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Renting: be wary of signing ‘reservation’ contracts

Raymundo Larraín Nesbitt, September, 21. 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
Lawyer - Abogado
21st of September 2020

Spain is a very open country that accommodates people from all walks of life. The friendliness of Spanish people, coupled with its gorgeous weather and active nightlife, makes it a very attractive proposition to spend time living and enjoying life in a liberal society. Most people will dip their toes by renting out property before committing to buying, which is a very sensible thing to do and we strongly advise it in all our conveyance articles. You should always rent out first in the area you fancy living in to see how it works out for you.

Last week I had to deal with a case in Barcelona that is a prime example of why you should be wary of signing reservation contracts on renting in Spain.

With the excuse the property was in a highly sought-after location, and someone else could snag it, the tenants were forced to pay a non-refundable deposit equivalent to one month’s rental to strike the property off the market for the next 30 days.

The problem was that the tenants had not seen the final contract itself, only this pre-contract reserving the property which was only a few paragraphs long and didn’t go into any details. Once signed, a few days later they emailed them a copy of the proposed rental contract, which I reviewed.

The second (and final) contract was a prime example of abusive clauses. Not only did the landlord force the tenants to pay for all the normal expenses (i.e. water, gas and electricity) but also for the community of owner’s fees, local taxes (even garbage collection), and also for the annual maintenance of the (worn out) heater! On top of this abuse, they also made the tenants responsible for any and all damages to water pipes, electrical grid, rooftop, drainage and gutters! This is a problem, because as the property was fairly old, it was highly likely there were hidden issues not apparent to the naked eye the tenant was unaware of.

Needless to say, the contract was a total rip off. The problem was that as they had already signed a ‘pre-contract’ with the estate agency, and it specifically stated the reservation deposit was non-refundable; if they did not sign the lease, they would forfeit a whole month’s deposit, which was a lot of money. Although a sizeable loss, it was always better than getting into a long-term contract (five years plus) with such abusive one-sided conditions that could prove most onerous on the long run.

On negotiating, you always have leverage until you part with your money. Don’t fall for the drivel of blindly signing pre-contracts, or reservation contracts, only because you are being railroaded into signing them. It’s just standard sales pitch, and it’s poppycock.

Although this proved to be an expensive experience for them, we can glean a valuable lesson that is useful to legions of other would-be tenants, particularly in large cities such as Madrid and Barcelona. The lesson one takes from this is that you NEVER pay a penny unless you are first shown the wording of the final rental contract

"Every pound is a prisoner.” Margaret Nesbitt

 

Larraín Nesbitt Abogados, small on fees, big on service

LNA is a law firm specialized in conveyancing, taxation, residency, 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. 

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Rental-related articles

 

Article originally published at IDEALISTA: Renting: be wary of signing ‘reservation’ contracts

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.

2.020 © Raymundo Larraín Nesbitt. All Rights Reserved.

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Huge bargains available in long-term rentals in Spain

Raymundo Larraín Nesbitt, September, 11. 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
Lawyer - Abogado
11th of September 2020

 

Although I’m guilty as anyone of reporting the negative impact of Covid-19 in the Spanish real estate market, the fact is that it has also opened up a slew of new opportunities well-worth looking into.

I had already reported at large in previous articles how the virus outbreak has created a number of singular buying opportunities for savvy investors with steep discounts (understatement).

Likewise, it has also created unique opportunities on renting out in Spain, specifically long term. In today’s blog I’m going to expand on how the pandemic has opened up new opportunities on renting out long term in Spain.

Before the epidemic hit Spain, long term lets were hard to come by and were largely overpriced. This is because landlords were focused instead on the hugely profitable holiday rental market. However, due to the ongoing pandemic, holidaymakers shunned Spain this summer mainly because of the pesky quarantine requirements back in their home countries. Now that the new reality has sunk in, landlords have swiftly shifted gears and are viewing long term rentals with renewed love & interest.

There is a huge untapped latent demand for long term rentals. Which goes on to explain why landlords have flipped over en masse to long term instead. This huge influx in supply of long term rentals has (greatly) impacted the market, dragging down prices significantly. As Spanish daily El Mundo reported this week, lets have dropped by 50% in Ibiza.

