Do you need an updated NIE certificate to sell property in Spain?

Raymundo Larraín Nesbitt, December, 1. 2020

Marbella-based Larraín Nesbitt Abogados (LNA) has over 17 years' taxation & conveyancing experience at your service. We offer a wide range of 50 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 © 2020. Plagiarism will be criminally prosecuted.

 

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8th of December 2020

We published several years ago (in eight languages) a detailed article explaining what a NIE number is and how to go about getting one. A NIE number is assigned by the national police and is yours for the remainder of your lifetime, it never changes. Many years ago, Spanish police issued them as an A4 sized certificate that had a three-month expiry date printed on them. Modern-issued NIE numbers no longer show ‘expiry’ dates.

At times notaries, on selling, demand a seller procures a new updated NIE number certificate. This is because they have seen the 3-month expiry date is (long) overdue and are asking for a ‘new’ updated copy. In truth, the ‘new’ certificate will bear exactly the same number and details as the former, the only difference is that there will not be any expiry date on it.

Imagine sitting the morning of completion at a notary’s office, surrounded by a group of anxious strangers, and feeling a knot at the pit of your stomach when the notary officer informs you the sale has fallen through because your NIE number is not accepted by the notary! Now imagine millions of euros are at stake. It can well happen. The sale needs to be postponed or else change over to another notary (not always possible when mortgage loans are involved, as is often the case).

Then again, some notaries, who are not prone to nit-picking, will have no qualms accepting an ‘expired’ NIE number certificate. They will find it completely unnecessary to re-apply for a new copy and are more than happy to accept an old one which shows a 3-month expiry date.

The problem is that sellers cannot pick the notary witnessing a sales deed. This is a right that belongs only to buyers, who are legally entitled to pick whichever notary pleases them most. One of the many disadvantages this poses to sellers, is that they are unable to know beforehand - often until it is too late in the day - which notary will be the one selected by the buyer. Meaning they cannot know if the selected notary will demand they update their old NIE number certificate, or not, on selling.

This can be easily pre-empted by your appointed conveyance lawyer on including a clause in the POA to attain a duplicate NIE number should the need arise on selling. Bottom line, in practice it’s a bit akin to playing Russian roulette; a seller cannot know for sure if the chosen notary will demand an updated NIE certificate, or not. It is the duty of your conveyance lawyer to plan ahead for this eventuality and overcome any unforeseen obstacle.

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

George Raymond Richard Martin (1948). 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.

 

At Larrain Nesbitt Abogados we have over 17 years’ experience assisting clients buying & selling property in Spain and dealing with its taxation.

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

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

Legal services available from Larraín Nesbitt Abogados

Selling-related articles

 

Article originally published at Spanish Property Insight (SPI): Do you need an updated NIE certificate to sell property in Spain?

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 on 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. No dragons, Lannisters or self-serving politicians were harmed on writing this article. VOV.

2.020 © Raymundo Larraín Nesbitt. All Rights Reserved.

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Home-Seller’s Checklist

Raymundo Larraín Nesbitt, May, 1. 2020

Lawyer Raymundo Larraín gives us a rundown on the points we should have ready on selling a house in Spain. This is the third, and final, of a three-part series on buying & selling property in Spain. Previous entries:

 

Marbella-based Larraín Nesbitt Lawyers has over 17 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 © 2018, 2020. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8th of May 2020

 

Congratulations, you have found a buyer for your Spanish property! You should now instruct a lawyer to represent you in the sale, particularly if you are non-resident in Spain.

To secure the deal, your appointed lawyer will require from you a long list of documents you should have ready at hand. These documents will then be forwarded to the buyer, or his legal representative, as they are necessary to prepare a due diligence.

Following this, the next step would be exchanges; to sign the all-important Private Purchase Contract (contrato privado de compraventa, in Spanish). At times, buyer’s & seller’s skip this key step and go straight to completion, but in my opinion, this is unadvisable for reasons I won’t go into.

The below list is thought only for non-resident sellers acting as physical persons. If the seller is a holding company, there would be additional documents that need to be handed over to a buyer, or his representative.

Selling property may at times prove a daunting and stressful ordeal for sellers; to save yourself aggravation and time it is most advisable a seller pre-empts this by collating the below list well ahead of time.

You are welcome.

Seller’s checklist

 

  • Full scanned copy of your purchase Title Deed
  • (Updated) scanned copy of a Nota Simple
  • Copies of your national ID, passport and NIE Number certificate (in force). A duplicate NIE certificate is at times demanded by notaries if your certificate already expired i.e. 3-month validity (the assigned number never changes)
  • Copy of recent utility invoices (water & electricity)
  • Copy of IBI tax invoices, for the previous 4 years
  • Copy of Refuse Charge (Basura, in Spanish), for the previous 4 years
  • Energy Performance Certificate
  • Licence of First Occupation
  • Community of Owner’s administrator contact details
  • Scanned copies of the minutes of the last three General Assemblies (Junta General Ordinaria, in Spanish)
  • Community of Owner’s Certificate stating the property being sold is not in arrears
  • Spanish fiscal residency certificate (to avoid a 3% retention on the sales proceeds)
  • Copy of Power of Attorney, if instructing a lawyer (it is highly advised that you do to avoid payment scams at completion, which are rife)
  • If renting out, copy of the signed lease agreement

 

Capital gains tax mitigation checklist

 

On hiring our law firm, we can GREATLY mitigate your tax bill on selling property. We can offset all the following taxes and fees at no extra cost:

  • 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 – you are welcome.
  • All property-related improvements (not maintenance costs) i.e. glass curtains, refitted kitchen, roof retiling, wood flooring, A/C installation, house alarm etc.
  • Estate agent's commission (on selling): VAT invoice/s.
  • Lawyer’s fees (on selling): VAT invoice.

 

3% tax rebate on selling property in Spain

 

To close, free of charge, we also apply for a tax rebate on the 3% withheld by the Spanish Tax Authorities on account of a non-resident seller’s CGT liability. This is taking 5 months on average through us.

Selling at a loss?

 

If you’re selling at a loss, we can apply for a full tax refund of your plusvalia tax for a very competitive fee. More on this service in our article: Have you sold property at a loss in Spain? You can now apply for a tax refund. In general, you only have 30 days as from the date of sale to apply for this tax rebate.

Sounds interesting? Call us.

 

At Larrain Nesbitt Abogados we have over 17 years’ experience assisting clients buying & selling property in Spain and dealing with its taxation.

