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Mortgages: fixed or variable rate?

Raymundo Larraín Nesbitt, June, 11. 2018

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
11th of June 2018

 

This question is hardly a good pick-up line – please don’t embarrass yourself, or me, trying it out – you will likely get slapped! However, you will surely be asking it yourself if you need a mortgage to finance your new bolthole under the sun.

With the recovery of the property market, more buyers will be asking themselves this question over the next years.

This blog post is going to explain why – at this particular moment in time – fixed rate is the superior option and why you should opt for it.

 

Fixed-rate mortgages

Pros

  • Security. You know exactly how much you will be paying every month. Interest rates are at their lowest point historically in the Eurozone. The only way is up now. If you pick a variable interest rate, you are going to be paying more and more every month which is going to add to your stress levels and mess up with your budget. Interest rates reached 5% in the peak. So paying, for example, a 2% fixed interest now is reasonable.
  • Cheap. Fixed rates are at their nadir. The moment interest rates rise again in the near future, fixed rates will also rise in tandem. You won’t see again for a long time the great offers that are now available on the mortgage market.
  • Shielded. Market volatility won’t affect you. You are going to pay the same fixed quota every month over the next 20 years regardless of Brexit, Italexit, Russian political meddling, Korean nuke boy, Trump's tantrums and whatnot.

Cons

  • Fixed rates are higher in the short-term than variable ones.
  • Variable rates would allow you to repay the loan earlier.
  • You pay more interests at the start.

 

How can our law firm assist you?

Our law firm has over 15 year’s conveyancing experience. Speak to us, we will be very pleased to discuss your matter with you and give you impartial advice. 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) 951 894 675 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.

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My (off-plan) builder says I don’t need Bank Guarantees. Is this safe?

Raymundo Larraín Nesbitt, May, 30. 2018

Admonitory blog post on the importance of bank guarantees on buying off-plan property.

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
30th of May 2018

 

In short, no.

So why is your developer telling you this fib? Because he’s likely pulling a fast one on you.

In Spain, if you become a self-developer (autopromotor) you don’t need to apply for bank guarantees because YOU are the developer.

I had already warned about this cunning ploy a decade ago in my 2008 article Bank Guarantees in Spain under the heading “Bank Guarantees on Self-Built Properties.” Now that we see once more a massive resurgence in offplan, this ‘trick’ is being used all over again.

Becoming a self-developer effectively neatly circumvents Spanish Consumer Law obligations developers have of issuing a buyer with bank guarantees at their own expense. Bank Guarantees which secure ALL your stage payments. In other words, the developer (builder) offers you this option to avoid huge costs and legal responsibilities. The moment you become a self-developer you are no longer protected by Spain’s Consumer Laws as you are automatically deemed a grizzled veteran. In plain English, you lose significant consumer entitlements - no bueno.

Smart cookies that offer you to become a self-developer will tell you that the land on which the house is to be built upon (which you own) is your best guarantee. Er, no thanks. Playing Russian roulette is probably a safer option.

If you are a layman on how the construction business works, let alone in Spain, this option is not for you. Self-building your own property in Spain is only an option to be followed by those dauntless who have deep pockets (can afford losses) and have the know-how. It is categorically not an option for your average Tom, Dick and Harry gambling with their life savings to save a fast buck. Be smart, don’t cut corners in Spain unless you are affluent and know exactly what you are doing.

Project Manager vs. Builder

Even shrewder cookies will offer you to take on a dual role; acting as both PM and builders. Needless to say, this is neither acceptable nor safe. It’s like putting a fox in charge of the hen house.

If you are mad resolute you want to become a self-developer, make sure you appoint a PM that is totally independent and unrelated to the builder. That way you will ensure he will do his job policing the builder’s work.

If you want to add a further layer of protection, place a lawyer and an architect on top on an overseeing role.

Ten-year warranty: did you know?

Did you know that as a self-developer one of your (many) responsibilities is to attain a ten-year warranty which is fairly expensive?

Did you know you can’t sell on your newly built house for the next ten years unless you have attained said 10-year warranty?

Did you know that to attain this warranty it follows a laborious procedure which requires independent inspections at every phase of the construction procedure?

In other words, it can't be tacked on at the end of works.

How can our law firm assist you?

Our law firm has over 15 year’s conveyancing experience. Speak to us, we will be very pleased to discuss your matter with you and give you impartial advice. 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.