Shrewd tenants can now bag themselves a two-digit discounted rental in prime locations in Spain i.e. Marbella and Balearics. This is nothing to scoff about, as when you sign a long term lease - by law - you can remain up to five or seven years in a property (even eight or ten years, depending on whether the landlord is a physical or legal person and also if a silent renewal is triggered).

Securing a lease contract at a huge bargain price on a prime location for an extended period of time almost sounds too good to be true, but it’s happening right now. This is one of many untold positive consequences of the virus outbreak in our real estate market. I dare say it really is a once-in-a-lifetime opportunity.

The pandemic will be over in a year or two, confidence will return, and the market will rebound strongly, as it always does when it overreacts. The pent-up demand for rentals in Spain cannot be overstated enough.

And when all is said and done, and the dust has settled, your rental contract will continue to go on unfettered for many more years after the epidemic is over, at a huge discount; well-below its true market value.

This (unique) market opportunity is of particular interest to:

 

As the Chinese say, “Crisis is an opportunity.”

If this is not a great market opportunity, then frankly, I don’t know what is.

 

 

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.

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Article originally published in Spanish Property Insight: Good news: Huge bargains available in long-term rentals 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.

2.020 © Raymundo Larraín Nesbitt. All Rights Reserved.

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POSSESSION: why you should never allow a seller to remain in a property AFTER completion

Raymundo Larraín Nesbitt, September, 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.

This blog post is the second of a two-part series dealing on possession. First part is: Possession: why you should never hand over your house keys BEFORE completion – 21st August 2020.

 

By Raymundo Larraín Nesbitt
Lawyer - Abogado
1st of September 2020

 

Congratulations, you finally bought a house in Spain and you are all giddy at the thought! It is an exciting moment for a buyer. However, some devious sellers take advantage of a buyer’s good faith at this moment of weakness requesting to remain in the property post-completion only “for a few days” until they sort out some matters.

If you are buying property in Spain, you should never allow a seller to remain in the property after you complete at a Notary - ever.

The excuses given are all assorted (preferably tear-shedding ones that build rapport appealing to lofty values, which always work best on gentle souls):

  • “It is now the summertime season and for the life of me 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 do care for animals, yes?)
  • “I’m undergoing medical treatment; I need more time before I can move out” (I’m old and sick, have pity on me)
  • Other.

 

The fact is that some shrewd cookies, after selling a property, have no intention whatsoever of leaving 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, changes the locks or shuts off the utilities as he may find himself being criminally prosecuted by the vendor (coercion and/or illegal trespassing).

 

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

Buyers naively think they can just waltz 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 to 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, don’t be a muppet, never allow a vendor to stay in a property post-completion, ever. Always demand possession on completing before a Notary Public. No house keys, no completion, period.

It all boils down to possession.

Pro-tip: NEVER allow a seller to remain in a property after you sign the Title deed at a Notary Public. Ever. You must always DEMAND the house keys and full possession at the time of completion before a notary. Settle for nothing less.

You're welcome.

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

 

At LNA we assist you buying, selling, or renting for a very competitive fee.

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

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

Related services available from Larraín Nesbitt Abogados

 

 Selling property-related articles

 

Article originally published at IDEALISTA: Possession: why you should never allow a seller to remain in a property post-completion

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.

2.020 © Raymundo Larraín Nesbitt. All Rights Reserved.

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POSSESSION: why you should never hand over the house keys BEFORE completion

Raymundo Larraín Nesbitt, August, 21. 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.

This blog post is the first of a two-part series dealing on possession. The second part is: POSSESSION: why you should never allow a seller to remain inthe house AFTER completion - 1st September 2020

 

By Raymundo Larraín Nesbitt
Lawyer - Abogado
21st of August 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.

It is an exciting moment for sellers who are giddy after having waited for years on end to sell. However, some devious buyers take advantage of seller’s good faith at this moment of weakness requesting the house keys ahead of completion at the Notary. These buyers have only paid a small deposit (normally 10%), giving you all sort of plausible reasons to access the property before paying the balance.

The excuses given are all assorted (preferably tear-shedding ones that build rapport appealing to lofty values, which always work best on 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 move my stuff in, you can trust me, I’m best friends with so and so, you know him/her” (You can trust a friend-of-a-friend).
  • “I start a new job on Monday, I can only make the move this weekend” (I’m all stressed out, have pity on me)
  • Other.

 

The fact is that when you hand over your keys to someone, you are handing them possession over your property. This has serious legal repercussions. It awards them an array of legal rights that basically shuts you out of your own home. In order to regain access, you will have to go through a law court.