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

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

Legal services available from Larraín Nesbitt Lawyers

 

Selling-related articles

 

Article also published at Spanish Property Insight: Home-Seller’s Checklist

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.

2.018, 2.020 © Raymundo Larraín Nesbitt. All Rights Reserved.

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Home-Buyer’s Checklist - RESALE

Raymundo Larraín Nesbitt, April, 10. 2020

Lawyer Raymundo Larraín gives us an overview on the points we should cover on buying a resale in Spain. This is the second of a three-part series on buying & selling property in Spain.

Marbella-based Larraín Nesbitt Lawyers has over 17 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 © 2020. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
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 a buyer 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 – 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: 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 1.5 million people per 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, because anyone can mass produce it without having to pay royalties brutally reducing the cost of development. It is estimated his work saves 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.

 

Resale-related articles

 

Article originally published at Spanish Property Insight: Home-Buyer’s Checklist: RESALE

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.

2.020 © Raymundo Larraín Nesbitt. All Rights Reserved.

... Read more

Home-Buyer’s Checklist - OFFPLAN

Raymundo Larraín Nesbitt, March, 1. 2020

Lawyer Raymundo Larraín gives us an overview on the points we should cover on buying off-plan in Spain. This is the first of a three-part series on buying & selling property in Spain.

Marbella-based Larraín Nesbitt Lawyers has over 17 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 © 2020. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
1st of March 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 a buyer with a basic guideline on what you should be asking a developer for.

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 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 Off-Plan Checklist

 

  • Verify the plot of land is registered under the developer’s name whose contract you are signing.
  • Request a copy of the developer’s Building licence.
  • Request bank guarantees or insurance policy securing ALL your stage payments, including the initial holding deposit paid to the developer/estate agent. These will act as a safety net safeguarding your interim payments should the developer complete the property late, or not at all.
  • Ensure the development is compliant with Coastal Laws.
  • If the development is finished, request a copy of the Licence of First Occupation.
  • If the development is finished, ensure you do a snagging list before completion.
  • 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.
  • Post-completion: arrange payment of local rates (IBI & basura) as a direct debit against your Spanish bank account. With offplan, IBI is normally available on the following year. You will be notified in your Spanish address.
  • Post-completion: if you are non-resident, ensure you pay every year your Non-Resident Imputed Income Tax (NRIIT) on your Spanish property.

 

“Ring-a-ring o’ roses,
A pocket full of posies,
A-tishoo! A-tishoo!
We all fall down.” – Popular British nursery rhyme that sinks its roots deep in the Middle Ages.

 

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.

Off-plan related articles

 

Original article commissioned and published by IDEALISTA: Home-Buyer’s Checklist

Article also published at Spanish Property Insight: Home-Buyer’s Checklist - OFFPLAN

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.

2.020 © Raymundo Larraín Nesbitt. All Rights Reserved.

... Read more

Community of Owners in Spain

Raymundo Larraín Nesbitt, December, 3. 2019

Lawyer Raymundo Larraín explains to us the legal intricacies of community of owners, or comunidad de propietarios in Spanish. Makes for excellent bed reading!

Article dedicated with affection to my friends Ann and Andy H., from Wakefield, West Yorkshire, England.

Marbella-based Larrain Nesbitt Lawyers has over 16 year’s taxation & conveyancing experience at your service. 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 © 2.009, 2.012 and 2019. Plagiarism will be criminally prosecuted

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

Introduction

Now that the season of General Assemblies is fast approaching for Q1 2020, I thought I’d revisit my 2009 article. The following is a revamped version of my decade-old article updating it in line with the new changes in legislation.

Community of Owners is an article which gist is to provide basic guidance on what becoming an owner in a community entails, with particular focus in Andalusia. It is not an in-depth treatise.

General Assemblies, held once or twice a year, are prone to bickering and backstabbing, where every neighbour it would seem has an axe to grind. You’d do well in acquaint yourself with your owner’s duties and rights to better protect your interests; which may not be aligned with others’.

Because this is just a ‘short’ article, I strongly recommend reading the law itself, as I have considerably abridged the sections pursuant to it, on reviewing them, giving only a general overview of its key sections and casting aside any pesky nuances which are only of interest to other lawyers.

This is a link to the Commonhold Act in English as amended by Law 8/99 & others, courtesy of Castillo Traductores. English version starts on page 4. You are welcome.

Definition

On buying property in an urbanisation, or block of flats, you may automatically become a member of what is known as a ‘Community of Owners’, or CO for short. The CO is a legal entity comprised by all the property owners within the same development, or building, and is governed and ruled by its own self-approved statutes and bylaws, besides a national legal framework that acts as common denominator to all CO’s.

General Legal Framework

There is a general legal framework acting nationwide as backbone common to all communities in Spain, as set out by the Commonhold Act 49/60 (AKA Ley de Propiedad Horizontal, Horizontal Property Act, or Commonhold Act) and by the Spanish Civil Code (arts 396 et seq).

The 1960 Law on Horizontal Property was amended most significantly by Law 8/99, amongst others, to bring it line with social changes. It is now a 60-year-old law.

Community Statutes and Bylaws

In addition to the above general laws, the day-to-day running of each community is really determined by the Communities’ Statutes which are drafted at the time of lodging the Master Deed (aka Escritura de División Horizontal or Horizontal Deed). Unanimity is required to amend either the Master Deed or the Community Statutes (arts 5 and 17). So, in practice it’s quite a feat to change either of them. An exception to this unanimity, is a recent legal change on holiday rentals (see section further below).

That’s why a community may, at its own discretion, approve additionally its own Community Rules or Bylaws (in Spanish Normas de Regimen Interno or Normas de Funcionamiento de la Comunidad de Propietarios), which are not to be confused with the above Community Statutes. Community Rules (Bylaws) need only a simple majority vote to be approved and amended so as to waive the unanimity rule. They allow for great flexibility and will rule, for example, on communal services such as garbage collection or the use of communal facilities such as the swimming pool or lifts. They cannot rule on matters reserved only to Community Statutes.

Normally, on buying off-plan, there will be a clause whereby the purchaser allows the developer to draft and lodge the Master Deed as well as the Community Rules (Bylaws) at the Land Registry. Buyers may later on amend these, when they become owners, on complying with the strict majorities that are required by the Commonhold Act (unanimity).

This means that every development may enact their particular laws governing it but always subject to, and in compliance with, the general legal framework that must be respected and adhered to at all times. Bylaws will rule for example the Community’s governing bodies such as the need or not for the optional role of vice-president or how must the owners be notified in advance of an owner’s assembly i.e. think of non-residents being notified abroad of an upcoming General Assembly (AGM or EGM).

