So, you have decided on Buying Property in Spain? It can be a very exciting time and it can be fraught with pitfalls for the uninitiated. With a professional property agent, a reliable lawyer and this guide, you can reduce your chances of falling foul of the Spanish system.
1. Don’t Ignore the Registries
There are two registries relating to Buying Property in Spain, the Land Registry and the Catastro register. Any house you consider buying must be registered on the Land registry, if it is not, it is vital your legal representative confirms that the property can be registered and legalised.
There are horror stories of people buying properties that are not on urban land, were built illegally, too close to the beach or in a national park.
The Catastro register is managed by the Tax office “Hacienda”. This register is used to calculate IBI bills, Taxes etc.
If there are inconsistencies in the information stored in both these registers, the registration of new owners could be blocked. The main issues arise regarding the size of the property that is registered.
If the discrepancy is substantial, you will need to rectify the title to the property before can be fully legalised.
2. Don’t Forget the Community
Many properties in Spain are set within urbanisations with communal facilities such as pools, gardens and lifts.
The Community of Owners manages these facilities and the funds to pay for their upkeep. Property owners have obligations financially to pay a proportion of the fees required for the maintenance of these areas. The Community of Owners may have agreed on a major investment such as building works or painting and as these costs are divided amongst the property owners, they can be substantial.
Your legal representative should obtain any appropriate documentation to ensure that past debts are not outstanding or any liabilities due in the future are accounted for in the property sale price.
3. Don’t ignore the title holder
It is common for a property for sale to have been subject to part of an inheritance, most likely the children of the deceased.
Your lawyer will need to check that the person selling the property is legally entitled to sell it. There could be more than one owner of the property and if the property is sold without the knowledge of this party, you could be subject to lengthy litigation to force the vendor to refund the money paid.
There are the possibilities of debts on the property, an enforceable rental agreement or even judicial claims against the property. Do not buy or sign anything without your lawyer approving it.
4. Don’t overlook the Licenses
If the property has had any alterations or additions for example a pool, garage or extension, they will have required the relevant permits. To ensure the property is fully legal, these permits allow your lawyer to check if the property or any alterations were completed in compliance with the regulations in force.
Your lawyer will need to contact the local Town Hall to ascertain the legitimacy of any constructions not listed in the land registry.
5. Don’t think the Law is the same
It seems an obvious piece of advice but – Spanish law is not the same as UK law.
A good conveyancing lawyer will be worth their weight in gold. There are multitudes of tricks vendors use to try to offload their costs onto an unsuspecting purchaser.
A notary can be more than €1000, as the purchaser you are only liable for the costs of a copy of the deeds, but unscrupulous vendors often inform you that the notary costs are the purchasers or even to split the bill. The rates (IBI) are another common way for vendors to reduce their own costs. The purchaser is only liable for the rates for the proportion of the year that you own the property. The vendor is also liable for the costs to provide an Energy Certificate which is a legal requirement for all property sales.
A good lawyer will protect you by drawing up a pre-purchase contract or “arras”. This would normally stipulate that the vendor loses double the money of any deposit paid should the purchase fail in any way.
6. Don’t forget the inventory
It is quite common for house purchases in Spain to include the contents within the sale.
If your chosen property comes with furniture etc, as part of the purchase, it is your legal responsibility to perform an inventory check of every item included in the sale and for this to be referenced within the sale contract.
The inventory will avoid any future disputes relating to any items not retained in the property as agreed.
7. Don’t Buy a Tourist rental without checking for restrictions
A common goal for many house purchasers is to run a small “tourist rental” business from their property. These can be as low key as Airbnb or a full Bed and Breakfast establishment. If this is your intention, you must make your lawyer aware of this. There are many restrictions relating to this business activity at both local and regional levels.
Some licences will require architect plans, health and safety reports and other legal hoops to be jumped through to meet your objectives.
8. Don’t buy without a survey
A survey is becoming a must for purchasing in Spain. There have been many issues with “Concrete Rot” or “Aluminosis”, especially with properties built in the 60s and 70s.
A surveyor will already have data regarding the problems a particular area, village or town has and they will work closely with your local lawyer to ascertain any current or
9. Don’t Buy Off-Plan with guarantees
If you are considering an “off-plan” property, only proceed once your lawyer has established that the correct bank guarantees are in place. There have been 1000s of people who have had to pay a mortgage on an unfinished new build due to the constructor going bankrupt and insufficient guarantees in place.
The legislation has been improved but if you have any doubts, walk away.
10. Don’t sign or pay anything
A respectable property agent would not dream of asking for money upfront or for their fees to be paid early or a myriad of other underhand tricks. When you have found a lawyer, you are comfortable with, allow them to handle the whole transaction. Do not sign anything without their agreement and most certainly do not pay anybody anything.