Probably the most important investment you will make; purchasing a property in Spain.

            Have you been considering purchasing a property or business in Spain?

Have you been concerned due to the bad publicity generated?

Do you think that it is difficult to find honest and reliable professionals?

Worried that you may be investing in an illegal building?

Are you waiting for the market prices to drop even further?

Do some of the prices sound too good to be true?

With all the bad publicity circulating in the media and by word of mouth it is not surprising that people are wary. Much of what you have read or heard about is likely to be true. However this does not mean that you must lose the opportunity to avail yourself of the numerous Spanish properties that are being offered at very attractive prices.

The best approach in this case is to take sound advice from the experts to ensure a safe investment. Take note of the important points made below and ignore the sales pitch.

I write a monthly column for an English language newspaper on the Costa del Sol. My articles are all in relation to the expatriate community and the many issues or problems. This includes purchasing property and relocating to Spain.

I have included snippets of my articles, which will assist you to take the correct and informed measures, even before you leave your armchair.

Off plan has become synonymous with fraud. This is not the case. I would suggest that purchasers look at the new completed properties available. Here again you need honest advice and information.

Once you have an understanding of the laws and regulations (do not expect the system to mirror that of your home country) Investing in Spain becomes an attractive option.

It is a buyer’s market but are you purchasing a bargain?

With properties at an all time low many purchasers have decided to take advantage of the numerous bargains available at highly competitive prices. Many of these are now being sold by the banks that are willing to provide mortgages, often at a hundred percent of the asking price.

Whatever the source of your purchase, be extremely cautious, and calculate the true purchase costs.  When acquiring a property in Spain, one must declare in front of the notary, the correct price paid; you can proceed to pay your taxes and costs due. You may at a later date be presented with a further tax bill. The reason for this is that prices are at an all time low. Most of the town halls assessed the estimated value of properties at a time when the market was experiencing a boom. Take these two facts into consideration and you will understand that the price that you will pay for your property will be much lower than the value placed on it. Depending on the difference, the added tax could amount to thousands of euros.

Signing a power of attorney in Spain

It is quite startling how many non Spanish people who have decided to buy a home in Spain have taken extraordinary risks. To place your total trust in any service provider, without carrying out thorough checks, is foolhardy. Are you aware that you do not need a lawyer to act for you in Spain? You can give full power of attorney to anyone, making them your legal representative. But make sure you have full knowledge of the person who will be acting for you.

Possible defects in legal contracts

There can be serious defects in deposit or purchase contracts. Avoid the dangers of this occurring and insist on a second copy, in your language.  These contracts by law must be in Spanish this does not mean that you cannot insist on a personal copy. The deposit or reserve contract is a legal and binding document. The details will later be used at the notary where you will sign the title deeds. The notary will read through this before you sign. This is usually a hasty process. There is no going back once you have signed.

Making a Spanish will

There are many websites, giving information on drawing up a Spanish will. Here are two very important topics that are not usually discussed.  The first is that when you make Spanish will and any additional testaments in other countries where you have assets, keep the descriptions of the assets in these documents totally separate. That is to say, do not include your assets in Spain in a British will, or vice versa.  This would complicate the matter when the will is being executed. 

The foreign resident has the advantage over his Spanish counterpart having the legal right to draw up a will in accordance with the law of his country or origin (A Spanish citizen is guided by the law of this land and does not have the choices the expatriate has) This is what can occur if the will is contested. Where there are children from a previous marriage for example, or anyone who feels that they have been disinherited, make a counterclaim. It is highly likely that a court will supersede your wishes. The court could decide to implement Spanish law, and arrive at the conclusion that the assets should be divided accordingly.

INHERITIANCE TAX ON PROPERTY AND ASSETS

Know the facts and avoid expensive payments in the future.

There is the possibility that the regional government will abolish this tax for residents and resident heirs. Until such a time all property owners should make sure that they have covered every eventuality to lessen the burden of this tax.

Some expatriates are under the illusion that because they hold resident permits, they will automatically qualify for the attractive reductions available. This is not the case. There are some further important factors to consider. Are you aware of these requirements? Anyone in possession of an estate or other assets should make provision now. You must meet the full criteria to be eligible for these reductions. Non compliance will allow the authorities to consider that you hold non resident status. The outcome of this would mean that your heirs have to pay higher taxes.

If, at a later date you are advised to add your non resident inheritors to your title deeds to avoid part of this future tax, study the implications. The expense of this exercise will probably outweigh the total costs of the duties payable and you will incur hefty costs, paying taxes, notary and registry fees. Considering purchasing a property? Then yes, it is worth including your heirs as the purchase cost will not increase.

Due diligence

It is distressing to discover that the conveyancing of your property has not been carried out with due diligence. Property searches in Spain are limited. They are not carried out as the same way as in the UK for exampl:. Purchasers do not usually carry out a structural survey and neither would the bank, who may be providing you with a mortgage, ask for such a survey. The onus is on you to see that the property is in a good condition and not likely to suffer from structural problems. You need to be aware of signs of bad building defects.

The notary and your legal representative are responsible for making sure that there are no charges on your property. This does not include other probabilities such as added taxes which you may receive at a future date; or damage to the property. Remember numerous properties have title deeds, yet may not have obtained the important first occupancy licence. Land boundaries are taken from the previous title deeds and are not necessarily correct.

‘Look before you leap’