September 21st, 2015
In many cases, whether spouse-to-spouse inheritance or passing down the family line, beneficiaries wish quickly to sell inherited Spanish properties.
In order to complete a Spanish property sale following the death of an owner (or co-owner), the succession process must be completed first.
The seller or sellers must be alive; have legal capacity demonstrated in the personal attendance at the Notary’s on completion of the sale, or be validly represented under Power of Attorney.
In many areas of Spain (even in an active market), the process of selling a property can be fairly lengthy.
There is no problem therefore (in order to get ‘the ball rolling’), in marketing a Spanish property for sale before completion of an inheritance case. But obviously, the legal position must be made clear to any interested parties. Furthermore, any contractual commitment entered into must be of a conditional nature- completion of the sale being subject to prior completion of the inheritance.
The following is a brief summary of the principal ‘paperwork’ and logistical items to attend to, before putting a property on the market for sale.
1. Property Title The original Title Deed (‘escritura’) will be needed- or if it cannot be located, then an official copy should be obtained from the Notary’s. The Registered Title details can be extracted from the Title Deed; and an up to date copy of the Registered Title should be obtained from the Property Registry. In many cases, there are discrepancies between the official Spanish property title and the position ‘on the ground’. So, it is often necessary to get the title updated prior to a sale. Banks (for buyers’ mortgages) and well advised buyers generally will wish to see correct property description in the title. Discrepancies can otherwise seriously impact on achievable value. The title rectification process can be fairly lengthy- usually with architects’ certificates and retrospective Town Hall approval required. So, it is always best as early as possible to be aware of any such issues; and to ensure that they are correctly addressed.
2. Energy Performance Certificate. In order to market a Spanish property for sale, owners are legally required to obtain an up to date Energy Performance Certificate. Competition in the market now for this service means that it is generally a fairly quick and economical exercise.
3. Local Rates Information. The rates details for the property will be needed, together with proof that there are no rates arrears. Reference numbers can usually be found on the receipts for rates (IBI/ SUMA) sent out by the local Town Hall (‘Ayuntamiento’) or the paying bank. Missing information can be obtained from the ‘Catastro’- rates department of the Town Hall.
4. Planning Permission. Such evidence as is available from the time of acquisition of the property will be required, to prove compliance with planning legislation; and permission for the legal occupation of the property. For any missing documentation, official copies- or confirmation of legal compliance- can be obtained from the planning (‘urbanismo’) department of the Town Hall.
5. Community Details. Full details of the Community Administrator should be available, together with a copy of the Community statutes and (if possible) copies of the minutes of recent Community meetings. A summary of Community charges over recent years will be needed; and also details of any forthcoming charges, which have already been notified. The most recent statement/ receipt of Community charges will be needed; and before signing the sale and purchase deed (‘escritura de compraventa’) before the Notary, a Certificate by the Community Administrator confirming that there are no arrears of Community charges will be required.
6. Tax Issues. Capital Gains Tax liability will need to be considered; and also for non-Spanish resident sellers, a tax retention of 3% of the sale price is made on completion; and fairly stringent conditions apply to reclaims, even in the event of a sale at nil gain.
7. Services Contracts. Receipts for the most recent payments of property outgoings (principally electricity/ water; and if applicable, gas) will be required, together with the latest contractual terms of supply- in the absence of copies, these can be obtained from the local offices of the services supply companies. Apportionment between seller and buyer needs to be addressed following completion of the sale.
8. Power of Attorney. If the sellers do not anticipate being personally present in Spain for the legal sale process, then it will be necessary for a Power of Attorney (containing the necessary legal powers to sell and carry out associated administrative tasks) to be signed in favour of the appointed representative/ legal adviser. A well prepared Power of Attorney for the inheritance case should include the relevant provisions, to save duplication.
9. NIE Certificates. NIE (Spanish fiscal) numbers will be required for any registered owner; and up to date NIE certificates will need to be provided to the Notary on completion. These are also required for beneficiaries anyway, so will be available from the inheritance documentation.
10. Mortgage. If there is an outstanding mortgage on the property, details will be required as to the arrangements / requirements of the lender as to redemption; and also any charges which will apply. A mortgagee representative also needs to be available at the Notary’s on completion. So, often this dictates the timing and location of completion.
11. Bank Account. Any Spanish property seller will require a current bank account in Spain into which the completion monies can be paid. Usually a lawyer’s client account will have been opened for the inheritance case and can be used for this. It is advisable to be certain in advance, as to the charges which will be applied in crediting the completion monies to the account; and for the onward transmission of the completion monies. Spanish bank charges can be surprisingly high; and the manner of payment of the purchase price; and onward transmission/ form of Foreign Exchange service used, can significantly affect the costs.
12. Legal Representative. In order to be fully protected in any Spanish property transaction, it is essential to appoint in writing a legal representative, who is independent- both from the other party to the transaction; and also from the estate agent negotiating the transaction. The appointed legal representative must be duly qualified, registered with the applicable Colegio de Abogados (Law Society equivalent); and up to date with their professional practice requirements. They must also carry adequate professional indemnity insurance cover. It is also essential that all communication is in a language which both the property owner and the legal representative speak perfectly. There should be no risk of any misunderstanding. Usually a specialist lawyer will have been engaged for the inheritance case; so they are generally the logical choice for handling the legal aspects of the sale.
13. Estate Agent Appointment. The issue of estate agent appointment in Spain can be something of a potential minefield; and is worthy of an entire separate article! Suffice to say for now that it is an area which needs to be extremely carefully handled and documented.
The above is a non-exhaustive checklist- really just the bare minimum.
The Legal 4 Spain team is always available to provide preliminary advice on a no-obligation basis in relation to probate and/or a sale or purchase of a Spanish property.