Selling Property in Spain – Ten Reasons to Hire a Lawyer

Although it is not mandatory to sell property in Spain assisted by a lawyer, it is highly advisable that you do; particularly if you are a non-resident. Lawyer and regular contributor Raymundo Larraín Nesbitt takes us through the advantages of having legal representation when you sell a property in Spain.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of December 2016

Introduction

While it is possible to buy or sell a property in some overseas jurisdictions, including Spain, without having to appoint a lawyer, it would be very unwise to do so. If anything, it is even more important to obtain good legal advice when selling overseas as it is highly likely that you will be unfamiliar with many of the key processes.

Broadly speaking, the two key reasons which justify hiring legal representation on selling, besides avoiding payment scams and commission abuses, are tax mitigation and a refund of the 3% of the sales price withheld by a buyer’s lawyer (if applicable). These two points are explained further below.

It is often that I hear that those with vested interests in there being no lawyers involved – I wonder why – are arguably the most outspoken advocates that retaining a lawyer on selling is a superfluous expense and always put as an example that Spaniards themselves don’t hire them on selling. “In fact,” they add “your estate agent could handle everything in a jiffy at no extra cost.”

I cannot even begin to explain why this flawed advice is wrong on so many levels. So why take the risk by not obtaining proper legal advice?

Only a qualified and registered lawyer (abogado) can give you legal advice in Spain. Beware of intruders posing as lawyers who meddle in conveyancing. The golden rule is to always ask a lawyer in Spain for his registration number (número de colegiado).

Selling Property Avoid Horror Stories

  • Seller sells a property to a cash buyer and is handed over counterfeited banknotes at the Notary Public. No legal recourse is possible.
  • Seller is duped by fellow barroom ‘illuminati’ into thinking ‘under declaring’ is the norm in Spain and accepts a huge wad of cash at the Notary on completion. Immediately after signing over the property vendor gets mugged and he’s left with no house and with no cash.
  • Seller appoints ‘reputable’ estate agency. Unbeknownst to him an unscrupulous agent, on realising there are no lawyers involved, words into the agency contract a ‘sales’ commission of up to 50% (plus VAT) on signing a private purchase contract (exchange of contracts). The buyer pulls out because he is unable to secure finance from a lender to carry on with the purchase and demands a full refund of his deposit. Meanwhile, despite the sale falling through, the agent demands his 50% ‘commission’ as the private purchase contract was indeed signed threatening the vendor with litigation on non-compliance.
  • Seller, after receiving an initial reservation deposit, is cajoled into skipping signing a private purchase contract and jump straight to completion before a Notary Public. This entails a vendor waiving numerous rights and legal safeguards which would have otherwise assured a problem-free transaction.
  • Seller signs away a Power of Attorney to sell his Spanish villa in favour of his expat ‘best pal’ who berates the use of Spanish lawyers (“They sleep siestas, you know?”) and who is a self-proclaimed conveyancing expert (because he bought two rural properties back when General Franco was still alive). His best friend is never seen again – nor the money.
  • Seller grants a Power of Attorney to a ‘golf buddy’ to sign completion on his behalf as his proxy. Years later, the vendor reads some internet article where it is explained that non-resident sellers are lawfully entitled to a full refund of the 5% retention of the sales price withheld by a buyer´s lawyer. Upon further inquiry before the Tax Office it transpires ‘someone’ pocketed the 5% refund.
  • Seller arranges on his own the mandatory Energy Performance Certificate on selling, and is overcharged by several hundred euros.
  • Seller agrees with cutthroat estate agent a trivial sales price because the sales market “is tough”. Conniving agent agrees with buyer a significantly higher price. Unbeknown to both vendor and buyer, the artful dodger pockets the price difference (besides his 5% agent’s commission and the 3% sales refund of the vendor). Not bad for a day’s work, eh?  

Selling – Ten Reasons to Hire a Lawyer in Spain  

1. Legal independence. Larraín Nesbitt Lawyers is totally independent.

2. Registered professionals. Larraín Nesbitt Lawyers only employ qualified and registered Abogados. Registered abogados are subject to disciplinary action by the Bar Association so must conduct themselves honourably to continue practising else risk being barred.

3. Professional Indemnity Insurance. Registered lawyers have Professional Indemnity Insurance in place in the event of malpractice or negligence. Currently this cover stands at €800,000 with Larraín Nesbitt Lawyers.

4. No language barrier. All our staff speak and write English fluently, besides other languages. Nothing will be lost in translation!

5. No hidden extras. We will provide you with a written quote so you are sure that there are no unpleasant surprises. We will provide you with a clear breakdown of costs in English, or your chosen language, beforehand.

6. Accountability. We will give you an invoice, statement of all expenses and written advice. Larraín Nesbitt Lawyers will put everything in writing.

7. Transparency. You will receive a written report in English, clearly setting out the terms of the sales contract.

8. Tax mitigation. Our lawyers will endeavour to offset both the associated purchase costs and refurbishment expenses on your property to reduce your tax burden on selling as much as is legally admissible (contingent on the vendor supplying us with the original invoices). More details in our article Taxes on Selling Spanish Property. Additionally, a lawyer will safeguard a seller’s right to negotiate with a buyer the pro rata payment of IBI tax (equivalent to the UKs Council tax). A seller not legally represented will likely be expected to pay this tax in full.

9. Non-residents 3% sales refund (Tax Model 211). As a post-service, our lawyers will apply for a full refund from the Spanish Tax Office (if applicable) which will be credited into your account.

10. Conveyancing can be arranged in your absence. If granting a Power of Attorney, our law firm will ensure you understand what powers you are giving and for how long those powers last. Normally the powers you give your lawyer are on-going unless you expressly revoke them. You should avoid signing off Powers of Attorney to people who dabble in conveyancing and are unqualified to provide legal advice.

Conclusion

Hiring a seasoned lawyer, in my experience, pays for itself on all the money you stand to save on avoiding the most common pitfalls on selling a property in Spain.

Because impartial legal advice is priceless.

Politicians were mostly people who’d had too little morals and ethics to stay lawyers.”George R.R. Martin.

George Raymond Martin is an American novelist and short-story writer in the fantasy, horror, and science fiction genres. He is best known for his international bestselling series of epic fantasy novels, A Song of Ice and Fire, which was later adapted into the HBO dramatic series Game of Thrones.

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

 

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About Raymundo Larraín Nesbitt

After completing his dual law degree in Madrid (ICADE) in 2003 Raymundo went on to work for prestigious Spanish and English law firms in Spain before moving to the UK for several years to work for a British multinational. He is a prolific writer of legal & financial articles in English, with well over 140 articles published and widely used in the Spanish real estate sector. Raymundo now runs his own law practice in Marbella, where he advises local and foreign clients on all legal matters with a focus on conveyancing and non-resident taxation. He is regularly quoted by the international press as a reliable source in his field of expertise.