Bylaws stem from Spain’s Commonhold Act and adapt it to the requirements of each particular CO. That’s why each CO has its own unique Bylaws, tailored to suit their own individual needs.

Naturally, given the tight space constraints of such a short article (and frankly, not to bore gentle readers to tears), I can only offer a general overview of the shared legal framework and concepts which underpin all communities in Spain without focusing on any particular Bylaw, which are unique to each CO, as I write.

Commonhold Quota

On drawing up the Master Deed before a Notary, every property within a community is assigned a quota or percentage thereof. This quota is composed both of privative and communal elements which are assigned to each property. Storerooms and garage spaces are tallied as well for this purpose.

A commonhold quota is important twofold:

  1. The expenses of a community will be allocated apportioning them to your quota. So, the larger your quota, the more you will have to contribute towards expenses. These can be paid monthly, bi-monthly or even quarterly depending on the Community Rules.
  2. On voting at owners’ assemblies, the quotas need to be tallied for majority vote purposes. So, each owner does not equate to one vote. There may be a single owner, such as a developer or bank, holding a significant communal quota which translates into great voting power. The resolutions reached bind all units within, regardless of whether they cast an opposing vote as majority rules apply (see below).

Owners’ Duties

Section 9 rules them in detail. The main duty will be, of course, to contribute towards the maintenance and financial upkeep of the CO.

Falling in arrears with your community fees will eventually result in your CO placing a lien against your property and may even lead to selling it in a public auction. This legal procedure in Spain works surprisingly efficiently. You have been warned!

This important article mentions the endowment of a community’s mandatory reserve fund, in accordance to each owner’s commonhold quota. The percentage of this endowment has now been raised to 10% of the community’s ordinary budget (used to be 5%). The purpose of this fund is to create a safety net for a rainy day i.e. the maintenance and repair of a building such as lift repair work. This reserve fund shall be endowed with an amount not lower than ten percent of its last ordinary budget. Its funds will be used as well to pay for the building’s insurance cover.

It is also very important to find out – prior to buying a property in an urbanisation – what your contribution is to avoids nasty surprises. Some of those private gated communities that lure you with breathtaking views, 24/7 top-notch security, lush tropical gardens, private gym and dream-like infinity pools command (very) steep monthly fees. This is particularly true of well-off off plan developments (when the community is not up and running yet) where it is not uncommon that unscrupulous salespeople tell you the community fees are X/month and later on it becomes only too apparent they are in fact 3X/month!

Communities’ Governing Bodies

Art 13 establishes the governing bodies are the Owners’ General Assembly (ordinary or extraordinary), the President (vice-presidents are optional), the Secretary and the Administrator. Oftentimes, the role of Secretary is also taken by the community Administrator (paid role).

Presidents and vice-presidents must be appointed from among unit owners only. The roles of Secretary and Administrator can be held by unit owners, as well as by outsiders, providing the latter hold the necessary professional qualifications and are legally licensed to perform such roles.

The Statutes will be the ones which detail exactly what roles exist in each Community of Owners. Presidents, by law, alas do not receive any remuneration for this most ungrateful task.

Following the above, no one in their right mind wants to be President, much less be elected to the same role year after year. A well-known issue is that some community presidents (which officially hold an unpaid role) perpetuate themselves year after year abetted by their web of 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 (specifically fellow gullible non-resident expatriates, bless their warm hearts!). 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 that’s almost like a second job. 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.

Owners’ Assemblies (AGM’s and EGM’s)

At least once a year an Annual General Meeting (AGM) will be called to approve the community budget and accounts. An Extraordinary General Meeting (EGM) may additionally be called at any time, needing 25% of the unit owners’ quotas.

The notification must be given with a minimum of 3 days’ notice.

This creates serious practical problems to non-residents owning second homes in Spain i.e. you need to book a flight to Spain which may be very expensive with such short notice besides having to take time off your job. Therefore, communities with a high number of non-resident owners may include in their Bylaws more realistic notices of, say, 30 days and to be notified by e-mail in addition to placing it on the Community’s Notice Board. There’s freedom and flexibility to rule on this as each community deems fit in accordance to their own needs and circumstances. Logic should prevail, albeit it seldom does in practice.

Majority and Unanimity Votes

Section 17 deals with when unanimity votes are required. Basically, unanimity is necessary for modifying the rules contained, either within the Master Deed or in the Community’s Bylaws.

A majority vote (three fifths of the owners’ assessed quotas) is required for things such as the lift service, janitors, security services or any other common service or facility. This type of majority vote will be the one used to decide on the Community Rules. Proxy votes are also allowed. Only owners who are up-to-date with their community fees may vote at owners’ assemblies. You are allowed to settle your arrears even on the same day as the General Assembly is being held. However, there are new practical limitations in place to settle arrears in cash. In compliance with new national and EU Anti-Money Laundering Regulations in force, payments in cash in excess of 2,500 euros may be declined. So, if you plan to pop over to the meeting with a wad of banknotes, you may be turned down by the Secretary!

You may find that in new unsold off plan developments, a developer may hold the majority vote as he still holds a large stock of unsold units. Conversely, it can be its lender, if they have taken over the developer’s units (repossession). Either way, both are obliged to contribute to the communities’ upkeep, paying their communal fees in proportion to their communal quotas, just like everyone else.

General Assembly Resolutions

Section 19 deals with the recording of the resolutions reached. They will be recorded in a book of minutes, validated and stamped by the Land Registrar.

A copy of the meeting’s minutes will be sent to each owner with the adopted resolutions following the AGM or EGM. Ideally shortly after the assembly, not several months after when no one can remember what transpired at the meeting.

The Secretary will act as the custodian of the general meetings minutes book.

Any Other Business

If you want to put a concrete matter forward to the Assembly for consideration, you must do so well in advance of being notified by the General Assembly. You cannot simply turn up at the AGM or EGM and expect to nonchalantly raise new issues which were not previously included in the day’s agenda. The President and/or Secretary will simply disallow it and move on with the agenda’s points.

Challenging General Assembly’s Resolutions

Section 18 rules on how assembly resolutions can be challenged at court. I’ve written a specific article on the matter due to its complexity: Community of Owners in Spain: Challenging Assembly Resolutions – 21st October 2011.

This can be done on three accounts:

a) When resolutions are contrary to Law or the Community Statutes;

b) On them being seriously detrimental to the interests of the community and benefit one or several unit owners.

c) When they are seriously detrimental to some unit owner who has no legal obligation to sustain such detriment or when they have been adopted in abuse of power.

