April 6th, 2015
As the Spanish
property market news headlines switch to recovery mode- with sales on the
increase, profits to be made; so the prominence recedes of the Press focus
during the recessionary period, of the supposedly ‘high risk’ nature of Spanish
property ownership- from demolition orders for planning defects; through
properties falling down with no right to compensation for distressed owners; to
unscrupulous intermediaries disappearing with client funds.
But the common theme
throughout the previously reported disaster cases must not be forgotten. In the
vast majority of problem cases of Spanish property ownership, there was no
independent professional legal representation at the time of purchase or sale;
or perhaps worse still, reliance upon unqualified/ incompetent legal
representation.
Obviously non-Spanish
owners of Spanish properties wouldnever dream of property dealings in their own
country without proper legal representation. So it is quite astonishing that in
Spain, often with no knowledge of the legal system or even the language,
private investors decide to ‘take a flyer’ in terms of the detail of the
Spanish legal process!
It is precisely
because of the well-documented risks in Spanish property ownership and the
frequent lack of clarity as to transactional costs and taxes, that independent
professional legal representation is essential for Spanish property purchases
and sales.
With proper
professional advice, instead of taking a high-risk gamble, owners of Spanish
property can invest intelligently and securely in real estate in Spain.
Some key points for
buyers and sellers of Spanish properties:
1. Ensure that your lawyer speaks your
language fluently. For a significant investment such as real estate, everything
must be completely clear.
2. Ensure that your lawyer is qualified and
registered in Spain with the Colegio de Abogados, to be certain of professional
regulation. (And check that there is adequate professional indemnity insurance
in place to cover the risk of anyproblem with their work).
3. Ensure that your lawyer is dual
qualified and professionally regulated both in Spain and in your own country,
to have a full grasp of all the tax implications of your Spanish property
investment. This enables dealings in Spanish real estate to be conducted in the
most tax efficient way, having regard to your tax liabilities both in Spain and
crucially, also in your own country.
4. Ensure that your lawyer acts
independently from the estate agent, developer or other parties to the
transaction. If there is any connection, ensure impartiality and the usual professional
clearance of anyrisk of conflict of interests.
5. Ensure that your lawyer provides you at
the outset with a clear written budget of all costs and taxes; and undertakes
to follow up at the end of the case with a final, clearly detailed cost and tax
summary.
6. Ensure that your lawyer operates an
individually designated client accounting system for your full financial
security.
7. Ensure that your lawyer provides a
written report on title, well in advance of a contractual commitment,
confirming all title and planning information in relation to the property. All
parties to a transaction must be completely clear on all aspects before a
contractual commitment is made.
8. Ensure that an initial private contract
is entered into, with a deposit paid on exchange of contracts. This provides
security for both parties; and protection against wasted/ abortive costs and
unscrupulous behaviour in terms of last minute negotiations.
9. Ensure that your lawyer (usually in
conjunction with the estate agent) attends to the transfer of services to the
property following completion.
10. Specifically ask your lawyer to confirm
the above points, to ensure that nothing is overlooked; and that you are fully
protected by your legal representation.
The above is a
non-exhaustive checklist- really just the bare minimum.
The Legal 4 Spain team
provides a full property conveyancing service (buying and/or selling)
throughout Spain. We are always happy to provide a competitive cost estimate at
the outset of a transaction on a no-obligation basis.
