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Home-Buyer’s Checklist – RESALE

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By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of April 2020

You have fallen in love with a property in Spain and now it’s time to take the dip and sign the contract!

This short article is written with the aim to provide buyers with a basic guideline on what you should be asking a seller for. It is not meant to substitute professional legal advice.

Whilst it is possible to buy a property in some overseas jurisdictions, including Spain, without having to appoint a lawyer, it would be very unwise to do so. Buying a house is one of the biggest investments most people make in their lifetime. So why take the risk by not obtaining proper legal advice?

Banks and notaries are not your own personal lawyers and will not carry out stringent legal checks to protect buyer’s legal interests; that is not their job. This is a common blunder buyers’ make, particularly non-resident ones.

Instruct your own independent lawyer and never under-declare; besides being illegal, you will pay a massive Capital Gains Tax bill on selling it later on. It is illegal, it is stupid and only benefits the seller, not the buyer.

Remember to store safely the following invoices on buying which can be used to GREATLY mitigate your tax bill on selling:

  • Lawyer’s fees (on buying).
  • Notary fees (on buying).
  • Land Registry fees (on buying).
  • Taxes (on buying) yes, these can be offset in full on selling
  • All property-related improvements (not maintenance costs). Providing you have VAT invoices to back them up. You are welcome.

Buying Resale Checklist

Please note I only have in mind physical individuals acting as sellers on writing this rundown, if companies are involved, then far more checks would be necessary.

  • Request a copy of a seller’s Title deed.
  • Request a copy of a Licence of First Occupation, where possible. This is required for holiday rentals and also by lenders to raise finance against a property (i.e. to buy the property itself, or because you need money to pay health-related expenses later on in life, etc).
  • Ensure the person/s you are dealing with as sellers are the ones registered as the property owners. If not, ensure they are acting through a valid Power of Attorney.
  • Request an updated nota simple, or else procure yourself one.
  • Ensure the property is classified legally as a dwelling and not as commercial property.
  • Ensure the property is freehold, not leasehold.
  • Verify the property is not in arrears with its Community of Owners, if applicable. A buyer becomes liable for the previous 3 years in arrears plus the current one (total 4 years).
  • Verify there are no outstanding local rates to be paid: IBI and refuse charge (basura, in Spanish). A buyer becomes liable for the previous 4 years.
  • Verify there are no tenants living in the property. Under new stringent rental laws tenants at times are legally entitled to stay 8 or 10 years in a property, even if sold on! The buyer must respect the duration of the whole rental contract, unless a tenant formally agrees to leave ahead in exchange of ‘compensation.’
  • Ensure the property is unencumbered (no mortgage against it).
  • Ensure the property is free of liens i.e. rights of way, rights of view, hunting rights, gathering rights, well rights…
  • Ensure the property is free of charges i.e. no registered embargoes against it.
  • If investing in a Buy-to-Let, verify your Community of Owners has not banned or restricted holiday rentals.
  • If investing in a Buy-to-Let, ensure you are compliant with holiday homes regional regulations and attain a Tourist licence to rent where necessary – seek legal counsel.
  • Post-completion: ensure your property is now registered under your name at the Land Registry and never take anyone’s word for it! Verify it yourself, request a nota simple.
  • Post-completion: arrange payment of local rates (IBI & basura) as a direct debit against your Spanish bank account.
  • Post-completion: if you are non-resident, ensure you pay every year your Non-Resident Imputed Income Tax (NRIIT) on your Spanish property.

“ We human beings become what we dream as children and during our youth.” – Manuel Patarroyo

Manuel Elkin Patarroyo (1946, Colombia). Is a Professor of Pathology and Immunology who developed, under precarious third-world conditions, the world’s first synthetic vaccine against a severe strain of malaria, a disease which kills 2 million people every year. The man was offered a fortune by leading US Pharmaceuticals for his patent (rumoured at over 1bn US Dollars). Anyone would have accepted such a generous offer; anyone but him. He altruistically donated his patent to Humankind, and as a result the prices charged for his vaccine are ultra-low being affordable even by those who are less priviliged. This is because anyone can mass produce it without having to pay any royalties, brutally reducing the development pipeline. It is estimated his work saves over two million lives every year. Much like his childhood hero, the much-acclaimed French microbiologist Mr. Louis Pasteur, he too would grow up to become a real-life hero.

Our world needs more people like Mr. Patarroyo.

At Larrain Nesbitt Abogados we can assist you buying & selling property in Spain and deal with its taxation. Ask us.

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 to book an appointment.

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Article also published at Larrain Nesbitt Abogados: Home-Buyer’s Checklist – RESALE

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