 

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.

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Landlord, careful with tenant’s subletting on your property!

Raymundo Larraín Nesbitt, May, 21. 2018

Admonitory blog post on the abusive misuse of long-term rentals.

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
21st of May 2018

 

 

 

                                                                                                                                                Sly tenant gleeing on all the money he's going to cream off you.

 

Now that the good weather has made a comeback, the rental season in Spain kicks off. Many landlords will be busy these days signing lease agreements on their Spanish properties. Unless you have been living under a rock for the last two years, the holiday rental business in Spain is booming (two-digits growth p.a.).

I though it would be a good idea to write a short blog post on the serious risks of renting out your property long-term and have your tenant subletting it as short-term unbeknownst to you.

Many unsuspecting landlords are falling prey to sneaky tenants who are subletting the property as short-term accommodation making a killing. It is estimated that on average a tenant can make 60% over and above a long-term rental. So obviously there is quite the incentive to flaunt the rules and do it, as it is win-win for them. They cream off the rental money and have zero risk on doing it, as any penalty is footed by the landlord as I explain next.

Who is ultimately responsible for this misbehaviour?

As I cared to explain in a previous blog post (How (not) to bypass regional Holiday Home Laws in Spain) the responsibility falls squarely on the property owner. Some cheeky landlords are renting out their luxury pads in prime beach locations as ‘fake’ long-term rentals to foreign companies in the full knowledge that these are busy marketing and subletting the property offering it as holiday rental accommodation without having attained the mandatory Tourist licence. What these landlords do not know however, is that if they get caught this may attract humongous fines which the property owner will be liable for, not the exploiting company, who is too busy counting the banknotes that roll in. For them, it’s a win-win.

Yet in most cases, landlords are oblivious to this foul practice and are blissfully unaware of what their enterprising tenant has been up to with their property. If the tourist Authorities catch wind of your tenant’s holiday rental business, any fines levied will go against your property, and you, as the owner, will be liable for them. Ignorance will not be accepted as an excuse.

The taxman knows

The Spanish Tax Office has reached an agreement with different property portals (i.e. AirBnb) to be supplied with the full details of tenants, check-in dates, agreed lease price etc in an attempt to combat tax evasion. Any non-resident landlord who hasn’t declared and paid tax on their rental income to the Spanish taxman is going to receive a nasty letter later on this year. You should be smart and pre-empt this scenario unfolding on regularizing your undeclared rental income.

Three telltale signs your ‘long-term’ tenant is stitching you up

  • You keep receiving complaints from your Community of Owners over the ‘abusive’ use of your property i.e. excessive noise, loud music.
  • The person/s who open your property door are strangers and are not those mentioned in your long-term lease agreement.
  • Too many different people shuffle in and out of your property at all times of day and night.

 

What can you do if you suspect your tenant is cheating on you?

  • Query the property’s concierge for any suspicious activity relating to your property.
  • Try searching for your property in popular mainstream property portals such as HomeAway, AirBnb etc
  • Hire a private detective to monitor (illegal) property use.

 

How can our law firm support you?

Lawyers can word into long-term contracts clauses that forbid this illegal use of property. In addition, they can assist you on removing the obnoxious tenant who is making a profit on your property at your own expense (tenant eviction service).

 

Our law firm offers a bespoke tax service, for a very competitive fee, which is tailored for holiday rentals (Holiday Rentals Accounting Service). We can reduce your landlord tax bill by a minimum of 40% - or your money back! We will save you more money than what you spend on hiring us. It pays off to be legal.

 

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

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

 

Tax services Larraín Nesbitt Lawyers can offer you

 

Rental-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.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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Old Spanish wills made by (resident) British nationals are being declared void

Raymundo Larraín Nesbitt, May, 8. 2018

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

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

 

As previously warned in other articles of mine (Spanish Wills and Probate Law in light of European Regulation 650/2012) new European Regulation has rendered some old Spanish wills void. Any Spanish will witnessed before the 17th of August 2015 should be revised by a Lawyer to ensure it is fully compliant.

In today’s blog post we examine how two old Spanish wills, made by British nationals and granted prior to the changes of 17-08-15, were declared void by Spain’s Dirección General de los Registros y del Notariado (DGRN, for short). The DGRN is the legal body tasked to oversee the roles of both Notaries and Land Registrars in Spain.

