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1
Do I need to employ a lawyer when I buy a property in Spain? D. Doran, Dublin, May 2007 Technically there is no need to use a lawyer to purchase a property in Spain. However, unless you are extremely familiar with the laws and procedures for purchasing a property in Spain it is strongly advised that you consult with your lawyer or trusted adviser.

Prior to buying any property you must conduct the appropriate property searches and make sure that the vendor has true title of the property, has all the relevant licenses (eg, building permits) and above all you have checked that there are no liabilities or charges on the property to purchase.

2
Is it OK to use a lawyer in England to handle the conveyancing for my property in Spain? V. Smith, London, May 2007 It is possible but it is recommended that you consult with a UK lawyer that is familiar with the procedures in Spain.

3
I am looking to buy a property in Spain. What is the legal process? D. Doran, Dublin, May 2007 Common practice in Spain is to take the following steps:
  1. Agree to the terms of purchase and price
  2. Obtain a "Nota Simple" which is a Land Registry search of the property.
  3. Search to see whether all rates (IBI), community fees, rubbish collection bills, gas, electricity, etc are up to date and paid.
  4. Usually the Vendor will request that an "Option to Purchase Agreement" be signed. This Agreement will set out the terms of the purchase, the completion date before the Notary and usually a 10% deposit will be requested as "down payment"
  5. Before completion a "minuta" with the details of the purchase are sent to the Notary's secretary in order for them to draft the "Escritura de Compraventa" - the Title Deeds.
  6. At the date of completion before the Notary the purchaser and the vendor are read the Escritura de Compraventa and asked if they agree and understand what they are signing. If both parties are in agreement the deed is signed, consideration is paid and the property is handed over.
  7. Once the Ecritura de Compraventa is signed and returned by the Notary it requires to be registered at the local Land registry.
  8. Within a month of purchase you are obliged to pay the 7% VAT of the purchase price.

4
Should I make a will? If I am buying off-plan, when should I do this? R. Isaacs, North Yorkshire, May 2007 It is highly recommended that a Will be drawn up. When, does not matter, but definitely prior to your death! It is advisable that once you have a legal right to a property, you draw up your Will.

Spain has, what is termed as, forced heirship rules for its domiciled residents. However, if you are domiciled in, say, the UK, the inheritance rules of the UK will apply to you.

Spain's inheritance laws are penal and apply to all those who own property whether resident or not, and it is strongly recommended that you contact a tax expert to advise you on the same.

5
What is a power of attorney? P. Burcher, Paris, June 2007 A power of attorney is a written instrument which authorises one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies.

6
How do I open a bank account in Spain? R. Galliard, via email, June 2007 Depending on the Bank but the procedure is straight forward:
  1. choose a bank in Spain that you feel comfortable with in terms of service
  2. you will be requested to provide some form of identification (usually a passport), proof of address (usually a utility bill of less than 3 months) and sometimes a letter of reference.
  3. It is law in Spain that if you transfer into your account more than 3,000, the bank will request proof of where those funds originated from.

7
How do I arrange to set up direct debits and utility contracts? R. Galliard, via email, June 2007 It is usual practice that most utility providers in Spain request payments to be made by direct debit. The utility provider will provide you with their direct debit forms.

8
Should I be physically present when the title deeds need to be signed? M. Garcia, London, June 2007 Yes. Although, if you have a trusted lawyer or representative you can provide him or her with a Power of Attorney. It is strongly recommended that you be present when purchasing in order to oversee in the event that a problem arises.

9
What is the difference in the private purchase contract and the title deed? M. Brown, West Midlands, June 2007 Private purchase agreement or option to purchase agreement is a non registered agreement and a promise to buy (but is enforceable under Spanish law). Whereas a title deed is a document registered at the land registry expressly stating who the owner of the property is.

10
How do I know that my deposit money is secure when buying a Spanish property? S. Tomassi, Edinburgh, June 2007 When paying a deposit it is advisable that it is deposited with a third party (in an estate agent's or lawyer's client account). However, not all vendors in Spain are eager for this and prefer the deposit be paid directly to them. When drafting and agreeing the private purchase contract or option agreement you have to make sure that there is a penalty clause stipulating that in the event they do not complete as a result of their own fault or action a payment is made to you (it is usual that the penalty be twice the deposit monies paid). You will then be able to reclaim via the Spanish judicial system.

11
I am looking to purchase a Spanish property from a developer in Spain. I am nervous about handing over my funds. Is there any way I can protect my position? H. Lam, Bucks, June 2007 When buying "off plan" in Spain, payments are staged. Developers in Spain are legally bound to guarantee (by way of bank guarantee) all payments made until the completion of the property. In the event that the construction is not carried out properly the purchaser has recourse by claiming the fund paid from the bank that is guaranteeing the developer.

Once the property is built it is obligatory that the developer provides a 10 year guarantee in the form of an insurance policy for the construction.

