Gecko Towers
Buying a property in the Marbella region is for many the culmination of a life long ambition. Vast amounts of research and planning goes into identifying where is your preferred location, what size or configuration of property best suits your needs but often, sadly, precious little time is spent selecting the Lawyer (“Abogado”) who will best represent your best interests in the buying process.
Given the well documented horror stories being the staple fodder of UK afternoon TV shows like “House-trapped in the Sun” buyers should consider the important messages being made clear. The phrase that occur most often in such TV shows is “Mr and Mrs Smith were introduced to their Abogado, Alfonso by, his brother, Miguel, the seller!!!”
The mantra of most information services about the process of buying a property in Marbella is clear – and it has been reiterated by the UK Government’s advice to potential purchasers – please see here our earlier post of this vital advice – UK Government – New Spanish Property Advice.
Make sure that you retain the services of a truly independent voice – most often an Abogado – from the start of your purchasing process. You will certainly recognize the value of this advice if you have ever tried any other way! If you take on board no other advice, please heed this fundamental wisdom.
Having satisfied yourself as to the honesty and trustworthiness of your Abogado, what else, at a minimum, do you need to consider?
A Buyer’s Basic Checklist:
1. Ask for a translation of any complex documents that you are asked to sign. Some documents are so important that it may also be prudent to ask for and receive a full explanation of their terms, in writing. It may be an additional cost to get a “court” translation – from an official translator – but it may be worth it. If you receive what may be described as a ‘Google Translate’ version of the document in English, challenge what you have been given. It may be words on a page but often completely unintelligible.
2. Ask whether any of the terms of the Private Purchase Contract (“PPC”) – the more usual form of property transaction that follows a Reservation Agreement and sets out dates for payments to take place and proposes a completion date – can be negotiated? This is particularly important if you are unsure of any terms, their meaning or effect.
3. Are all the particular “deals” offered by the developer specified in detail in PPC? This is primarily for newly built property of which there is currently an increasing supply. This may also apply to an “off-plan” property purchase where you select the property you’d like to buy but the development has not yet been completed. Such “deals” may include additional equipment over and above the usual “Specification”, particularly wall, bathroom or floor finishes, a furniture pack, kitchen finish, sports club membership or the terms of any rental guarantee. Whatever the hook that was used to engage your interest, if it is important to you, it needs to be set out clearly in writing and in the binding PPC.
4. Ask for clear proof that any cash deposit that you have may have paid to the developer or their agent – usually following the signing of a Reservation Agreement – is logged and signed for by either the seller or their lawyer upon their behalf.
If the property is ‘off plan’ you need to be clear on the precise terms of any Bank Guarantee in respect of your already lodged and to be paid over funds. It is usual that your cash will be protected by Statute in Spain but you need to make sure that someone you trust holds the guarantee documents to your benefit.
Additionally, it is vital that you understand when the Bank Guarantee lapses and, for instance, what happens if the property never gets built. The last thing you will want to confront is having paid over a schedule of payments set out in the PPC for a large percentage of the final and agreed purchase price only to find that your funds are locked in a stalled and unfinished development.
5. Check to see whether any cash deposit that you have paid is refundable. If so, in what events or circumstances will it be repaid? A faulty survey, an uncleared balance of a mortgage or community fee or local authority debt, or other unreleased legal charge over the property or a defective planning survey, for example.
6. Take photocopies of all important documents and keep them handy at home – with your Abogado keeping originals on your file.
7. Make sure for any recently completed property, that you see and hold copies of documents including the Finishing of Works License (Fin d‘Ora) and the License of First Occupation. Without these there will be doubts as to the legality of your chosen property. Further, the lack of certified copies of these documents will usually prevent you from being able to seek to be connected to utilities including Water, Electricity and, where available, Gas.
For an older property that has already received some renovation make sure that the redevelopment works, depending on their extensiveness, have been conducted under the auspices of the correct local authority License. These are often defined as “Mayor” (Extensive Works) or “Menor” (Small Works).
8. Any non-Spanish purchaser of a property in Marbella will require an NIE (Numero de Identificacion de Extranjero) number before your property purchase can be completed. Please ensure that you leave sufficient time to arrange with your Abogados for this to be collated for each purchaser and co-purchaser of the property. This is aside from any Residency applications that you may need if you hail from a non-EU country including the UK, US or Canada. In such circumstances, simply buying a property is no automatic guarantee of an ability to have an unlimited stay in Spain.