We tend to forget the human tragedies that hide behind these unfortunate situations. What the annulment of these wills has meant is to shatter the lives of women, surviving spouses, who out of no fault of their own, had their life’s torn apart following the deaths of their husbands. Unprotected women who placed their trust and financial well-being in the hands of their now defunct husbands, and who were already going through an ordeal of their own, were cut out of the Spanish wills made by their late husbands. The children disagreed with the content of the wills, challenged them – and won.

This nightmare scenario could have been easily avoided altogether by their husbands if these had made a new updated cast-iron Spanish will compliant with the terms of the new EU Regulation. This tragedy is going to repeat itself over and over again in the future with other surviving spouses on not heeding my advice; if you care for your significant other, ensure your Spanish will is compliant with the new set of laws.

  1. DGRN resolution of 14th June 2016

A British national, who had his habitual residency in Spain, dies in September 2015 (after the changes that came into effect on the 17th August 2015). He made a Spanish will in 2003. The man left three children and a wife. He decided to leave everything to his wife and cut out his three children.

His children contest the Spanish will. Long story short, the case reaches the DGRN and it rules that the Spanish will is void as it did not comply with the terms laid out by the new European Regulation 650/2012. As a result, his wife is cut out of the will and left penniless, whilst the three children inherit all his estate in equal shares.

  1. DGRN resolution of 3rd of July 2016

A British national, who had his habitual residency in Spain, dies in October 2015 (after the changes that came into effect on the 17th August 2015). He made a Spanish will in 2005. The man had two children and a wife. He decided to leave everything to his wife and named as substitute heirs, in the event of his wife’s death, his two children.

His children contest the Spanish will. Long story short, the case reaches the DGRN and it rules that the Spanish will is void as it did not comply with the terms laid out by the new European Regulation 650/2012. As a result, his wife is cut out of the will and left penniless, whilst the two children inherit all his estate in equal shares.

 

Conclusion

The stark warning I gave in my article's conclusion of January 2015 still holds true:

“Surviving spouses or partners are the ones who stand to lose most (or all) under this new Regulation unless you act now.”

Do not take chances with your loved ones’ well-being and plan ahead for your demise. Making a new Spanish will, that is fully compliant with the new European Regulation, is only €195 through us. This is a paltry amount compared to the dozens of thousands of euros your family stand to lose through litigation unless you act now; not to mention the additional grief and aggravation you will spare them at a time of bereavement.

It is in truth a small price to pay for peace of mind that will avoid a family being torn apart over money matters. Ensure your last will is respected and carried out the way you wanted it to be.

"Dura lex, sed lex."

 Roman civil law maxim meaning that, however regrettable the outcome of a legal matter, the law must be upheld.

 

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

Larraín Nesbitt Lawyers is a law firm specialized in inheritance, conveyancing, 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 Larraín Nesbitt Lawyers can offer you

 

Inheritance-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.

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Palma de Mallorca to ban holiday rentals and Airbnb to share landlord information with Spanish Tax Authorities

Raymundo Larraín Nesbitt, April, 26. 2018

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

 

 

 

 

 

 

                                                                                             

                                                                                                                                                 Holiday rental flat in Palma de Mallorca, soon to be illegal

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
25th of April 2018

Since the floodgates to devolved competencies were open by the government in 2013, which I heavily criticized at the time, the asking rental price in Palma de Mallorca has risen by over 40%. Moreover, over the last two years this trend has accelerated, and rental prices have hiked by two digits p.a. Clearly, this is unsustainable long term. The advent of huge American companies, such as AirBnB, clearly correlates the push in rental prices upwards.

Landlords, only too keen to jump onto the bandwagon, have pulled their properties from long term rentals morphing them into holiday rentals which are far more lucrative. This has created a huge shortage in the stock of available long-term rental properties for natives, driving prices further up in a pernicious spiral.

Whilst the problem remains serious, I strongly disagree with the blanket approach of forbidding holiday rentals. As I have cared to examine in previous articles of mine, this introduces malicious asymmetries in the market that compound problems furthermore.

As an example, as reported yesterday by El Pais daily, the Mallorca left-wing coalition (PSOE, Podemos and group Més per Mallorca) approved to ban holiday rentals in Palma city centre. The idea behind this is to protect natives so they have access to affordable long-term rentals as they were being priced out of the market by holiday rentals. Or at least, so goes the theory.

