5 tips on buying property in Spain

Raymundo LarraĆ­n Nesbitt, April, 21. 2021

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By Raymundo Larraín Nesbitt
Lawyer - Abogado
21st of April 2021

As the sale high season is upon us, I thought I’d write a gentle reminder for property buyers on the five basic points they should be ticking off on their checklist.

  1. Hire a lawyer

More and more I am witnessing how new buyers fray into the market forgetting all the valuable lessons from the last property boom. You will find in Spain many people will tell you that buyers are under no legal obligation to hire a lawyer. While this may indeed be true, the fact is that lawyers add a valuable input that avoids buyers making costly mistakes such as wiring reservation deposits to rogue agents who take off and disappear overnight. I have witnessed two such cases only this month. I gently remind all buyers that estate agents in Spain - unlike lawyers - are unregulated, have no insurance policies hired and are not subject to any disciplinary body. Moreover, anyone can be an agent in Spain, you don’t need to pass any exam or hold any professional qualifications. I’ve just received an enquiry from someone who has been conned out of her deposit by a rogue agent who’s now fled. As a recent example, we reported a recent high-profile case in Mallorca that embezzled several million euros from clients: Several hundred (foreign) off-plan buyers conned in Mallorca. Lawyers have escrow accounts in place and (expensive) insurance policies for malpractice or negligence, besides being registered and subject to the discipline of the Bar Association of which they are members. We strongly advise you hire an experienced law firm such as ours, with over two decades. Bottom line, if you are a foreigner and plan to buy property in Spain without a lawyer, you are in for a world of pain.

  1. Is the property duly registered?

At times properties are put on sale which are not legally registered. This may cause serious issues down the line leading to a loss of money. I.e. Rural property may have registration issues on a house that is illegal, off-plan property may lack the mandatory building or occupation licences, etc.

  1. Is the property registered under the seller’s name?

Another common problem is when you are buying a property from someone who is not the registered owner. This happens more frequently than what you’d think. The reason is simple, people inherit properties all the time but they neglect to follow an inheritance procedure (probate) to avoid paying taxes, and put them straight for sale. Needless to say, you cannot buy a property from someone who is dead. Although this may seem rather obvious, I can tell you from experience that more than once someone has emailed me ‘signed’ reservation contracts (read forged) by owners who passed away long ago. Beneficiaries must first go through probate before being able to sell a property on.

  1. Are there charges, encumbrances, or debts against the property?

Unbeknownst to a buyer, a seller may owe money to multiple debtors. Only this month we’ve had a case where our star seller owed: the local tax office, IBI, basura (refuse charge), community of owners, water, electricity and God knows who else. All these debts are taken over by the new owner, that is the buyer. By law whoever owns the property, takes on any and all past debts against it. A lawyer can ensure you are buying a property free of charges and debts. Peace of mind is priceless.

  1. La complementaria or bargain-hunter tax

Guidy buyers will be eager to snag a bargain under the sun. However, if things aren’t done right taxwise, you will receive a nasty letter from the tax office some 6 to 12 months after completion demanding extra property transfer tax because they suspect you underdeclared the sale price. A lawyer can pre-empt this problem avoiding a massive tax bill when you least suspect it. If you want to know more on this, we wrote an article explaining it.


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