There are four deadlines depending on the matter. The most important deadline is the 3-month-rule. Or else a year, if a resolution is against the Law or the Community Statutes. I would always advise challenging a resolution before the three-month deadline is up as a judge may not agree with you that the adopted resolution is against the law or community statutes, in which case you wouldn’t have a year to challenge it, only three months. Pro tip: don’t wait over 3 months to challenge them.

Only owners who are up-to-date with their community fees may challenge community resolutions before a court. Alternatively, they can lodge the owed amounts before a law court prior to litigating. You can only challenge approved assembly resolutions at court, through litigation; sending a strongly-worded letter or e-mail to the President, Secretary or Administrator stating you are in full disagreement with resolution X is a futile exercise. But if that indulges you…

Holiday Rentals

As we reported back in March (Spain's new rental laws in 2019), a new law was approved early on in 2019 which brought a raft of changes, specifically on holiday rentals. If you buy into a gated community or building, chances are high you will become part of what is known as a community of owners. New laws passed on March 2019 have empowered communities of owners across Spain to outright ban, or restrict, holiday rentals. You really do not want to invest several hundred thousand euros in a property only to find out later on you are banned by your community to offer it as holiday accommodation! All changes effective as from 6th of March 2019. General Assemblies (AGMs or EGMs) which adopt restrictive resolutions on holiday rentals should lodge them at their local Land Registry for them to be enforceable.

The main two changes are as follows:

   1. Community of owners may now ban holiday lettings outright

Spain’s Horizontal Act has now been amended allowing Community of Owners to vote by a simple majority of 3/5 (or 60%) to ban outright holiday rentals within a community.

I had already pointed out in a blog post in 2017 that this step was necessary, as the Horizontal Property Act at the time required unanimity to ban them, which logically was never going to happen because landlords would vote against it because of their vested interest.

This change has no retroactive effect. Meaning that if you attained a Tourist licence before your community banned holiday rentals, you can continue doing so. There is an ongoing debate on this point between lawyers, as it is a bit of a grey area until there are further like-minded rulings consolidating a jurisprudential trend settling the open controversy.

   2. Community of owners may now increase the community fees of all those owners who market their properties as holiday lets through holiday platforms

Spain’s Horizontal Act has been amended allowing Community of Owners to increase the communal quota assigned to a landlord of the overall community budget.

In plain English, communities of owners may now vote to increase the community quota of a property owner who uses his property/ies as a holiday home. The Community can vote to increase your quota by as much as 20%.

This change has no retroactive effect.

‘Inheriting’ communal debts

Unlike in other countries, in Spain community debts follow the property, not the owner. When you buy a property in Spain you may find yourself being liable for several thousand euros of unpaid community fees owed by the ex-owner. At times, sellers blissfully forget (God forbid) to mention any outstanding community fees pre-completion. When you buy a property in Spain you immediately take over all existing debts and the seller walks away scot free. A buyer is liable for the previous three years of community arrears plus the current one (total 4 years). More on this in our in-depth blog: Buying in a Community of Owners – Outstanding Debts!

Also, on buying a property, which is part of a Community of Owners, I strongly advise you to request the general assembly’s minutes of the previous 4 years (both AGM’s and EGM’s). The reason is that, unbeknown to you, the community may have voted on an item that requires you to fork out thousands of euros i.e. to repaint the whole flaking paint of the building’s façade. Seller’s at time surprisingly neglect to disclose such key points, I guess they are too busy booking flights to Bora Bora with the sales proceeds!

Which is why, under law, the signing of the deed of transfer of ownership requires a Communities’ certificate, signed by the President and the Secretary (normally the Administrator) stating that all communal fees are up-to-date for that unit. The purchaser can however waive this requirement voluntarily – unadvisable.

Property located in Andalusia

Following arts 7 & 9 of Decree 218/2005, off-plan vendors of property located within the autonomous region of Andalucía must hand over the DIA (Documento Informativo Abreviado) to purchasers. The DIA is the Spanish equivalent of the UK’s Home Purchase Information (HPI), or Seller’s pack. Both the Community’s Statutes and Community Rules must be included in the DIA pack.

Conclusion

There is a general legal backbone, common to all communities in Spain, which is embodied by both the Commonhold Act and the Spanish Civil Code. Besides this girder - which applies nationwide - each community of owners fleshes out its own set of Community Statutes and Bylaws adapted to its own idiosyncrasies; the latter are really the ones that rule on the day-to-day of each community and are unique i.e. no pets allowed in the pool. No two communities hold the same bylaws.

It is strongly advised that, prior to purchasing a property on a development, you request both a copy of the Community Statutes, known in Spanish as Estatutos de la Comunidad de Propietarios, as well as the Community Rules (Bylaws), known in Spanish as Normas de Regimen Interno, if at all existent. You may avoid unpleasant surprises, such as communities that ban pets or even piano players, gasp!

Communities of Owners should be run – in theory – like small, tidy democracies. Well, that’s the theory anyhow.

In practice, they resemble more dictatorships with full blown egos as many owners can vouch for. I would advise you bring your tin hat to owners’ assemblies and prepare for some serious and protracted trench warfare, whereby each owner will hold his own ground, yielding occasionally to fleeting interests.

Good luck; trust me, you’ll need it.

At Larrain Nesbitt Abogados, we can assist you twofold:

 

"Every pound is a prisoner.” – Margaret Nesbitt

Margaret Nesbitt (nee Conway) 1917 – 2013. From a humble working-class background, she lost her husband at a very young age, and was forced to fend for herself, single-handedly raising her four young children. Assisted by a generous (unsecured) loan of St Aloysius churchgoers, she bought a guest house in Glasgow and set up a business all by herself, without formal education, which she would run until her mid-nineties. Within only the span of a few years, working hard, she managed to repay the kind private loan with interests on top. As is often the case in life, she placed great value in that which she had been deprived of in her youth, which was a formal higher education;  she went to great lengths to generously ensure all her children, grandchildren and even great grandchildren enjoyed the perks of a privileged higher education. A quiet, courageous woman with strong religious beliefs that always managed to hold a positive outlook towards life despite all the social and financial hardships she was forced to endure and overcome alone. In the wee hours of any morning at Aldara, you would find her guest house’s kitchen brimming with bobbies on the beat enjoying a short pause and savouring the lavish generosity for which she was much loved.

 

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

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

Legal services available from Larraín Nesbitt Lawyers

 

Related articles

 

Article originally published at Spanish Property Insight: Community of Owners in 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. VOV.