In practice, the irony is that a left-wing coalition has created a side effect making the rich, richer and the poor, poorer. This is because holiday rentals will still be allowed in chalets (detached villas), normally owned by affluent owners, whilst it will be outright banned in flats (normally owned by less well-off citizens). The automatic effect this ban has is to reduce the property value of properties located in the city centre whilst simultaneously increasing the value of detached villas which now have carte blanche to be let as holiday rentals.

This is precisely why in my previous article on the Balearics I warned that lopsided regional regulation had the risk of derailing the rules of a market economy on artificially stifling competition and driving prices up; which is not good news for consumers. My conclusion to my September article was that the Spanish government needs to pub stomp this by acting resolutely and rein in devolved competencies which would iron out all these pesky market distortions. The holiday rental market is becoming increasingly fragmented and confusing in Spain and needs to be urgently addressed nationwide from Madrid unifying in one legal body the holiday rental regulation.

Banning holiday rentals in city centres is not the answer; it has already been tried and tested in other large cities and failed (i.e. Berlin). Curtailing property rights is not the answer and is a frontal attack to private property which is enshrined in art. 33 of Spain’s Constitution. Politicians have no business restricting individual’s property rights, thank you very much. This faux pas by local politicians will adversely affect foreign investments in the Balearics at a time when the property market was roaring.

At times, I get the distinct impression politicians have an innate ability to disrupt the market and plunge us headlong into recessions. Surely, just my imagination…

 

AirBnB to pass all guest details over to the Spanish Tax Office

 

On a different note, as reported yesterday by financial newspaper CincoDias, AirBnB has signed an agreement with the Spanish Tax Office to disclose and pass them all the financial details of landlord’s guests. This is going to constitute a massive shakedown of undeclared holiday rentals (read tax dodgers). If you own property in Spain and you rent it out, whether long or short-term, you must declare your rental income and pay taxes in Spain.

The Spanish Tax Office is growing weary as billions of euros are going untaxed. The AEAT will be cracking down on this skulduggery going forward. Over 1,400 properties have already been fined by Authorities in the province of Malaga alone as they did not meet the holiday rental requirements set out by regional regulation.

We strongly advise all landlords (resident and non-resident) to declare and pay their rental income taxes in Spain.

Our law firm offers a bespoke tax service, for a very competitive fee, which is tailored for holiday rentals (Holiday Rentals Accounting Service). We can reduce on average by 40%, or more, landlord’s tax bills. We will save you more money than what you spend on hiring us. It pays off to be legal.

Politics: the art of creating new problems where none existed.”

 

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

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

Tax services Larraín Nesbitt Lawyers can offer you

 

Taxation-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. No delusional politician was harmed on writing this article. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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Tax form 720

Raymundo Larraín Nesbitt, April, 20. 2018

The following blog post has been summarised to avoid unnecessary tax technicalities. The quoted tax rates are subject to change from one year to the next. Seek professional legal advice on your matter – see disclaimer below.

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
20th of April 2018

 

This tax form is only for reporting purposes, you do not actually pay any tax on filing it. I have structured this blog post as a FAQ for ease of comprehension.

Who needs to declare?

Spanish residents who own overseas assets over €50,000.

E.g. Mr and Mrs Smith live in Mijas Costa all year round. They own two houses in England, have open bank accounts in the UK and receive UK-based pensions. They consider themselves non-residents in Spain and only pay taxes in the UK.

Mr and Mrs Smith are in fact tax resident in Spain and need to file each a tax form 720.

Again, and for the avoidance of doubt, if you are non-resident in Spain you do NOT need to file this tax form.

Who is considered tax resident in Spain?

The Spanish Tax Office applies the following criteria:

  • You spend more than 183 days in a calendar year in Spanish territory.
  • Your centre of financial interests is located in Spain.
  • Your spouse and/or underage children live in Spain.

 

Reporting categories

There are three reporting categories, based on bank accounts, investments and immovable property.

Obligation to report?

You must report all assets in a particular category if the value of your total assets in it exceeds €50,000.

2018 submission period

From the 1st of January until the 2nd of April 2018.

Can I file it after the submission period?

Yes, but penalties may apply. Ask us.

If you have already filed tax form 720 in the past

You only need to file it again if:

  • The value of an existing asset grew by more than €20,000, or
  • You sold an asset, or
  • You obtained a new asset.