9. Power of Attorney (POA). If there is a chance that you will be unable to make appointments in Spain, which may be at short notice but require your attendance it may be sensible to ask your trusted Abogado if they would be happy to be granted a Power of Attorney to most effectively represent you in your purchase process. This will be drawn specifically for your needs in relation to your purchase.
For opening of bank accounts and for the initial application for the all important NIE, these may initially require your attendance in person but next steps can often be processed by your Abogado under the Power of Attorney – provided that it’s correctly executed and Apostilled (legalized) in your home country.
Consider this carefully, as the effect of the Power of Attorney is to create an avatar of youself in the shape of your Abogado. It’s quite a thing. As a result you can either have General POA to cover anything and everything you need to attend to or a Special POA dealing solely with the signing of the purchasing documents (usually called a “Compraventa”) for your property, for example.
10. Finally, let’s talk money. It may be that you need mortgage funding to complete your purchase. For most purchases a minimum of 25% to 30% of the agreed purchase price will needed to be introduced from your own funds. Money can be a bit of a taboo subject but its clear that in order to complete your purchase of a property in Marbella you will need to tackle this one head-on.
The reality is, of course, what you can afford and what it will costs to buy in Marbella. It is none of my business to pry into your ability to fund you property purchase, but equally no one likes to waste the time of others. So my message is clear, it makes sense to sort out your finances in parallel with your property search.
The agree purchase price plus any proposed renovation is key but you will also need to have an eye on the costs associated with buying, and I don’t mean removal expenses or new furnishings. I mean the actual out of pocket costs that you will need to cover to complete your purchase. Typically these include Transfer Tax, VAT (may be appropriate) and the costs of registering your new title to the property.
Please see one of my earlier posts that addresses the Costs of Buying a Property in Marbella What are the costs of buying a property in the Marbella region? and the Andalusian Government’s property stimulus package that I believe expires on 31st December 2021 – And Now For Some Really Good News!
If you are in the fortunate position to make your purchase with available cash there are several strategies that your Abogado may suggest in order to mitigate the effects of certain taxes that you may be obliged to pay in order to complete your purchase. This will depend on your precise circumstances but could be highly beneficial.
As you will probably know from your home market that since 9.11 the world over has become much more keenly aware of Money Laundering. The European dimension is one of the most stringent regimes determined to tackle this matter and your Abogado, like your professional representatives in your home market, owe a duty of care to their national regulatory bodies to ensure that they are vigilant in progressing checks on potential money laundering.
Why am I banging on about this? Well, my aim is to prepare you for the kind of intimate questions that you may not have anticipated and that your Abogado is compelled to ask you in their own “Know Your Client“ checking and in their obligations they owe to the Banco de Espana (The Bank of Spain) and the Spanish State, under the provisions of various European Directives.
As a result please don’t be offended by their questioning its all very routine. Their failure to ask these seen as probing questions potentially exposes your legal advisor to criminal sanctions. For this reason they will be diligent to ask and receive complete answers. I repeat its all very routine.
Your property purchase and associated costs in Marbella will usually be priced in Euros. If your funds are in Sterling, Swiss Francs or Dollars, for instance, you will need to arrange to “buy forward” with an exchange organisation or your bank – please keep an eye on the exchange rates – so that your funds are in Spain or otherwise available for completion.
There is quite a business to be had from providing competitive exchange rates so please shop around. Above all, please make sure that the business who undertakes your “bulk” conversion is appropriately bonded and properly regulated under a secure jurisdiction to provide the service. This should bring you increased fraud protection.
11. At the point of purchase of your property in Marbella it is prudent to consider the way in which you make your purchase. This requires detailed thought to ensure that your long-term interests are properly protected while any opportunities to plan for the future are also embraced.
It is never going to be a particularly happy topic to address but you will need to consider what should be the treatment of your property in Marbella after you are no longer around. Preparing a Spanish Will is a vital part of that planning.
Without going into substantial detail regarding the process of inheritance, I am advised, it is materially different in Spain from, for example, the UK. At the outset of your property purchase there is a usually an opportunity to get your estate planning in order. Your family will be grateful that you had the foresight to address this sensitive issue.
And now…. just enjoy your new home!
Should you be interested in discussing the legal process involved in buying a property in the Marbella region, we would be delighted to assist you. Our team of bi-lingual, highly experienced and wholly independent Abogados are ready to help you.
Please call, Mark FR Wilkins, during usual business hours on +34 600 343 917 or, if you prefer, please e-mail me at mark@roslegal.es
Please note that our posts are for general interest. They are no substitute for proper legal 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 or financial advice.
© Mark FR Wilkins 2021 All rights reserved.