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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 Spain – The 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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Do’s and don’ts on buying a home in Spain

Raymundo Larraín Nesbitt, March, 25. 2019

Marbella-based lawyer Raymundo Larraín gives us a few light-hearted tips on buying a home in Spain.

Article copyrighted © 2019. Plagiarism will be criminally prosecuted.

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

 

 

Springtime is upon us. It is again that bright season of the year where flowers bloom, bees dart around doing whatever it is they do, and real estate agents are busy dusting off glossy house brochures with a big smile on their face. Scores of buyers will now be booking flights to Spain with a view to acquire their dream house next to the sea.

With this in mind, I thought it would be a good idea to write this short amusing article to clue up buyers, so their dream does not turn sour on tripping themselves over in pursuit of their bolthole under the sun.

 

3 Do’s

 

  1. Hire a qualified registered lawyer (abogado)

I know, I know. I just had to add this shameless plug in the first place.

No, a Spanish Notary is not your personal lawyer and will not look after your interests. He’s there to ensure taxes are paid, period.

No, a lender does not susbstitute a lawyer and much less defends your legal interests on taking on a mortgage loan. No, they do not do a due diligence on the property title. A lender is there to give you a loan, period.

Beware of intruders who claim to be lawyers or law firms but are not registered to practice. Within the last year alone, I’ve come across three such interlopers. Unlike lawyers, they don’t have professional indemnity insurance and lack the legal qualifications to practice. I see plenty of such outfits advertising themselves regularly on popular expat magazines with glossy ads peddling their conveyance ‘services’. They will label themselves with all sort of fancy titles such as: consulting firm, legal consultant, iuris consultant, jurist, legal executive, legal advisor, legal assistant, paralegal etc.

In Spain it is very simple, you are either a lawyer (abogado) or you are not; there is no in-between. Always ask the person you are dealing with for their Law Society’s practising number and verify they are indeed registered to practice. Wrong assumptions lead to expensive mistakes.

  1. When in Rome, do as the Romans do

I know, we have all been there. You come to Spain and you think some things are stupid and you could do them much better in your own way. Perhaps, perhaps not. The point is that there are rules in place you ought to follow; if you skip them nonchalantly, you are only setting yourself up for a nasty fall.

  1. Follow the 3 L’s: Look, listen and liken

This is not your turf, it is a new world you’re braving. Take your time to look around where you picture yourself living. Visit the property during the week and over the weekend, by day and by night. Listen to what neighbours and natives have to say about the place. Compare the pad you fancy with other similar properties and areas. If all adds up, go for it. You only live once.

3 Don’ts

  1. Don’t pay any money in cash

Would you seriously pay in cash a home in your home country? So, why do it in Spain? This only benefits the person asking to be paid in cash, it does not benefit the buyer in any way. When you come to sell the property later on, you will be hit by a massive capital gains tax bill. Under-declaring is illegal, it is stupid; don’t be a muppet.

  1. Don’t be pressurized to sign

The never-ending sun, the sweltering heat, the cool sea breeze, the enticing beach sunset with a mojito and a saxo playing, all them nice piña coladas you drank late into the night, the soft-spoken agent gently cooing into your ear promises of wealth and capital appreciation; all these things play tricks on our minds and make us lose the plot when we get off a plane in Spain. Unlike timeshare, there is no cool-off period when you buy property in Spain. Holding deposits are normally non-refundable (unless your lawyer words it). If you wouldn’t rush ahead and sign on the dotted line in your home country, don’t do it in Spain. Focus, breath and take your time to commit before you sign any binding document giving away your life’s savings. Don’t let the big lights dazzle you, you will be spoilt for choice. It's a buyer's market.

  1. Don’t cut corners

“Jack knows how to cut through all this red tape.” Maybe he does, maybe he doesn’t. Don’t try to outsmart local procedures by cutting corners; it is a one-way ticket into a world of pain. If you would follow set procedures in your home country, why on earth are you trying to skip them in Spain?

 

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.

 

"Me ha bastado pensar que la naturaleza pertenece a los niños para reanudar mi batalla encaminada a la conservación de la fauna.” — Félix Rodríguez de la Fuente

“I need only remind myself that Nature belongs to our children’s morrow, to give me strength in the battles to come in defence of wildlife conservation.”

Félix Samuel Rodríguez de la Fuente (1928 – 1980). Decades before the BBC's brilliant Planet Earth, narrated by Sir David Attenborough, there existed Félix. He was a Spanish precursor of what is now branded as ‘ecologist.’ The son of a reputed Notary, he was expected to dutifully fall in line and follow on the wake of his father’s footsteps. But following social conventionalisms were not his cup of tea. After graduating in medicine, he heeded his calling and would go on to become a naturalist and broadcaster defending what he thought mattered most - Nature and the endangered wildlife. He would become world-renowned for his much-acclaimed tv series El Hombre y la Tierra (1975 – 1980). His calm, collected demeanour and rugged commanding voice, coupled with powerful images of an unleashed Nature the likes viewers had never witnessed, bewitched Spaniards and other nationalities, for decades to come. His enduring legacy would be to imbue and imprint on younger generations his indelible passion and love in defence of Mother Nature. This constitutes all unto itself a wondrous feat, given how Félix managed single-handedly to change the whole country's mindset, which was not particularly renowned for its love and protection of wildlife at the time (seventies). He had a soft spot for wolves, which had been driven by Authorities to the brink of total annihilation. Decades on after his death, young generations of Spanish ecologists and eco-activists, who grew up watching his show, took the torch and would follow on the path laid by him, steadily bringing back wolf packs into a land which was once their rightful domain. He would tragically meet an untimely death in a plane crash aged only 52. No accolade can honour enough what this man achieved in benefit of us all. Almost four decades on after his tragic death, he is still mourned and is credited as the father of Spanish environmentalism. There isn’t a single town in Spain who does not pride itself in having a street or plaza named after him. So much for adhering to social conventionalisms, eh?

 

Article also published in Spanish Property Insight: Do’s and don’ts on buying a house in Spain

Legal services available from Larraín Nesbitt Lawyers

 

Property-related articles

House Hunting in Spain – Interview with The New York Times. June 2015
Resurgent Spain: Málaga Sees Strong Sales – Interview with Mansion Global (The Wall Street Journal). December 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
Non-Resident Taxes in Spain – 8th December 2015
Non-Resident Income Tax – 8th December 2017

 

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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Licence of First Occupation

Raymundo Larraín Nesbitt, September, 3. 2018

Marbella-based lawyer Raymundo Larraín revisits a First Occupancy Licence and gives us a brief rundown on what it is and its relevance to a property buyer.

