Use a lawyer to help you protect your interests when buying in Spain

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Editor’s note: Buying property in Spain, be it a plot, apartment or villa, is often one of the biggest investments of a lifetime, in many cases amounting to a sizeable chunk of the buyer’s savings. It’s important for buyers to protect their investment by hiring a qualified lawyer to do the legal searches. Rafael Berdaguer, a lawyer with many years experience working in Marbella and the Costal del Sol, explains why.

If you are a foreigner buying property in Spain it is even more advisable, and a question of common sense, to use an experienced lawyer who can fluently communicate in your language, or at least in the universal language: English.

The first thing a lawyer has to determine is whether the real estate you intend to purchase is legal or not. I live in a town, Marbella, where the Town Plan establishes that some 18.000 dwellings have been irregularly built. I suggest at this point reading for a bit of background our article titled: Marbella 2010 Town Plan null and void: return to the 1986 Town Plan.

Some of these homes can be legalised, but there are others whose existence depends on the decision of a Court of law following a judgement declaring them null and void. In cases where there are problems, one must make sure they can be legalised by checking all facts: what kind of planning consent was obtained, whether there is any proceedings to redress the planning order being followed by the local council, or competent body of the administration, whether there are proceedings pending on aiming to make the building licence null and void or whether there is any court judgment resolving that the property is illegal and must be pulled down.

For those who intend to purchase in the countryside a legal search is also very important since it is in this type of land where most illegal constructions have been built and only few of them can be legalised.

The document that is supposed to give the purchaser comfort to a legally built house is the First Occupation Licence (FOL). This is a confirmation from the Local Council that the property has been built in accordance with the plans for which the planning consent was granted, and it is ready and qualified for the use for which same has been built. However, in Marbella, for example, there are many properties with a FOL that is irregular as the planning consent with which they were built was not legal. So one has to take into consideration that even if there is building consent and the house has FOL this does not necessarily mean that it is a legal property.

All these circumstances may affect the saleability of a property as a prospective purchaser may have difficulties getting a mortgage, something which should be taken into consideration at the outset. Also prospective purchasers may look into the potential difficulties for a property in irregular situation when the time comes for them to sell.

In parallel to this one must verify by conducting the proper searches at the Land Registry whether the property belongs to the person or company selling it, whether such property is free from charges, and if there are charges that these can be cancelled prior to concluding the transaction. In addition to this one must make sure that all local dues, taxes and community fees on the property are paid up to date and that there are no issues involving the community of owners where the property is which may significantly affect the property to be purchased.

Once the legal standing of the property is established, this must be checked from a physical point of view. For this, if the property is less that 10 years old, there may not be necessary to carry out a survey or inspection of the property as it should count with an insurance against structural damage. But for properties over 10 years there is no insurance cover and therefore the purchaser must employ a surveyor to inspect the physical standing of the property and its installations as otherwise he may not have other recourse than to litigate later on, something which it is not advisable due to the way Spanish Courts work.

There is some other compulsory documentation that the vendor has to provide such as the Certificate of Energy Efficiency (CEE). This document just gives you an idea within a scale as to how efficient a property is from the consumption of energy and should contain measures which can be taken to improve the efficiency in the consumption of energy. This is something good for new properties as it encourages developers to build more energetically efficient property, but in my opinion is a useless measure for old properties as it involves additional costs for the vendor, and delays in the completion of the transaction as in most cases the purchaser will take no notice of this document. However, it is a good starting point to create awareness amongst buyers to acquire energetically efficient properties especially if they have just been built.

To summarise, when it comes to investing a considerable amount of money in a property in Spain make sure you engage an experienced lawyer to do all the legal and other searches. That way you can avoid problems at the time of purchase, and ensure that when the time comes for you to move on, there are no problems at the time of sale either. That also increases your chance of making a good return on your investment.

Rafael Berdaguer
Lawyer with the firm Rafael Berdaguer Abogados based in Marbella, Spain.

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution.
Copyright © 2016 Rafael Berdaguer Abogados All Rights Reserved

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SPI Member Comments (3)

Thoughts on “Use a lawyer to help you protect your interests when buying in Spain

  • I’d also say: do not expect your lawyer (or estate agent) to protect you 100%. Do know their limitations and get everything in WRITING. The lawyer works within the limits of legalese, namely a contract. So do think outside the box before signing any contract no matter how simple it appears. Ask yourself: what are my expectations and what are they delivering for the money I’m forking out? I’d like to highlight a few issues in Rafael Berdaguer’s column.
    In paragraph 6: mortgage: ‘something that should be taken into consideration at the outset’. As a buyer, I’d say: consider making any contract dependent on the acquisition of a mortgage. If no mortgage obtained, no deal. If you have NOT named this up front and are unsuccessful – your deposit (maybe E6000) is forfeited to the vendor. Expect some pushback to this suggestion.
    Paragraph 7: ‘proper (legal) searches’. Note that these searches undertaken by your lawyer are limited searches, so read the small print. Do the searches cover ALL your concerns? Once this hurdle is cleared – the property becomes yours.
    Paragraph 7: The term ‘the property’ only refers to YOUR property … NOT (possibly) the entire 100 plus unit (?) complex into which you are buying. Consider: yours may be squeaky clean (legal search) and others may be in (serious) arrears which affect the entire complex. So think big(ger). Maybe the place is slowly going ‘under’, but ‘legally’ YOUR purchase will still going ahead. Protect yourself in any contract in writing and before you pay any deposit.
    The way I read para 7 it appears as if Rafael is suggesting that is the lawyer who checks whether ‘there are no issues involving the community of owners where the property is which may significantly affect the property to be purchased’. Is this the case – do double check. Does the lawyers search cover: the ‘community of owners’ as well? And what does this search entail?
    You’ll in all likelihood be asked for a E6000 ‘good faith’ deposit as the buyer, so do your own homework on the building complex as well OR clearly stipulate your need in the contract you sign. The reality is that you COULD be buying into someone elses problems. In my experience, the lawyers search does not cover the financial stability of the entire property/complex. This is not high finance: do due diligence and ask for the Annual General Meeting for the past 2-3 years or so. They should be forthcoming. If not, why not? It could be that: some owners have defaulted on their maintenance fees (and for a long time) … is this an issue for you? Is anything being done about it? What is the result? Is the property well managed? Drill down just a little: What is the annual income vs. expenses. What are the expenses? Are you comfortable with this scenario? What (if any) are future plans for the local area? Is there a surplus account for a rainy day. This is YOUR investment, and once you’ve deposited E6000 and signed the contract – it is gone. Unless you’ve introduced a caveat(s) that makes you comfortable. For, ALL that the vendor / lawyer has to prove is that the property YOU intend purchasing is legal and free from (limited) encumbrances. Otherwise, bingo … you’re an OWNER. Congratulations.

  • Rafael Berdaguer says:

    Thank you Downal for your input. I entirely agree with you. The burden on the prospective purchaser can be up to a high extent relieved depending on how thorough the particular lawyer does his work. We know what we do but not what other colleagues do. In connection with the Community of owners we demand copies of the minutes of the last two AGM and that should give you a fair picture of the financial situation of the Community, any issues or dispute the Community may be involved in, etc. If from the said to AGM there is need to dig further we demand more AGM´s minutes of former years to become aware of the standing of the Community. Regards

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