 

Penalties for non-compliance

The fines levied are stiff.

  • Failing to file 720 or filing it incorrectly: €5,000 per infraction.
  • Minimum fine of €10,000 for each group of assets.
  • Penalty of 150% on unpaid income tax.

 

Tax form 720 challenged in Brussels

The disproportionate fines have led to it being challenged in Brussels. And rightfully so.

In the meantime, this tax form is enforceable.

If you haven’t been filing it, for whatever reason, but you voluntarily file it before the tax office inspects you, the above fines are vastly reduced (you pay 15 - 20% as opposed to 150%). Which is why we strongly advise you to come clean and file it, even after the deadline.

The Common Reporting Standard

Please take good note that with the advent of the Common Reporting Standard, signed by over 100 countries to combat tax evasion, as from the 1st of January 2018, the Spanish Tax Office is being spoon-fed fiscal information by your home tax office.

For example, both the HRMC and the (Irish) Revenue Commissioners are supplying the Spanish Tax Office with detailed information (and vice versa) on all your overseas assets and reported income derived abroad as from January 2018.

We strongly advise you to file tax form 720 if you are resident in Spain.

 

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

Larraín Nesbitt Lawyers is a law firm specialized in taxation, conveyancing, 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) 951 894 675 or by completing our contact form.

 

Tax services Larraín Nesbitt Lawyers can offer you

 

Taxation-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.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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Never act as a guarantor in a Spanish mortgage loan

Raymundo Larraín Nesbitt, April, 10. 2018

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
10th of April 2018

 

Family is a bond that often transcends everything. It is a safety net that we can fall upon when things turn pear-shaped. Loving parents (and grandparents) have programmed in their genes to seek the happiness and welfare of their children, the next generation. As getting a foothold on the first rung of the property ladder has never been tougher than today, some young adults require the unabated financial support of their family.

It is in this context that some young adults enlist their parents (and/or grandparents) to act as guarantors of their Spanish mortgage. I mean, who could be such a grass snake and light-hearted to refuse their own children this plea? Actually, YOU.

Kind-hearted parents, specially if they are non-residents, are blissfully unaware of what acting as a guarantor entails in the Spanish legal system. Basically, on applying for a mortgage-backed loan, a lender will be hungry to secure its loan as much as possible spreading the risk. Young adults on low incomes with precarious McJobs, may require to lean on their family who own mortgage-free properties. Parents believe that acting as co-guarantors on signing a deed before a Notary means that in the remote event of a default their children are first in the pecking order and that a lender will leave them for last, if at all. Crass error!

The fact they own mortgage-free properties is like warm candy in the eyes of a lender. In the event of defaulting a loan, a lender may start chasing the parents first! In my professional life I have witnessed how whole families have fallen like a house of cards one after the next because a lender has chased the children, then the parents and in some cases even the grandparents. Because of this, the safety net that I was speaking of in this blog’s introduction is completely wiped out, annihilated.

Additionally, on acting as a guarantor, a legal charge will be placed against your property by your children’s lender. This will seriously hamper your borowing ability should you need it later on in life i.e. raise funds due to poor health issues.

Although my advice may seem cold-hearted – I’m not even going to dispute it –  it is in fact borne out of experience and is very practical. If a young adult cannot afford the place of his dreams as his first abode, then he simply cannot; end of story. At no time should he drag in his whole family in the selfish and relentless pursuit of his own well-being. Life is about making sacrifices and choices and knowing when to concede. His parents already went through a life’s worth of ordeals and now deserve a well-earned rest, enjoying their properties; not being made homeless and destitute at age 50 along with their children. No one deserves that fate.

Bottom line, never act as a guarantor (avalista) in a Spanish mortgage loan as it may jeopardize your home. It is precisely because you love your children and care about them that you should refuse to accept. If your child has any money problems, he can always come back to the nest and lick his wounds until he gets up on his own two feet again. In time, your children will mature and come to terms with the decision you made, which was the right one for both. Who said parenting was easy?

 

“Children begin by loving their parents; as they grow older they judge them; sometimes they forgive them.” – Oscar Wilde

Oscar Fingal O'Flahertie Wills Wilde was an outstanding and brilliant Irish poet and playwright. He is best remembered for his epigrams and plays, and his novel The Picture of Dorian Gray. He died young imprisoned by an obtuse Society who abhorred of his sexual orientation.

