It’s no secret that Spain is a very popular destination for northern Europeans and in fact for people from all over the world in search of the sun, the Mediterranean Sea, Spanish cuisine, open spaces and the friendly welcoming nature of the Spanish people. People visit the country, decide to work and live in the country, or to retire here, and sometimes people holiday in Spain on numerous occasions each year, so that buying a home becomes the most sensible option to pursue. It’s also become more common for people to buy to let in Spain, particularly since the crash in 2008 when property prices plummeted. People still holiday in Spain and as the banks’ lending criteria became stricter so a lot of young people were forced into renting, rather than buying their own home.
I’m Jonathan Eshkeri, an English solicitor and Spanish abogado. Since 2004 I’ve been advising and assisting people who want to buy Spanish property. I have offices in London and in Tarragona, just south of Barcelona, from where I’m speaking now. In this video I’ll be talking you through the property purchase process, highlighting the potential pitfalls and guiding you as to how to avoid them in the most effective way.
It’s important to distinguish between buying property that’s ready to live in, whether that be resale property or property that’s being sold for the first time by the developer, and buying property off plan. In this video I’ll be focusing on property that’s ready to live in as soon as the ink is dry on the sale and purchase documentation.
In my experience there are three broad types of property that people are interested in purchasing in Spain. There’s the single-family home, usually with a garden and often with a swimming pool, an apartment or a house, either in a block or on a development, that often shares a garden and a pool with other properties, and there’s the house in a rural setting, which may be anything from a converted barn to a large ranch house, usually purchased with one or more hectares of land.
Buying property in Spain - the role of the estate agent
The first step of your property search will involve contact with local estate agents, as they’re the people whose job it is to market properties for sale. That may seem obvious, but I think that it’s important to emphasise the role of the estate agent. Once you’ve chosen the property that you would like to purchase and perhaps once you’ve negotiated a price at which you’d like to purchase it, but before making any deposit payment at all, the next step is to seek independent expert legal advice of a lawyer qualified in Spain and with clear experience of Spanish property related work. If you buy a property in England and Wales, as well as in numerous other jurisdictions around the world, you’d be very surprised if the estate agent asked you for any money at all. You certainly wouldn’t pay money to the estate agent to secure the property. The matter would be put into the hands of a solicitor who’d make enquiries, report to you, and only once you were happy to proceed with the purchase would the solicitor make a deposit payment on your behalf. The process should be the same in Spain, although estate agents will try to convince you to the contrary. They’ll often tell you that you don’t need to take independent advice when purchasing a property in a country the language and culture of which are not entirely familiar to you. They will tell you that you ought to trust the estate agent and the seller and rely on the Notary to ensure that everything proceeds according to law. If you’re a Spanish national then it’s true, you’d be unlikely to engage a lawyer to advise you in relation to a property purchase. That’s because Spanish lawyers are trained as litigators, not as solicitors handling the purchase and sale of property. Spanish nationals take advice from their accountant and from their specialist tax adviser. They speak directly with the town hall and with the community of property owners, as well as with any other government department where enquiries need to be made. They can ask searching questions of the Notary before whom the completion documentation will be signed. Spanish nationals are more au fait with Spanish business culture than a foreign national would be. If you’re a foreign national, even if you’ve purchased property in Spain once or twice before, you’ll not have the knowledge or the experience to be able to foresee the possible problems and so you’ll not have the opportunity to avoid them. Having said that, there are many people who knowing everything I have just said will make a deposit payment to an estate agent before they’ve received the advice of an independent specialist lawyer. That is not the end of the world, but it may make enquiries more complex, as those involved in selling the property feel that they have already clinched a sale. If you’ve paid a deposit and you don’t complete the purchase then unless there’s something fundamentally wrong with the property, you’re almost bound to lose your deposit. You might want to pull out of the purchase if your adviser identifies an niggling issue that puts you off of the property, but you will think a number of times before you lose €3,000, €4,000, or €5,000. So, once you have found the property that you want to purchase and have agreed a price, there’ll be various issues for your independent lawyer to check. These points will vary according to the type of property that you’re looking at. First of all let’s have a look at a property in a residential development.