But what’s worse, they have only paid you, so far, a fraction of the sales price; they never completed things at the Notary! It could take several years of protracted litigation to have them physically evicted by bailiffs from your property. In the meantime, you’ve spent a lot of money in lawyers and legal proceedings, lost countless opportunities to sell to other legitimate buyers and your place has probably been trashed by your would-be buyer. Let alone all the stress and aggravation this has brought you and your partner.

It all boils down to possession.

Pro-tip: you should NEVER hand over the keys to your property before you sign on the dotted line of a sales deed witnessed by a Public Notary and are handed a big fat banker’s draft for the full sales price. Ever.

You are welcome.

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

At LNA we assist you buying, selling, or renting for a very competitive fee.

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

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

Related services available from Larraín Nesbitt Abogados

 

 Selling property related articles

 

Article originally published at IDEALISTA: Possession: why you should never hand over your house keys before completion

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.

2.020 © Raymundo Larraín Nesbitt. All Rights Reserved.

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Dual residency and hogwash

Raymundo Larraín Nesbitt, August, 11. 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
Lawyer - Abogado
11th of August 2020

 

Speaking with colleagues this week on residency, the topic on dual residency came up. It would seem some financial advisers, with vested interests, are peddling the idea that UK nationals can attain the best of both worlds: dual residency.

The idea behind this is that you should sign up for Spanish residency, before the end of the Brexit Transition period, and at the same time you would continue to live and pay taxes in the United Kingdom as normal. It's the best of both worlds, as in theory you only pay tax in the UK but you override all the pesky post-Brexit passport and immigration controls into the Union.

Unfortunately, back in the real world, things don’t work out like this. Although in theory admin residency and tax residency are two separate legal concepts, in practice they go hand in hand; when you apply for Spanish (admin) residency you eventually become a Spanish tax resident, whether you want it or not. You will be taxed on your worldwide income and assets, including those in the UK.

What few people realize is that Spanish Immigration Authorities proactively monitor all successful applicants, meaning they ensure applicants continue to meet the conditions even after they have been granted residency. The implication of this is that if you file for Spanish residency, and then fly back to the UK and resume your life there, your residency permit in Spain may be withdrawn. If you no longer meet the conditions for residency and are found wanting, they will strip it off from you.

Anyone who thinks they can land a Spanish residency and then march off back to the UK and continue about their lives there as if nothing had changed is being delusional.

Bottom line, if you don’t fancy becoming tax resident in Spain, don’t sign up for Spanish residency. Attaining residency implies you live in Spain all year round, not just when it's convenient for you. And the tax implication of living in Spain all year round is that you are now regarded as tax resident.

You can’t always get what you want (well, unless you're Mick Jagger).

 

LNA has a 100% track record attaining Spanish residency.

 

At LNA we assist UK nationals to apply for Spanish residency for the first time, or renewals, for a very competitive fee. You will be assigned an in-house specialist to deal with your matter. Call or email us free of compromise. We only deal with residency permits on the Costa del Sol (Malaga province).

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

Larraín Nesbitt Abogados is a law firm specialized in residency, 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.

Immigration & Residency services available from Larraín Nesbitt Abogados

 

 Residency-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.

2.020 © Raymundo Larraín Nesbitt. All Rights Reserved.

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Squatters overrun Spanish properties

Raymundo Larraín Nesbitt, July, 29. 2020

Marbella-based Larraín Nesbitt Abogados 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.

Inset image: occupied mansion displaying the international squatter symbol

 

By Raymundo Larraín Nesbitt
Lawyer - Abogado
1st of August 2020

As a result of Spain’s challenging financial situation, brought about by the Covid-19 pandemic, we are witnessing several consequences.

One of them, is the untrammelled growth of squatters all over Spain, which is reaching alarming levels. It is estimated there are over 100,000 properties occupied by squatters in Spain (source).

Spain’s press reports the squatter problem has increased by over 300% since the virus outbreak in March, this is unprecedented. Over 40 police reports are being filed on a daily basis and this figure continues to grow unbridled, month after month.

