Whatever else changes, the golden rule of buying property in Spain does not

Booms, busts, social media, smart phones, and now a pandemic, to name but a few of the big changes to our world I have seen in the last twenty years writing about Spanish property, but one thing never changes, namely the golden rule of buying property in Spain. As everyone should know by now, that rule is always find your own lawyer to look after your interests, rather than the interests of people trying to sell you something.

I’ve heard many sob stories over the years from people who used a lawyer (abogado in Spanish) introduced to them by their agent or developer, or even in-house lawyers, which turned out to create a conflict of interests that compromised the service they received. Lawyers introduced by brokers can have an incentive to look after the interests of the introducing agent or developer, rather than just the buyer paying their fees, especially if the relationship is close, and leads to a lot of business for the lawyer. 

Back in the boom years, before the financial crisis, there were quite a few big sales operations on the costas that worked with ‘captive lawyers’ to present a charade of due diligence, usually paid for the unsuspecting buyers, that led to fat commissions for the agents, unjustified fees for the lawyers, and disaster for the hapless investors who thought they had a lawyer  looking after their interests. In the worst cases back then, buyers were given a false sense of security by lawyers doing nothing so much as facilitating sales for brokers. 

Though things are much better these days, I was recently reminded that, whatever else has changed in the world, the golden rule hasn’t.

John Elsy, and his wife Sharna, both in their 40s from South Shields, in the north east of England, got in touch with me last week worried about losing a reservation deposit of €6,600 they had recently deposited with their lawyer for an off-plan purchase on the Costa del Sol.

It turns out they had decided to use a lawyer introduced to them by the agency they were buying from.

After discussing  prices and rental returns with their agent, John and Sharna paid their deposit late on a Friday afternoon, but after doing a bit more research over the weekend, they concluded that the expected rental returns were unrealistic, the numbers no longer looked sustainable, and decided they wanted to pull out as they had a 60-day cooling-off period in the contract. First thing Monday morning they tried to get in touch with their lawyer to issue new instructions.

But, they found it impossible to get hold of their abogado all that day, and when they did finally get a response the next day, they were told the agent would have to be consulted first, they say. This suggests at least some sort of conflict of interests. You would expect lawyer working only for them to have responded faster, and not consult the agent first.

“We could not understand why the solicitor would not speak to us, and had to speak to the estate agent first, which tells me he knew what was going on,” says John. “We later found out that a document that the estate agent got my wife to fill out and sign was a contract between ourselves and the estate agent, which we were told was just a record of our data to keep on their files, and it contradicted the reservation document that we signed between ourselves and the developer.”

In the end, John and Sharna got most of their deposit back, but they were clearly angry about the way they had been treated. I should add I only heard their side of the story, and perhaps there was no conflict of interest, and everything has a reasonable explanation. But, it still struck me as good example of the potential for conflicts of interest, and to remind potential buyers of the golden rule.

I was a bit surprised to learn of people still using lawyers introduced by the sales side, which should just flash warning lights on the buy side. I thought the pitfalls of using lawyers introduced by agents were now so well documented on the internet that buyers wouldn’t fall for it anymore. So all I can do is repeat what I’ve said for twenty years – when buying property in Spain, the golden rule is find your own lawyer.

Find your own lawyer in Spain to represent you with no conflicts of interest.