Larraín Nesbitt Lawyers, over 16 years’ conveyancing experience at your service.

Article copyrighted © 2.005, 2.010, and 2.018. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
8th of September 2018

The Licence of First Occupancy (LFO, for short) is a crucial document on buying off-plan property in Spain that draws a line between what is legal and what is not, in general terms. A LFO does not (usually) apply to resale properties.

This article is just a stub, a short summary. If you fancy an in-depth take on this topic, you can read our 2005/2009 breakdown: Licence of First Occupation.

Definition

A Licence of First Occupation is a certificate issued by a town hall which confirms that a newly-built property (off-plan) fully complies with all planning and building regulations and is fit to be used as a dwelling. It assures compliance with Health, Access, Safety, Planning and Construction laws, and that the property has been fully completed, with no outstanding works.

The LFO allows off-plan purchasers to dwell in a property legally. A LFO is also known as Habitation Licence or Certificate of Habitation and in Spanish, Licencia de Primera Ocupación or Cédula de Habitabilidad.

LFO importance

It is important mainly for four reasons:

  • It provides a check on the planning legality. A LFO means the developer has built the dwelling in accordance with the original town hall’s Building Licence as well as with all Planning laws. The inspection to grant this licence is carried out by town hall’s chartered technicians who certify the dwelling is deemed apt for human habitation.
  • It is required by utility companies to have access to official supplies: water, electricity and gas. Spanish law requires the granting of a LFO to hook up the dwelling to the supply grid.
  • Lenders will ask for it if you require finance. Banks will also be asking you for a LFO. Even on reselling the property, your buyer may request a copy for his own lender.
  • Holiday lettings. If you are looking to buy as an investment (buy-to-let), a LFO is required by Regional Tourist Authorities to rent out your place on a short-term. If your property hasn’t attained a first occupancy licence, you will not be able to legally rent out your house and may be landed with humongous fines if caught red-handed. The fines for non-compliance are six-figures in some regions of Spain.

 

Conclusion

Be wary of anyone downplaying the importance of a LFO on off-plan property claiming it is unnecessary.

In general, I advise you not to complete without a Licence of First Occupation.

 

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.

 

“La perfection est atteinte, non pas lorsqu'il n'y a plus rien à ajouter, mais lorsqu'il n'y a plus rien à retirer.” – Antoine de Saint-Exupéry

Maj. Antoine Marie Jean-Baptiste Roger, comte de Saint-Exupéry (1900 – 1944 KIA). French writer, poet, aristocrat, journalist, and expert aviator. He became a laureate of several of France's highest literary awards and also won the U.S. National Book Award. During his U.S. hiatus, he wrote the three books that would earn him literary immortality whilst strongly lobbying for the U.S. to join the war effort against the cruel Nazi tyranny. He is best remembered for his novella The Little Prince (Le Petit Prince), based on his real life Libyan desert crash, and for his lyrical aviation writings, including Wind, Sand and Stars and Night Flight. He vanished without a trace during WWII over the Mediterranean Sea on a reconnaissance mission behind German lines whilst piloting his Lockheed P-38 Lightning. His tragic disappearance marks the start of his literary legend which continues to grow every year, as new generations of young readers become imbued with his exquisite work (in over 350 languages!)

Article also published at Spanish Property Inisght: Licence of First Occupation

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Off-plan-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.

2.005, 2.010 and 2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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8 Tips on Buying Off-Plan in Spain

Raymundo Larraín Nesbitt, June, 11. 2018

Marbella-based Lawyer Raymond Nesbitt gives us an overview on how to avoid the most common pitfalls on buying new-build property in Spain. He introduces his article with a brief overview of the property market.

Article copyrighted © 2010, 2018. Plagiarism will be criminally prosecuted.

The following article has been greatly summarised to avoid unnecessary legal technicalities. The advice given is of a general nature only and should not be construed as tailored legal advice. Seek professional legal advice on your matter – see disclaimer below. The author does not endorse any of the offplan developments mentioned below for illustration purposes only.

Photo credit: courtesy of Stavanger Group, Belfry villas, Estepona

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
8th of June 2018

 

Brief overview of the Spanish property market

 

The sales season is upon us.

Resales remain somewhat sluggish, yet off-plan has taken off and is on full cruise mode.

This is reminiscent on how the last property cycle started (1999 – 2007), with offplan spearheading the recovery and pulling in its wake the resale market. Obviously, market conditions are very different now and no one should expect a huge boom as in the previous cycle.

However, hard data suggests we have clearly started a new expansionist super cycle, as I ventured in last Aprils’ article:

  • Property prices in Spain (confirmed sales) jumped by almost 10% in the first quarter of 2018 following S&Ps Case-Shiller Home Price Index, according to the latest figures released in May by Spain’s Land Registrars Association (Colegio de Registradores de la Propiedad de España). This impressive figure, all unto itself, is a huge market indicator that flags the real estate market is back on the move.
  • The overall number of house sales increased 23% year-on-year in January 2018 according to Spain’s National Statistics Bureau (INE). House sales figures grew incrementally for nine consecutive months. There was a 46% jump from December to January in house sales and the trend remains unabated on the 1Q 2018.
  • The construction sector in Spain has increased 6% year-on-year on the 1Q 2018, following the latest figures released in June by Spain’s National Statistics Bureau (INE). This explosive surge in growth is unprecedented since the year 2001. The construction sector accounts for 10.6% of Spain’s GDP in 2018; a far cry from the jaw-dropping 20% figure reached in the apex of the property boom in 2006/2007.

 

What these three tantalizing figures translate into - without the esoterics - is that Spain has finally turned the corner in 2018 and is firmly set on the road to recovery. British buyers, traditionally Spain’s strongest market, remain subdued with Brexit looming ominously on the horizon. Northern Europeans, mainly Nordics and Belgians, have taken pole position in this new uncharted market.

The fledgling green shoots, which started in 2014, consolidated all throughout 2017 and are gaining traction in 2018. With this off-plan frenzy in mind, I thought it would be a good idea to publish a gentle reminder on the eight tips new-build buyers should be mindful of.

Brick is back. Can you afford to miss out?

 

8 Tips on Buying Off-Plan in Spain

 

  1. Hire a qualified registered Lawyer (Abogado)

Beware of intruders who claim to be Lawyers or law firms but are not registered to practice. Unlike Lawyers, they don’t have professional indemnity insurance and lack the legal qualifications to practice. I see plenty of such outfits advertising themselves regularly on popular expat magazines with glossy ads peddling their conveyance ‘services’. They will label themselves with fancy titles such as: consulting firm, legal office, legal consultant, iuris consultant, jurist, legal executive, oficina juridica, legal advisor, legal assistant, paralegal etc.