There are a number of reasons for this explosive squatter growth. Briefly:

  • Dire financial situation which has seen the unemployment rate jump over 40% (an all-time-high which eerily echoes Depression-era levels), in real terms, if you factor in the 4.7 mn unemployed with ERTEs who haven't worked for 6 months. The 'official' unemployment rate is 15.6%.
  • National and regional hard-left wing Administrations pro-squatter movement. Some high-ranking politicians, now in office, have in fact been active militants of this movement in their youth, openly abetting and encouraging it.
  • The lockdown has restricted movement from property owners from all over Europe, who have left their properties standing empty for long periods of time unchecked.
  • Outdated and lax legal framework devised to protect squatter’s rights (!) and punish owners.
  • Out-of-control immigration policy from non-EU countries. I.e. last Friday 24th of July 418 non-EU immigrants landed on beaches in Murcia, of which several were Covid-19 carriers. Murcia is one of 50 provinces that constitute Spain... when you tally in all the immigrants, across all fifty provinces, that arrive every day unfettered you start to get the big picture.

 

Although initially the squatter movement was guided by lofty ideals, and only targeted bank-owned repossessions in large cities which stood empty, particularly in Barcelona, they have now evolved to boldly break into Spanish resident’s main homes. The new trend we’ve picked up on is that they are now also actively targeting overseas expat's homes (second homes) located on the costas, even large luxury villas.

Marbella, Estepona, Benahavis, etc have all been hit by this nuisance on the Costa del Sol. No longer are squatters being picky discriminating on whom owns the property based on lofty ideals, or being put off by breaking into luxury developments; they now break-in into any empty property they fancy, especially expats’.

As a result of this rampant wave of squatters, a new market need has emerged. We have partnered with a reputable company, that employs ex-policemen, and specializes in ousting squatters legally. It is of extreme importance you contact us within the first 48 hours of them breaking into your property.

If you have squatters occupying your property on the Costa del Sol (Malaga), contact us ASAP. We will get rid of them swiftly and put an end to your growing nightmare for a very reasonable fee.

 

 

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.

  

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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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European Court of Justice rules that mortgage set up expenses are to be repaid in full to borrowers

Raymundo Larraín Nesbitt, July, 21. 2020

Marbella-based Larraín Nesbitt Abogados 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
Lawyer - Abogado
21st of July 2020

 

The ECJ has delivered, once more, a severe blow to Spanish banks with its 16th of July ruling. It forces Spanish lenders to refund borrowers with all the set up costs in mortgage loans which clauses are deemed abusive. If there is a clause in a mortgage deed whereby it is stipulated that all mortgage set up expenses (and also cancellation ones) are to be paid solely by a borrower, and is deemed abusive, all such expenses need to be refunded in full to borrowers.

The EUs High Court ruling comes on the back of two queries raised from loans granted by BBVA and Caixabank.

As a result, it determines that if a clause is deemed abusive by a judge, a national judge cannot oppose the full refund of the setup charges to a borrower unless there is a national provision that opposes it.

Following this ruling, eight million borrowers stand to be refunded (in full):

  • Notary fees
  • Land Registry fees
  • Gestoria fees

 

The ECJs ruling also goes on to add that it expressly opposes borrowers acting as litigants to pay or co-pay the procedural expenses of such court cases on being brought forward. This proves key as well, as it frees up litigants to litigate without fear of retribution on having to pay for litigation expenses on bringing such cases forward. Needless to say, this new ruling opens the floodgate of even more litigation against Spanish lenders.

The ECJ has once more boldly corrected Spain’s Supreme Court jurisprudence on such matters.

Kudos to our EU overlords on its fair ruling.

 

 

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.

 

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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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British nationals: Changes to Spanish Residency

Raymundo Larraín Nesbitt, July, 7. 2020

Solicitor Raymundo Larraín explains to us the new sweeping changes in Spanish residency for British nationals that came into force as from the 6th July 2020. These changes apply nationwide.

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.

DISCLAIMER: the new residency procedure has some grey areas that still require official confirmation. Until such time, some of the below-listed points are subject to change. This post will be edited accordingly as new information becomes available.

Inset photo: new TIE card

EDIT (06-07-2020): new residency changes apply to all of Spain as from 06-07-2020

EDIT (07-07-2020): added 3-month deadline for existing residency permit holders to swap green cards for new TIE cards

Article copyrighted © 2020. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
Friday 3rd of July 2020

The following blog post applies only to UK nationals.

There was a bit of a commotion early on this week when all appointments made by UK nationals were cancelled on Wednesday across all police stations on the CDS.

