local jurisdiction to another one, and it is highly advisable to be assisted by an experienced Spanish abogado to ensure you have the correct information for the area you will be buying in. We deal with conveyances in Spain (including the Balearic and Canary Islands) on a continued basis and as such, we are very well placed to guide you in the process of the conveyance of your Spanish property, advising you all the way up to complete registration of the property under your name at the corresponding local land registry, ensuring your investment is completely safe and that you end with a marketable title.
What does the process of purchasing property in Spain look like?
Once you have found your property, we will begin making formal enquiries about the property in Spain before the local land registry, where it ought to be registered, the cadastre, and town hall to ensure the property has no legal issues which may prevent you going any further at all.
We will then get together with you in our offices or by conference call, complete any formal enquiries and, if necessary and depending of your needs, put together a private contract to secure the purchase. It should be noted that once you have agreed with the seller the property you wish to purchase and the consideration agreed, each party is entitled to compel the other to complete the transaction, even if the agreement was an oral one. It is therefore extremely important not to commit to the purchase until all of your research and investigation has been completed and the outcome is satisfactory.
It is often advisable to pay a deposit to secure the property, but you should absolutely have sound legal advice before paying any money to any property owners, estate agents, or anyone else you may meet during your search for the perfect Spanish home.
We also strongly advise you to find your own independent legal advisor and avoid instructing that recommended by the estate agent or developer, as he/she might not look after your best interests due to, precisely, a conflict of interest with the party who made the introduction.
On completion, both parties need to be present before a Notary public to sign the Deed of Transfer (called Escritura Pública de Compraventa) in order to obtain a marketable title duly registered at the corresponding local land registry. We can provide you with the services of our in-house notary public so that both the seller and purchaser can avoid traveling to Spain. Alternatively, and in the event that the transfer deed is to be granted in Spain, you could authorise a member of our firm to act on your behalf locally by signing a power of attorney without leaving your home country. With your authority, we can then act to handle the eleventh hour inconveniences that may arise on the day of completion.
Once you own your property in Spain, it would be very prudent to secure the transfer of your Spanish property and other assets you may hold upon your demise by way of granting a Spanish will dealing only with those assets. Spanish inheritance law has sometimes frustrating requirements, and should something unthinkable happen, unnecessary delays and incorrect tax liabilities can be imposed if a valid will is not in place.
Unfortunately, whilst some of the complexities of Spanish property law are widely known, often the local people in popular areas, especially the owners and estate agents involved in selling their property to you, know that the law is complex. Potential buyers should always be aware that the interests of the people who are offering “local advice” are usually not aligned with the buyer’s interests!
With the reduced legal protection for buyers built into the Spanish court system, relying too heavily on the advice of people involved directly in the transaction may lead to difficulties later in the transaction, or after completion.
Although property transactions can often be completed in the UK with limited, or even no help from solicitors, it is usually important to appoint a qualified, independent Spanish abogado (Spanish lawyer) to safeguard your interests.
We can advise you, in your own language, by telephone or at our London office or we can even pay you a visit, to ensure that your deposit is processed correctly and that your property will not be subject to land grabs, forced demolitions, excessive (or non-existent!) community maintenance charges, or any other unforeseen issue with the peace of mind that provides the fact that we are SRA (Solicitors Regulation Authority) regulated with £3,000.000 professional insurance cover.
How can we help with your purchase of your Spanish property?
Scornik Gerstein LLP can handle the purchase of your Spanish property from our London office. We can offer one-off tailored advice, or work with you throughout the process of purchasing your Spanish property.
We can communicate with you fluently in your own language, under the protection of your own legal system, whilst ensuring that your requirements are completely understood by our native Spanish abogados.
In the UK, we are registered with the Solicitors Regulation Authority, assuring our clients that they will benefit from a responsive, professional and helpful service with full professional indemnity cover.
Our residential conveyancing team is highly experienced, and offer our signature friendliness along with the efficiency to handle your needs. Covering mainland Spain, and the Spanish Canary & Balearic Islands, we can explain to you the differences between the residential conveyancing process in the UK and Spain. We can lead you through the steps which will be involved, from the initial stages of obtaining the existing title deeds and drawing up a draft contract on your sale or purchase to secure it, to completing the transaction on your behalf if you do not wish to travel to Spain or attend our offices to achieve completion.
