Larraín Nesbitt Lawyers is a Marbella-based independent law firm specialized in property conveyancing, taxation, litigation, probate and succession. Expert native English-speaking lawyers and economists blend legal and practical advice providing tailored assistance on your matter. Our range of services cover the greater Marbella area, Sotogrande and Costa del Sol.


The firm focuses advising foreign investors on acquiring residential property in Spain both from a legal and fiscal point of view. Our no-nonsense approach to business coupled with our commitment to clients ensures easy-going transactions. We pride ourselves in putting our clients’ interests at the forefront of everything we do.


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8 tips on buying a home in Spain

Raymundo Larraín Nesbitt, May, 21. 2019

Lawyer Raymundo Larraín gives us a few insider tips on buying your dream home in Spain.

Marbella-based Larraín Nesbitt Lawyers has over 16 years' taxation & conveyancing experience at your service. We offer a wide range of 40 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain. You can review here our client’s testimonials.

Article copyrighted © 2019. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
8th of June 2019

 

1. Location, location, location.

Undeniably a worn out trope, but that doesn’t make it any less true. You are better off buying the smallest house in the best neighbourhood than buying the fanciest house in a less reputed estate. In practical terms, this translates into capital appreciation over the long run as well as making it easy on yourself to sell on. A well-located property enables you to sell it in a few months, as opposed to a poor-chosen location which may leave you waiting for years on end. Seasoned estate agents are your best source of information on the ground when it comes to choosing the ‘right’ address, whether for investment purposes or for bragging rights. Some hallmark names, such as Marbella or Mallorca, are consolidated world-renowned household brands that greatly mitigate exposure to any market downturn, allowing you to buck the trend, as they are always highly sought-after locations.

2. Orientation

On buying property in Spain, we advise you procure yourself a south or south-east orientation due to the sun’s angle. This will ensure your property is drenched in sunlight all year round and will significantly contribute to reduce your heating bills (and electrical bills) in winter. Spain’s electricity is not exactly cheap. If you are in a coastal area, a southern orientation may also secure you nice sea views to boot.

3. Affordability vs maintenance

Budgeting carefully is a key element of any successful conveyance procedure. Yes, you may afford to buy a swanky property in a great location, but can you afford its steep maintenance? Much like some high-maintenance partners in real life, some properties’ upkeep are (very) demanding and you better have the deep pockets to keep up in the game. You really do not want to get involved with a property you cannot afford to maintain, as this will be a financial millstone that will drag your finances down and may even lead you to file for bankruptcy. Only buy a property you are absolutely confident you can afford to maintain over the mid to long run. Do not get carried away with wishful expectations on commanding high rental yields to offset mortgage repayments, as property bills pile up inexorably at the start of every month. If you are relying on rental income to service your mortgage instalments, flat out you shouldn’t buy.

4. Buy-to-let or buy-to-live

This is a fairly important point that is often overlooked by buyers. The characteristics you need to look for are very different depending on whether you are looking at buy-to-let or else with a view to live in. If you are looking at the former, the property must have attained a Licence of First Occupation, it should be smaller, with good communications, within walking distance of all amenities and the sea (on coastal resorts). If you are after the latter, the property should be larger, with nice views, and good schools and hospitals nearby.

5. Ground floor or penthouse?

We had already covered in-depth the pros and cons of each in our blog: ground floor vs penthouse, from a Spanish perspective. Take good note that in Spain both property types are perceived as the opposite from the United Kingdom; which in turn impacts on price, capital appreciation, maintenance and even security.

6. Be familiar with your community bylaws

Before you commit buying a property in a Community of Owners, you should ask for copies of the minutes of the previous General Assemblies, which will highlight any existing issues in your community. It is also of vital importance you fully understand the rules governing your community (i.e. Community of Owners may now outright ban holiday lettings). If you are looking to invest in a buy-to-let and only find out post-sale that your community forbids holiday homes, you have wasted your money. It is also important you fully realize how much money you need to pay every quarter, as some quarterly community fees are exorbitant, especially in exclusive gated communities dotting upmarket coastal areas. Another well-known issue is that some community presidents (which officially hold an unpaid role) perpetuate themselves year after year abetted by their cronies and do in fact make a very tidy living running whole communities at the expense of pocketing fees from fellow owners on fudging the numbers. I tell you - by experience - that no one who has held the role of community president wishes to repeat from one year to the next as it is a very ungrateful task. Be wary of community presidents who hold their position indefinitely and fight tooth and nail to retain power and control. Only on changing administration does the corruption of the former management come into light.

7. Urban vs rural

Unlike in the United Kingdom, rural property in Spain is marred with legal issues. In the region of Andalusia alone, there are over 200,000 illegal properties. Buying a property with issues could see your trapped for years on end without a chance of selling it on. Moreover, on buying an illegal property you take over the liability of any prior planning illegality; the previous owner gets to walk away scot free – with your money. On buying rural, hiring a competent conveyancing lawyer from the outset is a must to help you waddle through the admin minefield. I would advise a reputed surveyor is also instructed, preferably regulated by RICS and working to UK standards. That is not to say that urban property is all good and rosy, far from it. But no doubt urban property offers much less legal risks than its rural counterpart. If you are looking for a quiet rural life to commune with nature, the choice is obvious. If you are more the city type, that easily gets bored watching grass grow and sheep bleat, you may want to look at urban instead.