Due to Brexit, a new two-tier system has been brought into place on applying for Spanish residency.

The changes listed below apply nationwide.

  1. New applicants

Newly arrived applicants will have all their residency applications handled directly from the capital of each province they wish to relocate to i.e. on the Costa del Sol they will all be handled directly from Malaga. Going forward, police stations and Centros de Extranjeria no longer deal with new applications. Any appointment made will be cancelled.

The requirements new applicants need to meet vary depending on each individual case, which is why we won’t go into specifics. You will receive a TIE card (see inset photo above).

We strongly advise all UK nationals applying for a residency permit in Spain for the first time, to take full advantage of the transition period and apply now before year’s end. The application requirements will change drastically as from the 01/01/2021, becoming very stringent, as you will be treated as a non-EU national. Many will not qualify as from 2021.

  1. Existing residency permit holders: Swap you green cards for new TIE cards

We must distinguish between those that hold a 2 or 5-year residency permit. In both cases, their residency applications and renewals work the same as before – no changes until the 31/12/20. The new TIE card supersedes previous green cards.

They are regarded, for the time being, as EU nationals until the 31st December 2020.

It is strongly advised that all UK nationals who are already on a two or five-year residency permit, take full advantage of the transition period, and apply now for a new TIE card before the end of this year. After 31/12/2021, you only have a 3-month deadline to apply for your new TIE card and you must be able to justify why you did not apply for it during the transition period.

TIE cards and Transition Period

Last June, Spain abolished its four-tier system for TIE cards and has now simplified it down to only two cards. All UK nationals on applying for Spanish residency, or for renewal, will be given a card for nationals of third countries (see inset photo).

At LNA, we can assist you to apply for Spanish residency for the first time, or renewals, for a very competitive fee. You will be assigned an in-house specialist to deal with your matter. Call or email us free of compromise. We only deal with residency permits on the Costa del Sol (Malaga province).

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

Larraín Nesbitt Abogados 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.

Immigration & Residency services available from Larraín Nesbitt Abogados (LNA)

 

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Article originally posted on Spanish Property Insight: British nationals: Changes to Spanish Residency - 3rd July 2020

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.

2.020 © Raymundo Larraín Nesbitt. All Rights Reserved.

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Spanish Government to Raise Taxes

Raymundo Larraín Nesbitt, July, 1. 2020

In a bid to combat Covid-19’s severe social and financial repercussions, the Spanish Government seeks to raise 80bn euros through a drastic increase in taxation across the board. Lawyer Raymundo Larrain briefly explains to us what these planned changes are and what you should do to protect your assets.

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 June 2020

I’m going to briefly write on the wide impact these proposed tax changes will have, with specific focus in inheritance tax and wealth tax, which is what mostly affects expats. There is no point in reviewing all the other proposed tax changes as most of them will not affect non-residents.

I will preface the article with a rambling on my take on this planned tax change, feel free to skip it and get to the point. So, please indulge me and kindly excuse my digression which I find most necessary given the convulsed times we are now living in.

Introduction

The communist partners of Spain’s ruling coalition (UNIDAS PODEMOS) unveiled in May a new tax proposal called “Horizonte País” (a 419-page economic manifesto) which constitutes an unprecedented tax hike that aims to rake in an extra 80 billion euros; that’s billion, with a ’b’. Never in Spain’s young 45-year-old Democracy had such an ambitious tax haul been implemented. I stress this is a proposal, it still needs approval.

The hard-left wing coalition claims nonchalantly this tax hike is aimed only at the super-rich and large companies appealing to lofty ideals of solidarity amid a global pandemic. By this, they mean a reduced collective of around 6,000 individuals (what we commonly refer to as HNWI and UHNWI). Although this on paper sounds good and well, it is a common fallacy; particularly from left-wing apologists, that I’ve heard time and time again over the years in Spain. The fact of the matter is, as I’ve pointed out repeatedly and practical experience shows, the burden of a much-vaunted tax rise is brunt foremost by Spain’s middle class and SME's, not by the ‘rich’. Take as an example Wealth tax. I can almost guarantee you that over 99% of those who pay this tax in Spain are not affluent but simply hard-working class. HNWI and large corporations have the motivation, the means, and the legal and fiscal knowledge to neatly circumvent such tax increases without a blink. Make no mistake, this unprecedented tax rise will be paid foremost by Spain’s struggling middle class and SME's in the midst of the most challenging financial context over the last 100 years (understatement).