Buying a Property in Spain on a Development
And here we are, on the terrace of a two-bedroom apartment on a golf course in the north east of Spain in the autonomous community of Catalonia. This development was built during the 1990s in a number of phases. There are all sorts of
different types of property here, from apartments like this one, to terraced houses like these, to single family homes like this one. In relation to any given development in Spain you’ll find a community of property owners, which is akin to a residents association, although it is established by law when the various units in the development are assigned individual title numbers at the property registry. Each owner is a member of the community of property owners, one owner will be voted president, another secretary, and another treasurer. There may also be further members of the community committee, known in Spanish as “vocales”, with specific responsibilities within the community, according to the needs of each community. Every year there’s at least one general meeting of the community, the AGM, and there may be extraordinary meetings if necessary. At these meetings all the important issues regarding the community are discussed, of which the most important from the perspective of a prospective purchaser are the indebtedness of the community members in terms of service charge, the total estimated service charge for the coming year, and the likely future expenditure in relation to major works. This is important because prior to deciding whether to purchase the property you should check how much service charge you’ll be paying, whether a relatively high number of owners are failing to pay their service charge, and whether the community are about to install a new pool, or undertake other major works that’ll cost you a lot of money. Your independent adviser must investigate these points and he can do so by requesting the minutes of the last two AGMs of the community.
On this development there is more than one community. There’s an overarching community that is responsible for the entire development, and there are sub-communities, each of which is responsible for different groups of properties, making the entire development far easier to manage.
One of the questions I am often asked is whether a survey is necessary. It stands to reason that if you’re buying bricks and mortar you should have the structure checked out by someone who knows what he or she is looking at. In the UK you would engage a surveyor to carry out a survey and produce a report. In Spain it’s possible to engage UK qualified surveyors, or Spanish qualified architects and others qualified in Spain in the field of construction, to prepare a report on a property, highlighting any possible structural defects and other issues relating to the physical state and location of the property. It must be said that Spanish nationals would be very unlikely to engage a surveyor or similarly qualified professional unless there were obvious signs of structural problems. It’s important to bear in mind that any survey will be couched in language limiting the surveyor’s liability. I am reluctant to say that a survey may not be necessary in certain circumstances, but the cost is not great, between €600 and €1,000, and a survey report can provide a great deal of peace of mind, so the decision must be yours.
Another vital issue to be considered by your independent lawyer is the question of who owns the property and what debts and other encumbrances are registered against the property. An encumbrance could be a right of way, for example. There may be a restriction registered by someone who’s litigating with the registered owner, so that an interest in the property is subject to the outcome of legal proceedings. Of course, there may be a loan secured against the property by a mortgage. If so, you will want to be certain that either before or simultaneous with completion of the purchase the loan will be repaid and the mortgage redeemed. It may seem that you own a gated garden adjacent to the property, but the property register may reveal that you don’t own it, but have only exclusive access to it. You’ll want to know about that. The most important issue to determine is whether the property is registered in name of the person who’s purporting to sell it. Very seldom do we find people trying to sell a property to which they have no right at all, but it’s far more common to encounter situations in which the seller has not yet registered the property in his or her name. A typical scenario is property registered in the name of a deceased person. In Spain the administration of a death estate can be more long winded than in the UK. Before you can buy the property the interest in the property that belonged to the deceased person must be registered in the name of the beneficiary or beneficiaries of the estate. Another possibility is that the seller purchased the property by way of a private contract, but didn’t ever sign a public sale and purchase document, which is vital in Spain in order to be able to register the property in the name of the purchaser. All these factors are reasons why it is not sensible to part with any money at all until your independent legal adviser has made full enquiries and can report to you, so that whatever you decide to do you’re aware of the risks associated with that step. With this type of property the question of planning permission is not usually problematic. It would be very difficult to complete an entire development without having planning permission from the local authority.
