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The pitfalls of buying property in Spain

During your research into buying a property in Spain you will have come across many stories of purchases in Spain gone wrong.  The key to making a successful purchase of property in Spain is to take early advice from a good quality independent Spanish lawyer.  

If you are unfamiliar with the process of buying a property in Spain you should read our pages on the process of buying a property in Spain.  If you are unclear as to the costs of buying a property in Spain please read our page on the costs of buying a property in Spain.  

That said, it is easy to encounter difficulty when dealing with a different jurisdiction and an unfamiliar language.  Please find below some of the common pitfalls of buying property in Spain.  
 

The pitfalls of buying property in Spain - the Deposit

When you make an offer on a property in Spain you may find that you are placed under a great deal of pressure to make a “reserve” payment.  The estate agent will explain that this is a payment to take the property off the market.  
 

At this point you know very little about the property.  In fact you do not even know that the person purporting to sell the property is actually the owner of the property.  Having said that many people are pushed into making payment of a deposit at this stage because they have fallen in love with the property and do not want to lose it.  

So, what is the problem with paying a deposit when you know you want to buy the property?  The problems are twofold, firstly you do not know whether there is a serious problem with the property and secondly you do not know whether the deposit is refundable.

Please take a look at our page on the process of buying a property in Spain. to understand how to avoid the pitfalls of buying property in Spain.  

Essentially, your independent Spanish lawyer should have the opportunity to advise you in respect of the property and the agreement before any documentation is signed and before any money changes hands.  If at that stage something is identified that rings alarm bells you can make an informed decision as to whether to proceed safe in the knowledge that it will not cost you to walk away from the property.  

The pitfalls of buying property in Spain - purchase tax

As you will have read in our page on the costs of buying property in Spain purchase tax is by far the biggest expense you will encounter when buying a property in Spain.  
 

What you may not know is that each property has two values in Spain - the market price and the rateable value.  In the event that the rateable value is higher than the market price you ought to pay purchase tax as a percentage of the rateable value, not the purchase price.  

The danger if you underpay purchase tax is that the Spanish tax agency can claim from you the amount it considers you have underpaid, with penalties.  

To avoid this pitfall your independent Spanish lawyer should advise you of the rateable value of the property at an early stage.  

The pitfalls of buying property in Spain - Off-plan Properties

So, you’ve read our guide to the process of buying an off-plan property in Spain and you’re viewing a show home with the intention of proceeding.  Everything seems straightforward and so you’ve decided not to use an independent Spanish lawyer.  You’ve paid over half of the purchase price and suddenly the developer stops answering your calls.  What now?
 
The answer to that question depends very much on the agreement that you signed and the bank guarantees offered by the developer for the payments you’ve made to date.  

If there are no guarantees you may find it extremely difficult to retrieve your funds, especially if the developer has gone into liquidation.  

Good quality independent Spanish legal advice from the very beginning is the way to avoid this pitfall of buying property in Spain.  For more information, please read our article on reclaiming deposits for unbuilt off-plan properties in Spain. 

The pitfalls of buying property in Spain - the property is not registered or was built illegally

You’ve paid a deposit and instructed your independent Spanish lawyers to make enquiries in respect of the property that you want to buy and they have advised you that the property is not registered, or that the house is registered but an extension that was built later is not registered.  
 

Alternatively your independent Spanish lawyer may identify that the property was built without planning permission, or that it is not permitted to be used as a dwelling.  What now?  

Your independent Spanish lawyer ought to advise you as to how this can be rectified and to ensure that it is done entirely at the cost of the seller.  Alternatively, you may not wish to wait for the work to be done to rectify this situation, or it may not be possible to regularise the matter.  

If the latter is the case and you have paid a deposit then you may find it very difficult to obtain a refund of the deposit.  That is why it is recommended that you instruct your independent Spanish lawyer before any funds change hands.  
 

For more information on planning and development of property in Spain, please take a look at our planning pages.

How to avoid the pitfalls of buying property in Spain

As you will have learned, often the key to avoiding the pitfalls of buying property in Spain is to take early advice from a good quality independent Spanish lawyer.  At E&G Solicitors in Spain we have been advising clients in relation to property purchases throughout Spain for over 12 years.  We are completely independent and have offices in Spain and in the UK.  

Taking the next steps towards buying a property in Spain

If you are considering buying a property in Spain contact us for a free initial consultation.  You can contact us by telephone on 020 3478 1421, by email at info@solicitorsinspain.com or by completing our contact form

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We appointed E&G Solicitors in Spain as our Spanish fiscal representatives to administer all Spanish estates and assets left to us in Wills. We find their approach pragmatic and helpful. They deal with matters promptly and with professionalism and have enabled us to overcome complexities in the Spanish legal system that we struggled with prior to their involvement. We value our association with Eshkeri & Grau and I have no hesitation in recommending them.

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