In Spain it is very simple, you are either a Lawyer (Abogado) or you are not; there is no in-between. Always ask the person you are dealing with for their Law Society’s number and verify they are registered to practice. If the individual refuses to give you his practising number, walk away. In the last property cycle these intruders wreaked havoc and are now back in force!

Specifically, on buying new-build, it is highly advisable that you retain a seasoned registered Lawyer before you commit yourself signing any document or else paying any amount. Initial down payments, such as holding deposits which strike the property off the market, are non-refundable unless specifically agreed otherwise. If you pull out, you will likely forfeit your deposit.

Many legal problems could easily be avoided on following this simple advice. Don’t be in a rush to hand over your money without having hired an independent Lawyer first; do not allow yourself to be pressurized by intermediaries. Rash decisions often turn out to be expensive mistakes in life.

Our law firm has over 15 year’s conveyancing experience at your service. You can read further here: Buying Property in Spain – 10 reasons to hire a Lawyer

  1. Plot of land under a developer’s name

In the last property bubble, many developers marketed and sold on whole developments without even owning the land.

One should never buy an off-plan unit in a land that is still not registered under the developer’s name. There are far too many associated risks to take a gamble with your hard-earned money.

This is one of the checklist points your Lawyer will do as part of his conveyance due diligence.

  1. Building Licence

The basic recommendation is not to sign a Reservation Contract or a Private Purchase Contract (PPC) unless the town hall where the property is located has issued a Building Licence for the development. You should categorically not buy a property that lacks planning permission, it is only basic common sense.

This is by far the biggest mistake that – unbeknownst to many – a buyer can possibly make. Many problems could easily be staved off on following it. The Building Licence will ensure that the building is above board and the property is not being built in green belt land, for example.

Residenziale Cataleya-Salón comedor ático-Porcelanosa.jpg

Photo credit: courtesy of Erasur, Cataleya, Estepona

  1. Bank Guarantees

Once your Lawyer has checked the plot of land is under the developer’s name and there is a valid Building Licence issued, it’s time to sign the reservation contract.

The instalments paid while the property is being built can be guaranteed by means of what is known generically as a ‘bank guarantee’. For more information, please read our detailed article on Bank Guarantees in Spain. Bank guarantees only work now if a Building Licence has been issued (further reading in my blog post). In other words, any payments made towards off-plan property that lacks a BL, will be unsecured.

Bank Guarantees are a legal tool devised to secure the interim deposits of prospective off-plan purchasers should their properties not be delivered on time or their developers file for administration. Every payment made towards the property, including the initial holding deposit, should be secured by a bank guarantee.

A bank guarantee is of critical importance, acting as a safety net securing all your stage payments, should the developer fail to complete your property.

  1. Licence of First Occupation

A Licence of First Occupancy (also known as Habitation Licence or Certificate of Habitation and in Spanish, Licencia de Primera Ocupación or Cédula de Habitabilidad) is a certificate issued by a town hall that confirms that a newly-built property fully complies with all planning and building regulations and is ready to be used as a dwelling. A LFO allows off-plan purchasers to dwell in a property legally. You can read more on this subject in our in-depth article on the Licence of First Occupation.

A LFO is important mainly for four reasons:

  1. It provides a check on the planning legality. A LFO means the developer has built the dwelling in compliance with the original town hall’s Building Licence as well as with all Planning laws. The inspection to grant this licence is carried out by town hall’s chartered technicians who certify that the dwelling complies fully with Health, Safety, Planning and Construction Laws and is deemed apt for human habitation.
  2. It is required by utility companies to have access to official supplies (water, electricity and gas). Spanish law requires the granting of the LFO to hook up the dwelling to the supply grid.
  3. Lenders will ask for it if you require finance. Banks will also be asking you for a LFO. Even on selling the property, your buyer will request a copy for his own lender.
  4. Holiday rentals. If you are looking to buy as an investment (buy-to-let), a LFO is required by regional Tourist Authorities to rent out your place on a short-term. If your property hasn’t attained a first occupancy licence, you will not be able to legally rent out your house and may be landed with humongous fines if caught red-handed. The fines for non-compliance are six figures in some regions of Spain.

Be wary of anyone downplaying the importance of a LFO claiming it is unnecessary. In general, I advise you not to complete without a Licence of First Occupation.

  1. NIE number

A NIE number is a Fiscal Identification Number for foreigners and is required, among other things, to buy property in Spain. More details in our article: NIE Number Explained.

You can attain a NIE Number through us in only 3 days.

  1. Snagging list

Before you complete on a newly-built property you should always do a snagging list of the property. You can either draw up a snagging list yourself or else appoint one of the many reputable companies that may carry it out on your behalf.

It goes without saying that Lawyers do not carry out snagging lists! This is why we strongly advise you to hire a chartered surveyor. Ideally, your surveyor should be a fellow of the Royal Institute of Chartered Surveyors (RICS), so you are guaranteed they work to British standards. You should know that Spanish survey reports are very different from our own.

You can read further on this topic in our detailed article Snagging List Explained or else in my Q&A with The Sunday Times.

For post-completion flaws and their repair, please read our article on Off-Plan Construction Flaws: Know Your Rights so you learn what your rights are and how to defend yourself once you have completed on a new build property. Post-completion, building flaws may become apparent which were either not picked up during the snagging list or else are new.

Photo credit: courtesy of Real Capital Solutions, Arboleda villas, Estepona

  1. Post-completion: dealing with property taxes, utilities, community fees & other

Once you have acquired your new Spanish property, you will have to face all the associated running expenses. Make sure you have carefully budgeted for this to avoid unpleasant surprises! Some of the luxury gated communities with lush tropical gardens and beautiful infinity pools that dot the Spanish coastlines may have steep maintenance expenses.

You should open a Spanish bank account if you haven’t done so already. Utility companies do not accept overseas payments and only accept standing orders against your Spanish account.

You should set at least as standing orders all the following:

  • IBI tax. Paid once a year (akin to the UK’s Council tax).
  • Rubbish collection tax. Paid twice or once a year depending to your town hall.
  • Utility bills (invoiced quarterly in the case of water and monthly with electricity).
  • Community fees (only if you’ve purchased in a Commonhold). Usually quarterly but may vary.