However, those considering the purchase of a single family home that sits on its own plot and does not form part of a development should take great care to ensure that full planning permission was obtained prior to building the property, that the property was built in accordance with that planning permission, and that the local authority has signed off on the build since it was completed. Whoever owns a house built on an independent plot is responsible only for what sits on the plot. So there’s no need to check whether anyone else owes money to a community and there’ll be no question of service charges. You may want to check what the annual rates bill is likely to be, but in all other respects the checks to be made and the questions to ask are very similar to those relating to a property on a development like this one.
Buying a rural property in Spain
An entirely different proposition is the house in a rural setting. We need to be realistic about rural Spanish property. In the UK we’re very used to finding houses in the countryside on their own piece of land, half a mile or more from the nearest neighbouring property. They may be refurbished farmhouses or barns and often have very high values. It is relatively common for people in the UK to live in such properties and they have done so for generations, without infringing any rules at all. In Spain people do not tend to live in the countryside. They live in villages and towns and the countryside is reserved for agriculture. On a plot of agricultural land you will find agricultural buildings made of stone that have been there for generations. These were used and sometimes still are to store the harvested produce until it can be taken to market, to house livestock in the bad weather, and to store tools for working the land. Spanish people do not tend to live in these properties. They may have such a property that they will use on a Sunday during the warmer months to spend the day with family over a meal prepared in the stone building. There may be a lavatory connected to a cesspit in the building, but not a fully fitted bathroom and certainly not a fully fitted kitchen. Spanish people would not live in an agricultural building, or “almacén agrícola” in Spanish. Now, people arrive from northern European countries, particularly the UK, and want to create their countryside property. Perhaps they find a countryside property that someone else has already created. The price is often extremely attractive and seems too good to be true. It’s highly unlikely that permission was sought for any property of this type, let alone granted.
Almost always, the major consideration with a rural Spanish property is whether enough time has passed since the property was built for the current owner and the person responsible for building the structure to be immune from any civil action that may be brought against him or her for the illegal build, action that can culminate in the demolition of the property. In different parts of Spain that time period varies. It can be six years, or 15 years, or only four years in some places. It’s essential to bear in mind that even if the existing structure will not be problematic, it’ll often be impossible to obtain any further planning permission to make any other changes to the property, including constructing any outbuildings, or a swimming pool for example. If there’s already a pool at the property then the same considerations apply as to a house. This all goes to what I said at the beginning of this video. Don’t pay any money to anyone at all until your independent legal adviser has made enquiries and reported to you.
Buying property in Spain - What happens after your lawyer has made enquiries?
Once all enquiries have been made and you’ve decided to proceed with the purchase, it’s usual for you to enter into a private agreement with the seller. The agreement ought to be drafted either by your independent lawyer or by the seller, the seller’s agent, or the seller’s lawyer. A deposit is paid when the agreement is signed and a final date for completion is established. Your independent lawyer can make the deposit payment on your behalf and he or she will make it either directly to the seller, or to the seller’s lawyer, or to an estate agent who is able to prove that he has the seller’s authority to market the property for sale. It’s then for your legal adviser to prepare for completion. The completion documentation will be signed in a room just like this one, as this is in fact the office of a Notary in the city of Tarragona. The people in the room will be the buyer, or someone representing the buyer, and the seller or someone representing the seller, the Notary, and most probably one or more estate agents, who will be keen to get paid for their work. Even if the buyer and seller are represented at the meeting they may come along as well, so you can easily have seven or eight people around the table.
The documentation is checked and signed, payment is made to the seller by way of banker’s draft, and the keys are handed to the purchaser or the purchaser’s representative. Very often the purchase monies are divided into an amount to be paid directly to the estate agent, being the estate agent’s fee, and the balance to be paid to the seller, so two banker’s drafts. In that way everyone leaves the completion meeting having achieved their respective goals. The seller has sold, the purchaser has purchased and the estate agent has received the agreed fee. If you have any queries that have not been covered in this video, or if you need any advice at all regarding Spanish matters, please contact me directly. My contact details are to be found on our website, that is www.solicitorsinspain.com. Thanks for watching.