One of the many untold victims of this virus outbreak has been the middle class. The middle class, as I’ve written countless times over the years, constitutes the cornerstone of all western democracies. They are the ones that shoulder the tax burden of society and contribute towards its political stability. There can be no strong democracy without a strong middle class. One of the (many) nasty effects of Covid-19 is that it has induced a severe recession on us that is decimating Spain’s middle class. Never in history have we witnessed such rapid destruction of the middle class, not only in Spain, albeit worldwide. Millions of people have lost their jobs, and millions more are sitting at home in the hope of being paid the ERTEs called in by their employers.

As written, the hard-working middle class is what gives a country its political stability, it is democracy’s backbone; lose it, and the country becomes polarized, delivering us into political instability with social strife becoming rife. Spain’s companies are over 90% SMEs. In truth, Spain has very few large corporations compared to other developed economies, relying heavily on tourism (16% GDP), hospitality industry (6%), and construction (6%). An untamed tax hike could obliterate SMEs in the thousands, compounding job losses furthermore, paving the way for nationalisms (read separatists) and extremist political movements. An unbridled tax increase, at such an inopportune financial moment, could potentially tip Spain’s economy off the edge, wiping out the middle class, and destabilizing the whole country as a result for decades to come.

Take Argentina, for example. At the end of WWII it was one of the most stable countries in South America, believe it or not. It boasted the largest middle class in the continent. In fact, Argentina was known at the time as the ‘granero del mundo’ or breadbasket of the world as it had such a large food surplus that it exported it to other countries (and at times even generously gifted it, such as to hunger-stricken Spain during its devastating post-civil war that ravaged the country). It had the highest income per capita of all South America. A country rich in natural resources seemed destined for greatness. Alas, successive governments adopted a series of ill-advised economic policies that decimated its middle class and led the country to file for bankruptcy, time and time again. I believe, as I write these lines, they are about to default for the seventh time in the last 70 years. Nowadays no one who thinks of Argentina associates it with the term ‘stability’, quite the opposite. The deleterious consequences of poor decision-making roll forward for decades. Argentina is a prime example of what can happen to a strong country if the (economic) policies adopted by its ruling class push it over the edge.

At a time when ailing families and companies are struggling to make ends meet in Spain, (drastically) raising taxes doesn’t seem to my mind like the right approach. I don’t think it takes a Ph.D. in Economics – like the one our president has – to realize it is only common sense to lower taxes in such a dire financial context to attract foreign investments and foster job creation. Raising taxes, at such a delicate time, is counterproductive, and could further exacerbate and compound the dramatic financial situation we are in, tipping us into a full-blown II Great Depression, God forbid.

Take Germany, for example. The Union’s leading economy has adopted a cautious stance lowering VAT on food for example, from 19% to only 7% in a bid to prop up ailing businesses. This, to my mind, is the right approach to tackle this severe crisis. You need to give companies and individuals tax breaks, allow them breathing space over the next 12 months, at least, until a cure is hopefully found, and we get back to ‘normal’.

Spain, on the other hand, has instead opted for the ostrich approach; burying its head in the sand and ignoring the elephant in the room. It has forbidden, yes forbidden, companies to lay off employees! It has also forbidden companies to file for bankruptcy!! While they are at it, they should also forbid people to die from the virus. Maybe that would help to massage the soaring numbers of our high death toll.

Bottom line, if you help struggling small businesses, you will save millions of jobs in the process. It is not so hard to understand. A drastic tax increase is not the way out of the woods and may unleash an unmitigated disaster. There has to be a resolute political will to make this happen, I’m thinking along the lines of Roosevelt’s New Deal; an EU-wide concerted supranational effort to fight a common crisis together, as one. No country can hope to win this battle on their own, least of all Spain. If the Union truly aspires to be Churchill’s “United States of Europe,” it better get its act together and start acting as one. You need to put your money where your mouth is.

“In union, there is strength.” (Aesop).

As it stands now, the fate of Spain’s middle class lies squarely in the hands of our socio-communist politicians. Through their actions (or inactions), they will either contribute to decimate Spain’s middle class or help preserve it.

“70% of society is only three payrolls away from poverty.”