 

The particularities on buying off-plan are for example that IBI tax will not be usually readily available to pay until two years after you’ve purchased the property, maybe even more. You will be nonetheless held liable for those two previous years on the backdated IBI tax. Failure to pay IBI tax may lead to your house being auctioned off to recoup the debt. More on these taxes in our article Non-Resident Taxes in Spain.

You are also liable to file Income tax on owning property in Spain every year for which you need to appoint Fiscal Representation. Even if you do not rent out your property, you still need to pay this tax every year as a non-resident. We have a very competitively-priced taxation service, ask us.

Holiday rentals

If you do decide to lease your Spanish property as a holiday rental, given the spectacular rental boom Spain is undergoing over the last two years, we offer a Holiday Rentals Accounting Service (HRAS).

We can reduce your landlord tax bill by a minimum of 40% - or your money back! Ask us.

Spanish will

To close, we cannot stress enough how advisable it is that you make a Spanish will to dispose of your Spanish estate. This will not preclude any other will made in your home country and is limited exclusively to your Spanish assets. A Spanish will saves your beneficiaries time, money and hassle at a time of bereavement as it greatly streamlines the Spanish succession procedure. Contact us on our will writing service.

We offer the most competitive fees in the market.

 

Conveyancing – Buying from €995

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.

 

"Podrán cortar todas las flores, pero no podrán detener la primavera." — Pablo Neruda

Ricardo Eliécer Neftalí Reyes Basoalto (1904 – 1973). Brilliant Chilean poet. Since a young age he proved to be extraordinarily gifted with the Arts writing all manner of poems. Nobel Prize winner for Literature in 1971. Due to his international high-profile and strong political beliefs, which he passionately defended, was suspected poisoned on the orders of Dictator Augusto Pinochet only days after his nefarious coup d'état. Among his timeless classics, 20 poemas de amor y una canción desesperada stands head and shoulders above the rest. The Colombian master novelist Gabriel García Márquez once called him "the greatest poet of the 20th century in any language."

Article originally published in Spanish Property Insight: 8 Tips on Buying Off-Plan in Spain

Legal services Larraín Nesbitt Lawyers can offer you

 

Off-plan-related articles

Buying Off-Plan Property in Spain – 8th of June 2013
House Hunting in Spain – Interview with The New York Times. June 2015
Resurgent Spain: Málaga Sees Strong Sales – Interview with Mansion Global (The Wall Street Journal). December 2015
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
Non-Resident Taxes in Spain – 8th December 2015
Non-Resident Income Tax – 8th December 2017

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.

2.010, 2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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Legalising Unregistered Property Extensions

Raymundo Larraín Nesbitt, August, 8. 2017

Lawyer Raymond Nesbitt briefly explains how to go about legalising unregistered property extensions and the consequences of not doing so.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of August 2017

 

                                                                                                                                     

 

Photo courtesy: Kingspan Insulation Ltd

Introduction

Often, with a view to sell, property owners decide to make improvements or extensions to their Spanish properties to make them more attractive to prospective buyers. Adding an outbuilding in the garden next to the pool, adding a few additional guestrooms, adding a toilet, building a cellar with home cinema or an in-door heated swimming pool all sound harmless and like a great idea on paper. Surely these improvements add value to the property, making the prospect of selling them far easier, yes?

The fact of life is that if these improvements are not carried out following the correct legal procedure they may become a perfectly good waste of money or even be counter-productive to selling your home.

In this article, I explain what are the legal consequences of unregistered extensions and how to go about legalising them.

 

Legal consequences of unregistered property improvements

There are several risks associated, with varying degrees of importance, of not following the statutory legal procedure; I will list them as bullet points.

  • You can be fined. Should your town hall catch you undertaking non-sanctioned improvements on your home you can be heavily fined and even be required to pull down the improvements at your own expense.
  • You may be criminally prosecuted. You may even face the daunting prospect of a State prosecutor instigating criminal proceedings against you dependent on the illegality committed. This is particularly true of rural property. Please read my article on the matter: How to Buy Rural Property in Spain.
  • You may be forced to pull down the improvements at your own expense.
  • Unregistered extensions are uninsured. Should they collapse, you have no legal recourse against them. Legal extensions will be covered by insurance.
  • You can´t borrow money against the improvements on the property (or not enough money). Should you require to raise capital to face medical treatment, for example, a lender is going to offer you significantly less money if you have not registered the extensions or improvements made to your property.
  • Unregistered extensions at the Land Registry do not exist legally. This has very important practical consequences, particularly on selling a property. In other words, only accurate property descriptions matching reality at a Land Registry are deemed legal. This translates in practice into significantly reducing the pool of buyers for your property, something nobody wants; more so on a challenging sales environment. Most buyers require finance to acquire a property (i.e. mortgage loan). Lenders will offer borrowers considerably less money to acquire a property with non-registered extensions as these are non-existent for all intents and purposes.

 

Making it easier on us, let us examine it with a practical example. If a rural property is being sold with a modern two-storey villa of 450 m² in a plot of 10,000 square metres (€1.5mn) albeit on paper (Land Registry description) it is actually a vintage cortijo of 80 m² (€120k), a lender will only be able to finance a fraction of the asking price. Meaning a buyer will be facing a huge shortfall in the money required to close the gap. Consequently, the deal will likely fall through because of lack of finance. What we can glean from this example, is that what is not lodged at the Land Registry simply does not exist legally to lenders and no money can be borrowed against it.

  • Some extensions require a Licence of First Occupancy (LFO, for short) without which a property cannot be lived in or rented out. So, for example you cannot receive income letting it out as a holiday home.
  • You may not be able to apply for utilities. As a result of not having attained a LFO, the property may not qualify to apply for utilities.

 

Profile on the legal procedure to register extensions and improvements

  • Contact an architect to draft a building plan.
  • Hire a lawyer.
  • File and pay for a town hall’s building licence (major or minor works).
  • Attain a certificate of end of works.
  • Register the extension/improvement in a deed at a Notary Public.
  • Register the updated deed at the Land Registry.

 

Conclusion

Registering extensions and improvements is in a property’s owners’ best interests as these will be made legal and will allow him to fetch a more attractive sales price for his property.

Bottom line, for your own good, your Title Deed must reflect and match exactly your property’s description. If this is not the case, you must hire a lawyer to amend your Title Deed and adapt it to reality to legally sell your property or to apply for a loan against it.    

 

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.

Article originally published at Spanish Property Insight: Legalising Unregistered Property Extensions

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Related articles

 

 

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. VOV.

2.017 © Raymundo Larraín Nesbitt. All rights reserved.

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