Buying and Selling Spanish Property – Why use a lawyer?

When buying or selling a property in the U.K, most people wouldn’t dream of entering into a transaction without the assistance of a qualified and independent lawyer. Yet in Spain, many buyers and sellers, particularly foreigners, somehow forego instructing a lawyer and simply rely on the estate agent to handle the transaction on their behalf. A large number have encountered serious problems as a result. Some have lost everything.

So what makes a purchase in Spain any different from one in the U.K? Maybe it’s the combined effect of sun, sand, sangria and the smiling faces of the various ‘experts’ lurking in every corner, eager to assure unsuspecting buyers that everything will come up smelling of roses.

The reality is that entering into a foreign property transaction is one of the most complex and expensive transactions that you will most likely ever undertake. Furthermore, there is the added complication of an unfamiliar foreign language, together with the associated foreign laws, taxes and procedures. The reality is that the need for a good independent lawyer is far greater for a foreign transaction than when buying at home.

In many instances, Estate Agents will offer to handle the paperwork and the legal side of things on a buyer’s behalf. With the more reputable agencies, the intentions are usually genuine and the transaction may indeed complete satisfactorily. However, Estate Agents are not trained lawyers. Many have no professional liability or indemnity insurance to cover you should the transaction go wrong or should they miss something important in the paperwork.

Also bear in mind that your Estate Agent is not independent. In fact, they have a potential conflict of interests in representing you in the legal process. Remember that the Estate Agent is acting for the SELLER. The Agent’s primary interest and goal is to sell the property on the seller’s behalf in order to earn their commission. If the sale does not go through because somebody spots an irregularity or legal defect in the paperwork, the Estate Agent earns nothing.

As an alternative, some clients even look to instruct a lawyer in the U.K. However, he or she will have little or no local knowledge of Tenerife. That lawyer is unlikely to jet over to Tenerife to carry out searches and enquiries, or to attend the completion appointment at the Notary. The lawyer’s only option is to subcontract the work to a local agent in Tenerife, who in many instances is not a qualified lawyer. Both the lawyer and the agent will expect to get paid, so In essence, you end up paying twice for the same service. There are also the inevitable delays when information and documentation has to pass through the extra middleman.

Using a qualified local English solicitor with experience of the local market gives you protection and peace of mind. John Hatrick is the first and only English Solicitor registered and authorised to practice from Tenerife.

Tenerife Solicitors are regulated by both the College of Abogados (lawyers) in Tenerife as well as the Law Society and Solicitor’s Regulation Authority in England. As a result, our clients avoid the language barrier or other potential misunderstandings that can arise between the English and Spanish. Furthermore, using an English solicitor gives British clients a forum to raise any dispute in their own country and in their own language.

Tenerife Solicitors’ clients also benefit from the firm’s Professional Indemnity Insurance for any claim should something go wrong during the transaction due to the negligence of the firm. Our clients can however rest assured that the firm has not had to make a single claim since its inauguration in 2008.

Why leave your property transaction to chance? Call Tenerife Solicitors now for a no-obligation quotation.

To look up an English Solicitor, go to www.solicitors-online.com and click on ‘Solicitor search’.

To look up a Tenerife lawyer, go to http://www.icatf.es/listar_abogado.asp
For a list of Foreign Registered Lawyers from other jurisdictions authorised to practise in Tenerife (such as English Solicitors or French Avocats) select “Abogado Inscrito” (Registered Lawyers) in the drop down menu next to “Situación”

What’s involved

From the moment we are instructed right up until after completion of the purchase, we will guide you through each step involved in the transaction. We are here to ensure that all Spanish legal requirements are met, that the property is correctly registered in the vendor’s name and that it is free of any mortgages, charges, encumbrances, debts or other liabilities.

At Tenerife Solicitors, client satisfaction is paramount. We aim to respond promptly and concisely to all telephone calls, emails and correspondence. We are aware of the frustration experienced by the British with the bureaucracy and laid-back attitude of doing business in Tenerife. Wherever possible, we aim to minimise bureaucracy and delays and provide you with a service as close as possible to that which you would expect in the U.K.

Why wait until you have agreed final terms on a property before instructing us? We are happy to assist you in negotiating and discussing the purchase terms with the seller or the estate agent. It is particularly important that you negotiate preferable terms. For instance, do you wish to obtain an early or a more distant completion date? How much deposit are you prepared to pay? Are there items at the property, such as furniture or other extras that you would like included in the sale?

Once instructed, we will explain the procedure involved in buying in Spain in layman’s terms without complex legal jargon. We will also give you an accurate indication of the costs involved in the purchase.