12
What are the normal fees for using a lawyer in Spain? I have heard it's expensive. F. Golightly, Herts, June 2007 The standard fees charged by lawyers in Spain are 1% of the purchase price. However, if you are purchasing a Spanish property with a high value it is advisable to negotiate the fees.

13
I need to calculate the costs of running a property in Spain. Could you give me an idea of the annual costs and taxes? S. Hurst, via email, June 2007 This is hard to calculate as there are many factors that influence the costs. For example where the property is located, whether there are community fees, the value of the property, what services you contract, etc.

There are three major costs you have to consider:
  1. Impuesto sobre Bienes Inmuebles (IBI) - Rates. Is the annual payment to the local Town Hall. The amount will depend on the rateable value of the property. The rateable value tends to be lower than the market value of the property. Each Town Hall will assess the IBI on a percentage basis. In Spain the percentage will vary depending on the location of the Town Hall. Taxable amount can range from 3,100 for a well-located villa down the coast to 80 for a village house set inland and far from popular areas.
  2. Property Tax - Non-residents owning property in his/their own name(s) must pay this tax because their principal dwelling cannot be here in Spain. Also, residents who own more than one property are subject to tax on their second home which is not their habitual residence. This tax is calculated as follows: 25% of 2% of the rateable value of the property. For example if the rateable value of your property is 120,000, 2% is 2,400 and you are taxed on 25% of this amount therefore you annual tax is 600.
  3. Wealth Tax - Residents and non-residents are liable to the wealth tax which is based on the value of the assets you own in Spain. Property owners must file a Wealth Tax return if they own property in Spain as at 31 December of each year, regardless of the value of the property. The taxpayer has to declare the higher of the rateable value and acquisition price. Almost in every case wealth tax is based on the acquisition price. This amount is deductible if for example you have any debts against the property. The rate depends on the value of your assets in Spain and the amount payable is pro rated between 0.2% an 2.5% every year.
For advice in this area of the law you must consult your tax adviser prior to purchasing your property in Spain, as there are tax efficient ways to mitigate these annual costs.

For your information, the tax year in Spain is from 1st January to 31st December, and tax is then paid by 30th June of the following year.

14
If the builders are late delivering completion on a Spanish property, can I sue them, or ask for my money back? N. Duncan, Glasgow, June 2007 It is very common to have delays in constructions of property in Spain. Developers in Spain are well aware and versed in the potential delays in construction, and as such usually protect themselves contractually. In the agreements they frequently give themselves a two month window to complete the construction. Further, they include clauses to justify the delay for reasons such as strikes, weather, etc.

In the event that there is an extraordinary delay you can take one of two actions:
  1. Cancel your contract for breach of performance and request immediate repayment of your deposit(s); or
  2. Wait until you can complete on the property then claim for damages of your losses.

15
I heard about an issue called 'land-grab' a couple of years ago. What does this mean and is it still a problem? H. Chapman, via email, June 2007 In the past 5 to 10 years Spain, and especially the southern Mediterranean coasts, have gone through an immense change, especially with regards infrastructure, ex pat immigration and property development. Basically the population has increased with the need for wider services (roads, amenities, housing sites, etc). This has meant that the Spanish Government has had to "Land Grab" to build roads; Government sponsored housing, sport centres, etc.

Usually the Spanish Government expropriate land which is not already developed and usually in the outskirts of cities and in rural areas so as not to disrupt the general population. It is very unusual that this will happen in an urban area.

In Spain this effect is no different to any other developed country and invariably depends on the Government's Town Planners, which of course consider the social needs of the time.

Again consult your adviser in Spain to check with the Town Hall for any future Governmental development projects.

16
Is it possible to make a Spanish will in the UK? I own a property in Spain. D. Richardson, via email, August 2007 Yes, you can make a Spanish will in the UK, but it has to be done in two columns (Spanish and English) and it has to be signed in a Notary Public. After that, the document has to be apostilled (La Haya apostille) in order to be valid in Spain.

When only UK assets are the subject of a will, it is not necessary to sign a will before a Notary Public, but all Spanish legal documents have to be signed by a Notary, wills included.

Details of your nearest Notary Public can normally be found in the phone book.

17
Can we sue the lawyer we used to buy a property that was never built? On his advice and with the completion of the contract he prepared, we parted with 60,000 euros only to find out later that there was no permission to build the property. The builders have since walked away from this project with our cash. A. McCarthy, via email, September 2007 Firstly you could try to file a denuncia (criminal procedure) against the developer, because maybe the lawyer was deceived too. Only if this client can prove that the lawyer was involved in the failed transaction can the action against him go ahead.

Of course any lawyer can be sued by clients for negligence in his/her legal work; in fact all lawyers have an insurance policy to cover this kind of problem. The only question is that the client has to prove that his money was lost as a result of the lawyer's negligence. If the lawyer can prove that he was deceived by the developer, it will be very difficult for the client to successfully mount a legal challenge against the lawyer.

I feel that the most appropriate course would be to sue the developer and try to clarify the persons involved in any deception.



 
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