Lawyer Raymundo Larrain delivers useful pointers on buying property in Spain.

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By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
1^st of April 2023

Introduction

You would never buy a property in your home country 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.

While 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?

Eight pointers on buying property in Spain

1. Tenants. Unbeknownst to a buyer, on buying property, there could be tenants inside. The new owner takes on the legal position of landlord and must respect - by law - the duration and terms of any pre-existing rental agreement. You should know some rental agreements in Spain lock you in for ten years… and you cannot update the rental. Your lawyer can safeguard your interests in this event.
2. Utility invoices (water, electricity, etc). Outstanding utility invoices are a nuisance as utility companies may shut down the supplies. Reconnecting the electric supply, for example, can set you back 500 euros and you need to wait at least 4 weeks to top it off!
3. Community of Owners. Properties within a community can be in arrears. The new owner takes on all the debts dating back five years, which can be fairly substantial. Likewise, a new owner also becomes liable for all the pending community improvements (known in Spanish as derramas). In old buildings, that require much work and maintenance, these hidden debts are in the thousands i.e. replacing the lifts.
4. Local taxes. The property can be in arrears with taxes levied by the local town hall. In a worst-case scenario, the property can be impounded and sold off in a public auction to recoup the debt. The new owner is held liable for all taxes going back four years.
5. Report on Title. It is important to acquire a clean title. Mortgages, embargoes, liens, etc can weigh down on a property’s value. Nobody wants to buy a property with a charge against it, as it can be seized by creditors.
6. Community of owners that ban holiday rentals. A new trend is emerging in community of owners, whereby they agree to ban holiday rentals outright. There is no point investing in a fancy beach pad if you are not allowed to rent it out. It goes without saying that a property which cannot be leased legally has a substantially reduced market value as opposed to other ones which can.
7. Licence of First Occupation (LFO). Strictly speaking, a LFO should only be requested on buying off-plan property. However, nowadays it is being required even for resales. Buying a property without a LFO brings its owner serious problems that we collate in our article: Licence of First Occupation. For example, a property which lacks a LFO cannot get a mortgage loan against it. Meaning any potential buyer of said property must be a cash-buyer (it goes without saying they are few), which would greatly reduce the pool of prospective buyers, pushing back years the sales date.
8. Tourist licence. Most regions in Spain have passed stringent laws if you want to offer your property as a holiday accommodation. By law, it is mandatory you attain a tourist licence to offer your property in holiday platforms, estate agencies or private websites. Failure to comply leads to eye-watering fines. There is also the point that some regions in Spain (i.e. Balearics) go to great lengths to restrict and ban holiday rentals. Meaning not all properties can attain a tourist licence as some are located within areas which are zoned out for holiday rentals; that is banned outright by local authorities. It goes without saying that a property which cannot be leased legally has a substantially reduced market value as opposed to other similar ones which can.

In conclusion

I have only listed the basic eight, but you should be aware there are far more points to look out for (in the dozens). A seasoned conveyance lawyer will quickly pick on all the flaws listed above and advice his client on running a due diligence on the title. For reference, we offer a free in-depth buyer’s guide to buy property in Spain: Lawyer guide to buying property in Spain.

On buying property in Spain, you should be mindful the title is clean. It is fairly common the previous owner has fallen in arrears (maybe that’s exactly why they are selling!). In Spain, the golden rule is that debts follow the property, not the debtor. Meaning, when a buyer takes over a property, they also take on all existing debts from the previous owner! And this is not limited only to owed money, if a buyer, for example, acquires an illegally built rustic property on green belt land, the may be held criminally liable for the previous owner’s planning infractions. Planning infractions follow the property; whoever becomes the new owner, ‘inherits’ any outstanding planning problems and will be held liable for them.

Whilst it is true there is no legal obligation to hire a lawyer on buying property in Spain, it would be very foolish (and costly) not to do so. This is why we advise you to hire a reputed and independent conveyance law firm to carry out a thorough due diligence on the property ensuring everything is above board.

We assist clients all over Spain. Our friendly staff will be more than happy to have a chat with you.

     LNA offers the following related tax & legal services:

• Conveyancing in Spain – Buying
• Rentals (contract drafting)
• Contracts (read & review)
• Holiday Rental Accounting Service (HRAS)
• Registration of Holiday Homes (only Andalusia)

“Eyes up Guardian.” – Lance Reddick

Lance Solomon Reddick (1962 – 2023). Was an American actor and musician. He was best known for playing Cedric Daniels in The Wire (2002–2008), Phillip Broyles in Fringe (2008–2013), and Chief Irvin Irving in Bosch (2014–2020). In film, he was best known for starring as Charon in the John Wick franchise (2014–2023) and David Gentry in Angel Has Fallen (2019). He was also known for portraying Detective Johnny Basil on Oz (1997–2003), Matthew Abaddon in Lost (2004–2010), and Albert Wesker in the Netflix series Resident Evil (2022). He provided the voice and likeness for video game characters Martin Hatch in Quantum Break, Sylens in Horizon Zero Dawn and Horizon Forbidden West, and Commander Zavala in the much-acclaimed Destiny franchise. He will be sorely missed.

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.