 

This is one of many potential pitfalls buyers can be faced with. Our law firm has over 15 years’ experience dealing in conveyance matters. Don’t risk your hard-earned money, speak to independent lawyers.

 

 

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) 951 894 675 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.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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Buying resale property in Spain? Never allow a vendor to stay in the property

Raymundo Larraín Nesbitt, March, 30. 2018

This blog post explains the legal reasons on why you should never allow a vendor to remain in a property after you have paid for it.

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
30th of March 2018

 

                                                                                                    

                                                                                                          Scammy needs to stay in your new home 'only' for a couple of days... he looks trusty.

 

Buyers, by nature, are hopeful and have a contagious positive outlook about them. However, this rose-tinted spectacles attitude may land them in hot water.

On buying property in Spain, some know-it-all vendors will politely ask his buyer if they can stay in the property ‘only’ for a couple of days until they have finished their move. The excuses they will give are multiple (preferably tear-shedding ones that build rapport appealing to your values, they work best with gentle souls):

  • “I am a single parent with young children. I need time to complete the move all by my own” (You care for young children, yes?).
  • “I only need a couple of days to pack my stuff up, you can trust me, I’m best friends with so and so, you know him/her” (You can trust a friend of a friend).
  • “It is now the summertime season and I cannot find affordable alternative accommodation” (I’m skint and homeless, have pity on me).
  • “I’m elderly and only need a couple of days to sort out some admin paperwork and I will be off in a jiffy” (I could be your father, you know).
  • “My pet Bungo can’t stand hotels. My vet says he needs fresh grass and sunlight for a few more days until I book my flight back to the UK” (you care for animals, yes?)
  • Other.

 

Fact is that some shrewd cookies, after selling a property have no intention whatsoever to leave the property they have just sold you. And why would they? It is all advantages for them to (over) stay in it:

  • They have just been paid for the property, so they are sitting on a pile of cash. It’s not as if they are cash-strapped.
  • They don’t need to pay a rental, because they ALREADY have the possession of the property, YOUR property.
  • They don’t need to move in their ‘stuff’, it is already there.
  • Any unpaid taxes or bills, they will not be responsible for, it is the new owner who is liable for them.
  • And God forbid the new owner stops paying the taxes or shuts off the utilities as he may find himself being criminally prosecuted by the vendor (coercion).

 

Some vendors abuse their position and besides cashing in on the property get a free pass with a free rental, all scot-free.

Buyers naively think they can just walk in and change the locks to the property or shut off the utilities. Well, they are in for a rude awakening on how Law works in Spain. The vendor can file a police report (denuncia) and the naïve buyer can be remanded into custody for illegal trespassing and or coercion. This is because the vendor only handed over the title to the property, NOT the possession.

If a buyer wants to vacate an abusive vendor he will be forced to hire a litigation lawyer and go through a full-blown eviction procedure at his own cost. These, on average, are taking 6 – 9 months in Spain. So, for the next 6 to 9 months the vendor avails himself with free rental and his lifestyle continues just the same as it was (well, with a few extra zeros in the bank and without having to pay any bills or taxes). Not bad, eh? Win-win.

Bottom line, buyer don’t be a muppet, never allow a vendor to stay in a property after you buy it. Demand possession on completing before a Notary Public. No house keys, no completion, period.

Possession is nine-tenths of the law.”  Scottish expression

 

This is one of many potential pitfalls resale buyers can be faced with. Our law firm has over 15 years’ experience dealing in conveyance matters. Don’t risk your hard-earned money, speak to independent lawyers.

 

 

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 Larraín Nesbitt Lawyers can offer you

 

Conveyancing-related articles

Buying Resale Property in Spain – 21st February 2013
Buying Off-Plan Property in Spain – 8th of June 2013
Buying Property in Spain – 10 Reasons to Hire a Lawyer – 8th November 2016
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


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 © Raymundo Larraín Nesbitt. All rights reserved.

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Buying off-plan in Spain? You need a Building Licence

Raymundo Larraín Nesbitt, March, 20. 2018

This blog post explains the key importance a Building Licence has for a buyer.

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
20th of March 2018

Today marks the start of springtime. This traditionally kickstarts the real estate season to buy property in Spain. Scores of Nordic, Swiss and German buyers will begin to assail estate agencies all over Spain in search of the perfect property.