8. The lawyer

A necessary evil. You would never buy a property in the UK without instructing a solicitor or conveyancer, and yet a surprising number of people choose not to instruct a lawyer or legal representative when buying abroad. If anything, it is even more important to obtain good legal advice when buying overseas as it is highly likely that you will be unfamiliar with many of the key processes. 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?

Choosing a reputable conveyance law firm will be your best line of defence against the stack of odds you will be facing. Make sure your lawyer is truly independent and is not affiliated with your chosen estate agency in any way, you would come to regret this. Having a seasoned lawyer on board is having half the fight already won. Your lawyer will be able to cut through the red tape seamlessly, enabling you a smooth and safe buying procedure. Three expenses on which you should never skimp are: doctors, lawyers and education. You would regret dearly ‘saving’ money on any of the three.

Our law firm has over 16 year’s conveyancing experience at your service. We are members of the British Chamber of Commerce, Spain, and regulated by the Spanish Law Society.

Because peace of mind is priceless.

Conclusion

But enough of platitudes. All that matters is that we are in a buyer’s market.

Do not be rushed into buying a property, you will be spoilt for choice.

If you have qualms over a property, or its area, why don’t you consider renting it for a while? You should ponder such factors as leasing it on or off-peak. You can always sign a rent-to-buy contract. If it is to your liking, then go ahead and buy it; you only live once.

 

We offer the most competitive fees in the market.

Conveyancing – Buying fees on application

We are specialized in conveyancing

 

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

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, inheritance, taxation and litigation. 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.

Article also published in Spanish Property Insight: 8 tips on buying property in Spain

 

Audentis Fortuna iuvat.” – Aeneid, Virgil.

Loosely translated as “Fortune favours the bold.”

 

Legal services available from Larraín Nesbitt Lawyers

 

Conveyancing-related articles

Buying distressed property in Spain – 8th August 2011
Buying resale property in Spain – 21st February 2013
Buying off-plan property in Spain – 8th of June 2013
How to buy commercial property in Spain – 4th July 2014
How to buy rural property in Spain – 8th August 2014
How to Buy Property in Spain Safely – 10th October 2014
House Hunting in Spain – Interview with The New York Times. June 2015
Buying property in Spain from a private seller (Resale Property) – 21st of February 2017
Buying property in Spain from a developer (Off-Plan Property) – 8th March 2017
How to inspect an off-plan property overseas – Q&A with The Sunday Times. July 2017
Buying property in Spain – 10 reasons to hire a lawyer – 8th November 2016
8 Tips on Buying Off-Plan in Spain – 8th June 2018
Tax advantages on becoming resident in SpainThe Address magazine (pages 358 - 373). December 2018
Taxes on buying Spanish property – 8th December 2018
Do’s and don’ts on buying property in Spain – 8th April 2019
8 tips on buying a home in Spain – 8th June 2019

 

Please note the information provided in this blog post 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. VOV.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

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Last Blog Entry:

Spain’s New Mortgage Act

Raymundo Larraín Nesbitt, June, 21. 2019

Lawyer Raymundo Larraín briefly reviews Spain’s new Mortgage Act which came into force on the 16th of June 2019.

Marbella-based Larraín Nesbitt Lawyers has over 16 years' taxation & conveyancing experience at your service. We offer a wide range of 40 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain. You can review here our client’s testimonials.

Article copyrighted © 2019. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer - Abogado
21st of June 2019

So, you fancy buying a property in Spain with your partner and take out a loan? Well, you should read this post first.

The last time I wrote on this subject was last November, New Mortgage Law to be passed, and then again in May this year, Spain’s New Mortgage Law spells longer bank repossession evictions for struggling borrowers.

Spain’s new Mortgage Act brings a slew of changes that effectively change the game as we know it – moving the goal posts. For once, I am glad to report that the goal posts are actually being moved (for the most part) in benefit of consumers/borrowers, to the detriment of lenders.

The positive raft of changes comes about instigated by EU Authorities, as Spain is effectively transposing a EU Directive from 2014, which seems to have taken for ever BTW.

Whilst all the below-listed changes may sound great on paper, in practice the well-meaning intentions of EU lawmakers may create serious issues to the point of jeopardizing some property deals. The over-protective nature of some of the new requirements will likely translate into some buyers getting cold feet and pulling out, as waiting times and entry barriers have been effectively erected on lending.

As this is just a blog post, I am not going to go into detail on the new changes. I will simply collate the most important ones in bullet points for ease of comprehension.

All changes effective as from 17th June 2019.

