Gecko Towers
In making a property purchase in the Marbella region my strong advice is to ensure that you seek the guidance and wisdom from a locally based specialist in Spanish law. Your chosen Abogado (Spanish lawyer) should be a member of the local Colegio de Abogados (Spanish Bar Association). It is important to check that the law firm you have instructed is adequately covered by a professional indemnity policy. Abogados have insurance provided by their local Bar Association but more conscientious Abogados usually obtain a more comprehensive Professional Indemnity policies. This should give you added comfort.
If you would like your Abogado to conduct many of the activities that you may be asked to attend to when purchasing a Marbella property, a Power of Attorney (Poder) can be entered into. This will effectively mean that your Abogado will represent you in Spain, in your stead.
Powers of Attorney may be specific in nature allowing your Abogado to attend to very narrowly defined activities, including the signing of the Private Purchase Contract (PPC) and the Deeds, the raising of a Mortgage, opening of a bank account or similar. Conversely, they may also be more general allowing your Abogado to attend to a broad range of matters in place of you.
One important element that you may ask your Abogado to include in the Power of Attorney is handling the application for your NIE (Número de identidad de extranjero) – which is essential for each party comprising the buyer, to obtain. A purchase cannot be completed without an NIE. It implies no Spanish tax residency or similar and should not cause apprehension.
The Power of Attorney, the granting of which takes place early in this buying process, will also require you to visit a Notary – see below.
Having entered into the Reservation Contract – to take your chosen resale property off the market – the buying process starts and leads, initially, within a window of a few weeks, to the signing of a Private Purchase Contract (PPC). At this point, with a couple of exceptions the buyer and seller are bound to conclude the sale of the property and the PPC usually sets a date for the completion of the sale.
As a result, if you are familiar with the English and Welsh system of property purchase, the PPC stage is effectively the “exchange of contracts” which binds the parties and sets a date for the completion of the purchase.
Starting prior to signing the PPC and in the weeks up to formal legal completion of your property purchase the role of your Abogado is vital. Primarily, there is a necessity to review the relevant planning arrangements to make sure the property and its boundaries comply in full with local planning details and ordinances and to study any License of First Occupation (for newer properties).
All Spanish properties must be registered in the name of the owner(s) at the local Registro de la Propiedad (Property or Land Registry). The only party(ies) able to legally transfer full ownership of a property to the buyer are those who are registered on the Registry as the legal owners. Therefore, an investigation at the Land Registry by your Abogado will show who the legal owners are, and it is their names that must appear in the PPC and Public Purchase Deed (see below). The only exception to this is where the sellers are properly appointed agents for the legal owners, such as a sale following a death.
Your Abogado will obtain an updated extract from the Property Registry showing the current owners on a Nota Simple (Extract of Title). This should also disclose some of the charges, mortgages and similar secured against the property.
It is hugely important in the process of undertaking this Due Diligence that your Abogado, in addition to the Nota Simple, obtains from the seller’s Lawyer a clear understanding of what debts, if any, are secured on or affect the property. To avoid, you, the new owner, from becoming liable for your predecessor’s debt, full disclosure by the seller is required. It is not at all unusual that at formal completion that cheques are exchanged that are written out to the relevant parties for local community rates (IBI), refuse collection (Basura), unpaid community fees or other property taxes, and prepared, against a buyer and seller agreed schedule. The total of such payments will be deducted from the final purchase price and paid to the relevant parties.
In their Due Diligence, your Abogado should also make certain that following the legal completion of your purchase that utilities, particularly electricity, water and WiFi/fibre optics, are connected to the property and that there is satisfactory provision for disposal of sewage. Further your Abogado, having obtained copies of previous Minutes of Community of Owner’s meeting and of previous year’s utility and community fee costs, should be able to advise you on likely annual running costs of your ownership.
In Spain, the role of a Notary Public is that of a Public Official and is an important part of the Spanish state, key to the legal system. Their vital role is to ensure not only that the contract they are being asked to formally witness is entirely legal but also that the parties to it clearly understand their mutual obligations under it.
Importantly, without the benefit of the Notary witnessing the document between a seller and a buyer, the Deed of Sale (Escritura Publica de Compraventa – a Public Deed) it would be impossible for your Abogado to register your interest in a purchased property on the Land Registry.
Following a successful mortgage application, if any, a date will be agreed when the Completion will occur at the office of the Notary. However, the Notary will call you (or your Abogado acting under a Power of Attorney) to meet at least ten (10) working days (“a cooling off period”) clear of Completion to ensure that you fully understand the terms of the Mortgage Deed you are entering into.
At the formal Completion, the Notary will sign as witness to the Mortgage Deed, making it a Public Deed that can then be added to the Land Registry as “notice to the World” that there is a Mortgage bearing your name that is registered as a legal charge against your property.
The Notary’s ancillary role, which has the interests of the Spanish Tax Office (“Hacienda”) at heart, is to ensure that the correct taxes are being levied as a result of the contract being entered into and that they are being paid by the correct party. We will address the issues of buying costs and associated taxes in a later part of this Guide.
You will be notified as to when you’ll will needed at the Notary’s office for the formal Completion. Meetings tend to run over as pieces of paper that should be in place are often elsewhere on another desk and need to be located. Your Abogado will spend time ensuring that the administrative staff of the Notary have all they need and there may be a little delay before the signing event gets underway.
Once underway the Notary will read aloud in Spanish the various pages that form the documents you have gathered to sign. He/she will establish that all required are present and that your original Passports have been seen and photocopied. It is usually your Abogado’s job to act as translator, so you understand the Spanish text being signed.
Having completed your property purchase, your Abogado then organizes for the property to be registered in your name as the new owner. At this stage a number of property transfer taxes will have to be paid, together with the Land Registry fees, the Notary’s and Abogado’s fees. The Spanish government fixes the Notary’s fees. A copy of the Escritura will be returned to you, often via your Abogado, by the Land Registry within a couple of months bearing the official stamps that confirm the property is yours and that your ownership is protected by law.
Should you be interested in discussing the process involved in buying a property in the Marbella region, we would be delighted to assist you. Please contact me to discuss your precise requirements.
Please note that our posts are for general interest. There is no substitute for proper advice tailored to your specific circumstances as provided by a qualified Abogado who is experienced in the application of the Spanish Law.
Nothing contained in this article should be seen or taken as the writer or the publisher providing legal, tax or financial advice. All details have been reasonably fact-checked and all efforts have been taken to ensure that facts are accurate as at the date of publication.
My details: Mark FR Wilkins, during usual business hours on +34 600 343 917 or e-mail me at mark@therightsgroup.com
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