Wealth tax

Mark Stücklin, had already masterfully covered this point in-depth, and frankly, I do not feel I can contribute much more. So, please read his article on the new proposed tax measures: Thousands of second-homes in Spain would be hit by a new tax on “large fortunes” proposed by the coalition government’s far-left Podemos party – 14th May 2020.

Spanish Inheritance Tax – proposed changes

As I had been pointing over the last 15 years, there has been an ongoing trend to suppress inheritance tax in Spain, led by centre-right wing political groups. Several regions in Spain have in practice abolished it, being Andalusia the most recent one to join this bandwagon in 2019. I had covered these groundbreaking tax changes in several articles:

 

In practice, these changes in IHT have resulted in expats paying little to no inheritance tax, which is always a welcome respite.

However, Spain’s newly elected socio-communist coalition wants to put an end to this and rein in devolved tax competencies from all regions, centralising them. It plans to enact a new law this year on inheritance tax that would apply a uniform tax rate nationwide. They propose to quash all lenient regional tax allowances that currently make taxpayers pay almost nil in both IHT & Gift tax.

If they go ahead with these plans, the taxation of inheritances of Spanish estates will skyrocket. No longer will expats (or Spanish residents) face nil IHT & Gift bills, as has been the case in most regions over the last decade.

What to do? Take pre-emptive action now, whilst you can!

Affluent Spaniards, in view of the proposed tax changes, have been busy taking action over the last month, seeking tax advice from lawyers and tax advisors – and you should do the same.

Regarding inheritance tax, as we have pointed out in several taxation articles, you should consider moves to pre-empt this potential draconian tax increase such as gifting properties to your loved ones (spouse, children) and benefit from the ultra-low tax allowances currently in place whilst they last paying little to no tax. Because once they are gone, they are gone; likely by year’s end.

You need to instruct a lawyer to legally formalize gifting assets and money to your loved ones, as this can only be done through a deed witnessed by a notary public to benefit from the highlighted tax advantages that result in an almost zero taxation.

To close, don’t attempt to do this on your own, unrepresented by a lawyer, or you will likely end up like one of this week’s legal queries we received that must now face over 26,000 euros in tax because he failed to seek legal counsel before acting. Had he spoken to us before, he would have paid under 300 euros in tax on being gifted hundreds of thousands of euros.

Conclusion

We strongly urge expats and residents, with assets in Spain, to seek immediate tax advice from their lawyers and tax advisors and look for ways, within the law, to mitigate exposure to the proposed tax changes, namely IHT and wealth tax.

At LNA, we can assist you advising and re-arranging your business and property holdings in Spain to mitigate exposure to these taxes, regardless of your property’s location, we act nationwide. We have 17 years’ taxation experience at your service, ask us free of compromise.

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

L’art de l’imposition consiste à plumer l’oie pour obtenir le plus possible de plumes avec le moins possible de cris.” – Jean Baptiste Colbert.

French economist and Finance Minister under King Louis XIV.

Loosely translated as: “The art of taxation consists in so plucking the goose as to obtain the largest possible number of feathers with the smallest possible amount of hissing.”

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Inheritance tax related articles and blog posts

 

Article originally published in Spanish Property Insight: Spanish government to raise taxes so get prepared - 8th June 2020

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.

2.020 © Raymundo Larraín Nesbitt. All Rights Reserved.

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How to formally end long-term lease agreements in Spain (Part II) - Keys handover

Raymundo Larraín Nesbitt, June, 21. 2020

Marbella-based Larraín Nesbitt Lawyers 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 © 2019, 2020. Plagiarism will be criminally prosecuted.

 

Introduction

Today’s blog post is the second part on how to formally end-long-term lease agreements in Spain.

In the first part, we dealt with serving your landlord legal notice of contractual termination.

In this second part, we’ll deal with the formal procedure to hand back the keys.

While most people may think this is rather straightforward, the fact is that if you do it wrong, your landlord will pocket your security deposit; or even worse, you may trigger an unwanted extension to your lease agreement (more money owed)! Handing back the keys is likely the most aggravating time you will endure throughout a tenancy, as both sides stand much to lose much if done incorrectly.

The reason on why so many tenants in Spain complain they don’t recover their rental deposit is because they fail to hand over the keys properly. Below we explain step-by-step the procedure to do it right.

We had already covered in-depth how to formally terminate a lease agreement in Spain. Again, we stress that phone calls, e-mails, text messages, WhatsApp, social media messages, conversations, etc are not valid ways in law to terminate a lease agreement. It must be done formally following a set legal procedure. If you do this wrong, it will have adverse legal and financial consequences for the tenant.