  • Floor clauses (collar clauses) will be completely removed in all mortgage loans. For more reference: European Court of Justice Slams Floor Clauses (‘Cláusulas Suelo’). Floor clauses (cláusulas suelo, in Spanish) was one of the abusive mortgage loan clauses I denounced back in 2009 in my article (point one): 10 Common Abusive Clauses in Spanish Mortgage Loans.
  • Repossession procedures will now only take place when a borrower falls in arrears 12 quotas or 3% of the capital for the first half of the loan. However, if the default occurs on the second half of the loan, a lender may not start a repossession before 15 quotas are unpaid (approximately 15 months) or else 7%.  In other words, as these quotas are normally repaid on a monthly basis, lenders will now have to wait at least a full year before they are able to instigate a repossession procedure against a borrower. Up until recently lenders had to wait 3 months before they could repossess. Moreover, this 3-month rule was a recent change in itself, as lenders post-crash could execute a repossession with only one quota in arrears, which was simply bonkers.  I denounced this abusive mortgage clause back in 2009 in my article (point nine): 10 Common Abusive Clauses in Spanish Mortgage Loans.
  • A borrower must now visit a notary twice. Yes, you read right. The first time without a lender where the borrower will be given the opportunity to ask the Notary anything on their particular mortgage loan terms (all you ever wanted to ask on mortgage loans but were afraid to ask). The second visit will be with the lender to sign the Mortgage deed. Notaries will be ‘forced’ to pass a test to borrowers to see if they have fully comprehended the clauses of their own loan contracts (sic)!
  • The borrower will be handed over a copy of the mortgage contract at least 10 days ahead of signing at a Notary the Mortgage deed.
  • The borrower will only pay for a properties’ valuation (on average between 400 to 600 euros). Lenders to pay now for Stamp Duty on the mortgage loan (as we’d reported previously), gestoría, Notary fees and Land Registry fees. Only this change unto itself translates into borrowers saving thousands of euros with this new law. Will lenders slyly pass on the increased costs to borrowers with more draconian mortgage terms? Likely. We shall have to wait and see.
  • Lenders may no longer tack on a mortgage loan ancillary non-requested linked financial services and products i.e. home insurance, life covers, pension plans, credit cards etc. This was one of the abusive mortgage clauses I denounced in my 2009 article (point 6): 10 Common Abusive Clauses in Spanish Mortgage Loans.
  • Early mortgage redemption penalties are now capped, being significantly reduced. In plain English, you can now repay your loan ahead of time without your bank imposing a huge penalty on you. Remember that lenders’ core business is to lend money and charge interests on it; if you repay a loan much sooner than agreed, your lender loses a lot of money over time. Which is why they impose these early redemption penalties, which are now capped.

 

Conclusion

The plethora of novelties are mostly positive for borrowers, bolstering their consumer rights.

However, while I’m always up for empowering consumer (borrowers’) rights, excessive over protectionism may create serious practical issues. If anything, Authorities should make it easier for potential buyers, not introduce uncalled for obstacles and additional red tape. Buyers already have to jump through enough hoops as it is.

For example, forcing borrowers to pass a test on their own mortgage clauses (!) is simply a bridge too far (read daft). It may be fine for chums like Juan Lopez, who is Spanish resident, and has no qualms in popping over to his Notary twice. But what about non-residents like Mrs Édith Piaf, who is a busy French career woman? How do I explain to my Paris-based client that she needs to book flights to Spain to visit a Notary twice? Does this seasoned professional really need to pass a test to gauge her contractual comprehension skills? I mean, really? Does this happen in any other country in the world? Talk about Spain being different.

What about the lost in translation shenanigans? Spanish notaries seldom speak any other language other than Spanish. Is he going to test her in French if her command of Spanish is non-existent? Will a translator be needed to step in to bridge the gap? Will her lawyer need to polish up on his language skills? What about other challenging languages? Is this an extra to pay now? Is a translator seriously expected to comprehend complex legal and financial mortgage loan clauses worded in archaic technical jargon and translate it seamlessly into Russian, Finnish, Dutch etc? Mortgage deeds in Spain are on average a 70-page plus document abounding in nuances and technicalities. That’s a whole lot to understand, translate and convey in one session. Who is going to pay for all this extra time and effort?

Sometimes excessive hand holding backfires leading to absurd new problems. Hopefully common sense will prevail.

We seem to have gone from one extreme to the other; from just “sign on the dotted line,” to testing borrowers on their mortgage knowledge. Striking the right balance is always a challenge.

 

 “Virtue is the happy medium between two extremes.” Aristotle

 

Spain’s new mortgage law came into force on 16th of June 2019. It will greatly alleviate struggling family’s finances greatly bolstering consumer & lender rights.

 

We offer the most competitive fees in the market.

Conveyancing – Buying

We are specialized in conveyancing

 

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

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, inheritance, taxation and litigation. 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.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Mortgage-related articles

 

Please note the information provided in this blog post 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. VOV.

2.019 © Raymundo Larraín Nesbitt. All rights reserved

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Rental Act Amended: It is now essential there is no tenant when you buy

Survey Spain, June, 21. 2019

Survey Spain is a reputable and independent firm of Chartered Surveyors managed by Campbell Ferguson. It is governed by the Royal Institution of Chartered Surveyors (RICS) and works to UK standards.

Survey Spain kindly used as source one of our articles: Rental Act Amended: It is now essential there is no tenant when you buy.

Original article can be found published in our website: Spain's new rental laws in 2019 – 8th March 2019

 

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