A popular choice of late is buying offplan. Over the last year, dozens of new-builds have sprouted, particularly in the Estepona area. Whilst buying a new property has its advantages, it also has some major legal risks would-be buyers ought to be aware of.

In today’s post, I will comment on the recent change in 2015 to the bank guarantees law and how that can lead a buyer to lose all his money on buying offplan property.

Bank guarantees are a legal tool which act as a safety net on the deposits paid by a buyer should the developer file for bankruptcy or should the development not be completed.

The change in the law is that bank guarantees are only valid as from the time a developer attains a Building Licence from the town hall. Only as from this moment onwards are bank guarantees valid.

Many developers try to allay investor fears claiming they have an application for a Building Licence; well, that doesn’t suffice. Unless a developer has attained a Building Licence, all the money you have paid towards your new property is unsecured.

Should the developer go bankrupt or the development become stalled (for whatever reason) you will lose ALL your money. Even if you have been issued with bank guarantees rubber stamped by a bank, they are totally useless unless a Building Licence has been issued. More on this matter in our article: Law 20/2015: Important new bank-guarantee legislation explained for off-plan buyers.

 

This is one of many potential pitfalls offplan buyers can be faced with. Our law firm has over 15 years’ experience dealing in conveyance matters. Don’t risk your hard-earned money, speak to independent lawyers.

 

 

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) 951 894 675 or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Conveyancing related articles

Bank Guarantees in Spain – 8th April 2013
Licence of First Occupation Explained – 8th April 2013
Buying Off-Plan Property in Spain – 8th of June 2013
Law 20/2015: Important new bank-guarantee legislation explained for off-plan buyers – 21st September 2015
Buying Property in Spain – 10 Reasons to Hire a Lawyer – 8th November 2016
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

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 © Raymundo Larraín Nesbitt. All rights reserved.

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7 reasons on why you need legal representation on selling in Spain

Raymundo Larraín Nesbitt, March, 7. 2018

Selling in Spain? This blog post explains why you need to appoint legal representation.

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
7th of March 2018

 

Whilst some property owners may find it unnecessary, or even pointless, to hire a lawyer on selling, it is strongly recommended to avoid problems.

  • Avoid payment scams. A seller that does not hire a lawyer is vulnerable and may fall prey to payment scams. Please read our article Selling Property in Spain – 10 Reasons to Hire a Lawyer which explains the kind of scams a seller may be faced with without appointing legal representation.
  • Avoid commission abuses on selling up. A seller that has no legal representation can be the subject of commission abuses by unscrupulous agents. An example of this here: commission abuses.  
  • Tax mitigation. We will mitigate your capital gains tax liability on selling. We can offset both the associated purchase costs as well as the refurbishment expenses on your property to reduce your tax burden as much as is legally admissible (contingent on the vendor supplying us with original VAT invoices).
  • Refund of 3% of the sales price. Non-residents, on selling in Spain, are withheld 3% of the sales proceeds by the buyer's lawyer. This money is paid into the Spanish Tax Office. We can apply for a refund on your behalf (if applicable).
  • Cancelling pre-existing mortgages. If there is an existing mortgage/charge against the seller's property this needs to be formally cancelled by a lawyer prior to selling on signing a deed witnessed by a Notary public. No buyer will acquire a property with an existing charge against it.
  • Apply for a duplicate NIE Number. Although your assigned NIE Number is yours for life, and does not change, the issued NIE certificate itself has only a 3-month validity. On selling, your Notary will require an up-to-date certificate from the Police. Avoid lengthy queues and red tape through us.
  • Are you selling at a loss? We can apply for a tax rebate on your ‘plusvalia’ tax. More details in our article: Have you sold property at a loss in Spain? You can now apply for a tax refund. No win no fee available.

 

Most of the points above can only be done on retaining a qualified lawyer. Hiring a lawyer on selling adds security and helps you pay less taxes.

Do you still think you do not need a lawyer on selling in Spain? We offer the most competitive fees in the market.

 

Conveyancing – Selling  from €795

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. 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 Larraín Nesbitt Lawyers can offer you

 

Conveyancing related articles

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
Selling Property in Spain – 10 Reasons to Hire a Lawyer – 8th December 2016

 

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 © Raymundo Larraín Nesbitt. All rights reserved.

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