Terminating a rental contract properly is key to obtain a refund on your security deposit and also to avoid triggering automatic or silent renewals which add a further 3 years to your lease agreement if you are not mindful.

When you serve notice of termination to your landlord by recorded delivery, there will be a set day and time to hand back the keys. This is normally the last day mentioned in your rental contract.

II. Keys handover procedure

 

Your landlord, or his representative (normally an estate agent), will be there to receive the house keys from you. You must ensure all the following bullet points are carried out correctly:

  • The inventory. If the property was rented with furniture.
  • The invoices. As a tenant, you are normally expected to pay for water, electricity, wifi (internet), gas etc. You must ensure all these invoices have been paid and are up to date making sure they are paid.
  • The keys. The keys, and all its copies, must be handed back to the landlord or his representative that day. You cannot withhold them.

 

Ideally, we strongly advise a legal document is drafted with several clauses covering all the above-listed points which must be dated and signed on every page by both parties in acknowledgement. This agreement works in practice like a contract. From a legal point of view, on signing it, you are returning possession of the property over to your landlord. This is what we understand in legal terms by ‘vacant possession’.

I tell you by experience, that I’ve personally done the above several times when I rented out (when I was still young!) in both Spain and in the United Kingdom and as a result have avoided a host of problems with my landlords. And of course, always got my deposit back!

If everything is returned in good working order and the landlord, or his representative, did not raise any objections (i.e. damages to the property) and sign it, there will be no excuse to return your one or two-month deposit in full (depending on the type of contract signed), as soon as possible. Should they still refuse, the matter becomes a criminal offence which, as you can imagine, has serious consequences for a Spanish landlord.

By law, landlords only have 30 days to return a tenant’s deposit after handing back the keys. If a landlord takes any longer, he is likely stalling trying to pocket your deposit and you will be forced to contact a law firm, such as us, to sue them. You will need to give the law firm a copy of the signed documents and inventory list I mention above.

Some landlords are renowned for pocketing tenant’s deposits and will only tell a tenant they refuse to refund them after they have left the country i.e. typically the case of foreign students. You should trawl in social media the comments left by previous tenants and be on the look out to avoid such abusive landlords that make a (tidy) living out of pocketing tenant’s deposits for no good reason.

What happens if a landlord refuses to accept being handed back the keys or makes up excuses fobbing his tenant off?

This, oddly enough, happens frequently. The reason on why a landlord would do this is because they want to trigger an automatic contractual extension so you owe them more money or because they are simply in disagreement with you pulling out of the contract ahead of time.

In such cases, if you are certain you are within your legal rights to terminate a lease agreement, you can deposit the keys at a notary public. This is known as consignacion, in Spanish. On doing this, it creates a legal evidence that you did in fact comply and abide with your end of the contract handing back the keys on time. The Notary will then be compelled to hand back the keys to the landlord. It will become apparent the landlord is in breach of contract which will be taken on board by the judge ruling the matter if a legal procedure is instigated to terminate the contract and recover your deposit. Basically, what you are doing is pre-constituting legal evidence that will be used against your landlord at a later date showing they acted in bad faith (needless to say, it can also be used as leverage to negotiate a more favourable outcome avoiding a court case altogether!).

As a recap

To formally terminate long-term lease agreements in Spain, you need to meet two requirements:

How can LNA assist you?

 

At LNA, we can assist you with the two points above:

  • Serving legal notice

For a flat fee, we draft and serve your landlord (or tenant) legal notice by recorded delivery in our headed paper anywhere in Spain. This formal communication can then be used as irrefutable proof (in any ensuing court proceeding) that you correctly terminated the lease agreement, giving your landlord (or tenant) due notice as the law demands. This is a necessary step to recover your security deposit (fianza legal, in Spanish). We can offer you this service: Recorded delivery service.

  • Keys handover contract

We can also draft a keys hand over contract ensuring your rights are fully protected. This will guarantee you recover in full your tenant deposit. We can offer you this service: Rentals (contract drafting).

  • Legal action

If your landlord still refuses flat out to refund your deposit, we can act on your behalf through the law courts. We can offer you this service: 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.

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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 and 2.020 © Raymundo Larraín Nesbitt. All Rights Reserved.

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