Next, we negotiate a private contract for purchase with the sellers or their lawyers. The next step after paying the deposit is to examine and witness the terms of sale in writing. At this stage the lawyers will draw up the private contract. It is customary to pay a deposit of ten per cent of the price on exchange of contracts, which is not normally refundable if the purchaser defaults. Conversely, if the vendor fails to perform his obligations and complete the sale, you will be entitled to rescind (cancel) the contract and claim damages, typically twice the amount of the deposit paid.

Before contracts are exchanged, we will complete various searches and investigations in respect of the property to ensure that there are no hidden problems or debts linked to the property and more importantly, that the vendor is in a position to sell the property. We will also make you aware of any rules or regulations applicable to your new property, such as apartment-complex community rules.

Throughout the procedure, we will liaise with your bank or mortgage provider to ensure that they are in possession of all relevant information they will need in order to approve transfer of funds on the completion day.

Finally, on the day fixed for completion we will accompany you to the Notary Public to sign the title deed, or if you have given us Power of Attorney, we will sign on your behalf and in accordance with your instructions. The final payment will be made to the vendor, who will simultaneously hand over possession of the property to you, together with the keys.

At this stage the sale is completed. Immediately after completion, the notary will fax details of the title deed to the local land registry to inform them of the identity of the new owner, to prevent the property being sold twice. In this way the notary and the Land Registry act together to protect and guarantee your interests. We will then pay the relevant taxes on your behalf and have the original title deed submitted to the Land Registry for registration of your title.

Thereafter, we can also offer services such as arranging for the transfer to your name of utilities and services such as water, electricity and IBI (Council tax) and organise their payment through a local bank and set up direct debits for all future payments.

Buying a foreign property is one of the biggest transactions you will ever make. Why leave it to chance? Call Tenerife Solicitors now for a free no-obligation chat and quotation. Experience the level of service and professionalism you expect and deserve.

See below for a breakdown of typical fees, expenses and taxes associated with buying a Spanish Property.

For a typical purchase, buyers should budget for an additional 8 – 10% over and above the agreed purchase price of the property to cover all fees, expenses and taxes.

The typical expenses are as follows:

Solicitor’s fees

Tenerife Solicitors are currently offering clients a fully comprehensive service for purchase or sale of a property for only 1,500 Euros plus IGIC VAT. This is a fully-inclusive fee, regardless of the price of the property, which includes all searches, negotiating and preparing the contract, liaising with your bank or the seller’s bank, accompanying you to the Notary and dealing with post-completion registration and transfer of utilities.

The above price does not include the Notary’s fees, Purchase Taxes, Bank fees, Power of Attorney (if you cannot sign in person) or N.I.E (tax number) applications.

Should you require us to prepare a Tenerife Power of Attorney to act on your behalf in the transaction, this will cost an additional 150 euros plus IGIC.

For any client purchasing a property, we are offering a special promotion where we prepare your Spanish Will for an additional 150 Euros plus IGIC (when signed at the same time as completion of the property purchase (cost usually 240 Euros).

We can also arrange for the issue of your NIE for an additional 50 euros plus IGIC. This includes the levy that the police charge and will also be an afternoon appointment, which avoids having to be in the queue at the police station at 7am in the morning.

Mortgages

Non-residents can typically get up to 60% – 65% of the bank’s valuation. We can help you with this process.

Typical Bank charges include:

Obtaining a Valuation – costs approximately € 250
1% mortgage opening commission (calculated on the sum borrowed)
Buildings Insurance – varies from € 120 to € 250 per year.

N.B. Notary fees & fee for Registration of the mortgage – Whilst these have historically been charged to the customer, Judges in Spain recently rendered such charges illegal and many customers are now reclaiming such costs in respect of mortgages already taken out. Today the banks should pick up the tab for these costs.

Other Costs

Stamp Duty Purchase Tax – Fixed at 6.5% of the declared property price

(N.B. The illegal practice of under-declaring the true property purchase price has largely died out. The taxman now typically reviews property prices and where he thinks there has been an under-declaration, will not hesitate to issue an assessment notice seeking additional tax, interest and penalties on what he considers to be the correct amount payable. Fighting the assessment will often cost more than the difference in tax being assessed, so it is always better to declare the correct amount upfront. By under-declaring, buyers are also simply deferring a potentially much larger capital gains tax bill for when they ultimately sell the property.

Notary & Land Registry fees – Calculated on a complex formula depending on the property’s criteria. For a small apartment, most clients should budget for somewhere in the region of €1.000 – €1,200 for these charges.

For a no-obligation chat and a quotation, please contact us.