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.