Services we offer:
- Regular conveyancing across borders, including representation to avoid travel or inconvenient last minute unexpected commitments, which may prevent you from travelling.
- Off-plan purchases or other pre-completion transactions.
- Declarations of new buildings work.
- Planning applications.
- Public Coastal Domain disputes.
- Non-registered property.
- Time-share agreements.
- Mooring properties.
Selling your Spanish Property - What is the process and what are the costs involved when selling a property in Spain?
Preparing the sale of your Spanish property.
It is not uncommon to receive instructions from clients willing to sell their Spanish property, who think they are ready to complete since they have in place an agreement in principle with a buyer, only to find out that no title is registered under their name, and subsequently prevented from proceeding further.
It is therefore paramount to confirm with the local land registry that you have the correct title, without charges or encumbrances, before committing to selling your property. Discovering issues in the process of selling can have disastrous consequences.
Unless (unusually) otherwise agreed, you are likely to be asked by the buyer to provide evidence that the utilities and other outgoings are paid up to the date of the transfer, including the Impuesto de Bienes Inmuebles (IBI, or the Spanish equivalent of Council Tax) for the last 4 years. If a bill is pending to be produced and the amount is unknown it can be agreed that payment will be met by the parties pro rata once the bill is produced.
Another important document that you will require is the Certificate of Energy Efficiency. As in the UK, this can be difficult to obtain if the property is not modern and lacks cédula de habitabilidad (its Certificate of Habitation). We can help you to obtain this in a relatively short period of time.
Once you are confident that your title is perfectly marketable, you might consider instructing a local estate agent to assist you with the sale. If so, it is important to carefully check the commission contract that the estate agent presents to you. Although you might meet resistance, you should try to avoid any payment being made to the estate agent’s bank account rather than yours, and ensure that they get paid their commission when completion takes place, not before, as otherwise you might end out of pocket, paying a commission to the estate agent for a sale that at the end, for whatever reason, does not materialise.
Private contract
In order to secure the sale and perhaps gain some time to organise the paperwork, it is useful to enter into a written contract with the seller. Be wary of the type of contract which you enter since some may allow you to pull out at no cost, others may require you to give notice in a specific manner and before a certain date and pay a penalty to the buyer and others may not allow you to cancel at all.
It is therefore extremely important to get proper professional advice before entering into any contract.
Completion
In order to achieve registration of the purchase at the corresponding local land registry, the buyer must formalise the sale by signing the transfer deed (Escritura de Compraventa). Execution of the signing of the deed must be witnessed by a notary public and both the seller and buyer would be required to attend simultaneously to give their consent and sign, unless they authorise another person to act on their behalf via a power of attorney. We can arrange that for you expeditiously either with a local notary public nearby your domicile or with our in house notary public at our London office.
If you are not Spanish resident for Spanish tax purposes, 3% of the selling price must be withheld and paid to the Spanish tax authorities by the buyer on your behalf against your potential Capital Gains Tax (CGT) liability. The seller has a period of 3 months since completion in order to submit a tax return to the Spanish tax authorities. On this return, the seller can either pay any outstanding amount due to the Spanish Tax Authorities in the event that the 3% withheld did not cover all the seller’s liability or claim reimbursement of any amount paid in excess of the amount due.
We can assist you with your sale in a number of ways. You can authorise a member of our team to act on your behalf, by signing a power of attorney without leaving your home country. Our native Spanish speaking abogados can save you considerable time by acting as intermediaries on your behalf, answering the buyer’s queries, preparing your documentation and liaising with the buyer’s conveyancing lawyer and drafting the necessary private sales agreement to secure the sale.
We can also assist you in claiming reimbursement of any CGT paid in excess to the Spanish Government from a past, or present sale.
What if I can no longer afford my Spanish property?
If your property in Spain is mortgaged to a bank, but you can no longer afford payment of the mortgage, you should absolutely seek the advice of an independent legal advisor to avoid a potential repossession by the bank, which can ultimately lead to further recovery proceedings against you in England against your English property if the property itself is insufficient to pay off your debt with the bank. A member of our team will be able to assist you with renegotiating your mortgage agreement, arranging voluntary repossession, or assessing other options, including a setoff or even cancellation of the mortgage if we find irregularities with the deed.
Having the support of a native Spanish speaking lawyer who has a sound understanding of Spanish property law is essential to ensure the best outcome for you and your property when dealing with the bank or other lender.
If you would like more information, please do not hesitate to contact us.
