Be prepared, Know the process and why you need Proper informed advice

Many people arrive in Spain with the preconceived idea as to what buying property involves. On finding it more difficult and different to that in their own mother country than previously anticipated lthey eave everything in the hands of the estate agent or Property Company. When their property is handed over, they then may start to complain that this is not what they wanted - it probably wasn't. The problem was that they didn't tell anyone at the right time and when they realize it is more than probably too late! You need advice all the way through the process .................

Any and everything could go wrong, although most of the problems are small and are concerned with not reading contracts and arguments over what was to be included and what wasn't. However, there can be a considerable amount of misrepresentation which can be used to encourage people to sign contracts that are not always what they seem.

For example we had friends still waiting for the deeds to the property they paid outright for (well over a year after they had moved in) and also an electric motor which should have been supplied and fitted to their gate (as they were promised by the agent they brought from) has never been fitted to this date. They were also told they couldn’t get mains water so had a tank installed for delivered water (all at extra cost) only to find that if they had, had the deeds than they could have been attached to mains water at the bottom of the road after all! They are still trying to sort this out now! These people are a retired couple one of whom had suffered ill health before they moved and all they wanted was a better more peaceful life here in Spain. They definitely did not deserve the grief that they have been put through. There is more - but I’m sure you get the general idea. These may not be major life or death problems but to these people the difference between peaceful life and a stressful one.........

Some Agents just sell you a property and move on without a second thought, leaving you alone and in a country with different rules & regulations...

Check everything! after all it is your money and your life. Check before you sign

 

BEFORE SIGNING ANYTHING - HERE ARE SOME OF THE THINGS YOUR SOLICITOR SHOULD BE SHOWN:

• The sellers own title, known as the escritura publica and a report from the property register called the Nota Simple
• IBI- paid up receipt for annual property tax. 
• Catastral certificate giving land measurements and boundaries in exact measurements
• Receipts paid up for the annual fees of the community of property owners and last minutes of agm if buying on Urbanization with shared facilities.
• Receipts paid up for all utility bills.

Your Solicitor should make sure all this is in order.

When people are presented with the contract of amendments that they may have agreed on (nicely drawn up in Spanish, despite being unable to read a single word apart from their name and address) they sign it anyway. They think that by this stage they have no choice, again it is your money - your choice. If you are unsure about anything just ask at any point - It's your money! 

ONLY SIGN IF YOU AND YOUR SOLICITOR ARE HAPPY

It seems so easy when you read about the mistakes of others and are not involved yourself. Without doubt, excitement and the fact that they have become a second house owner or having just taken the plunge and decided to move to another country do have a bearing on peoples thinking at this particular time.

In most cases where an omission or something similar has occurred it is only a matter of a mistake and this can more often than not be rectified. The Spanish are dreadful at administrating and whilst they intend, with the best will in the world to do something, quite often they just never seem to get round to it, you have to keep on until it is done and how polite you are often has a bearing on how quickly this works!

It is no joke the Manana attitude is a fact of life! One of the reasons after all many of us wanted to live here in the first place.

Check everything - Don't sign anything you don't understand or can't read and never unless your solicitor has said it is appropriate to do so.

The fact that this is a business event as opposed to a social one seems to be forgotten by many. In fairness many property companies quite often purposely do turn property buying into a social event because it makes people easier to deal with and this in turn makes them less sales resistant.

By all means, be friendly and enjoy pleasant company but remember you are spending what is probably the second or perhaps largest amount of money that you have ever spent. If your property company is wining and dining you and paying for your flights and accommodation - understand why they are doing this!

Your time would probably be better spent asking questions and looking at the locations you have seen during the day and bear in mind it may not be the best location for you but the one where they themselves are selling the properties they themselves have. Keep this in mind and think, have they really got your best interests at heart?

What do you really think?

For example a couple of days in Spain all expenses paid in some cases, in others, at least a reduced rate!

How on earth can you decide on an area you have perhaps never even visited before and make a massive decision of purchasing a property under the pressure of a three or four day visit, especially after being asked if you have the means to pay a deposit (before you have set foot into the country) should you see the property of your dreams. This is pressure which is not what is needed when making this sort of decision. Take your time and do your homework if it takes another trip to make sure then surely its worth it in the long run, buying a property in Spain is not cheap and the taxes involved are high so it needs to be a long term investment not a short one, make sure you are as sure as you possibly can be.......................you will reap the rewards later.......

Spanish Property

Spanish property has proven more often than not to be a good investment, with returns matching anything provided by the stock market and with nowhere near as many of the risks. However, it's probably true to say that the majority of people who buy Spanish property do so not because of the financial returns but simply because they are looking for either a permanent home beneath the Spanish sun or a holiday home. That their property increases in value at a most impressive rate is really only an additional benefit for these people.

When it comes to Spanish property - most foreigners usually pay far more for property than they need to. Unless they are either very lucky with the people they deal with or know something about the property market in Spain and how it works, Often tens of thousands of pounds more! In the majority of instances, either more property or land or both, can be obtained for the available money that is being spent and in many cases for less than the money. You just need to do your homework or speak to someone else who has done it for you

Demand and not value often set the price! If you think the property is overpriced it probably is!

Most people have or should have a budget firmly in mind when setting out to buy a Spanish property. It’s very easy to be caught up in the situation and encouraged to spend more than you can afford. With your budget firmly in mind, start the search for your property. If you are intent on a coastal resort then be prepared to pay well over the odds and accept the fact that there is great competition for your money and a great number of people there that are on holiday and not in permanent residence. Having said this there is an awful lot of proerty on the market on the coast at the moment (July 2007) so there are bargains to be had I would say it certainly is a buyers market on the Costa Blanca Coast at the moment.

Depending whether your intention is to retire to Spain or live permanently in the country with a young family then it may seriously be to your advantage to consider just what sort of property you will get for your money and where you need to be located work wise and school wise. Unfortunately, in most cases budget mainly will determine what can be purchased - and where. Getting one foot onto the housing rung ladder is difficult anywhere, in Spain the situation is no different. 

It is of the utmost importance that you bare all these points raised in mind before you make any decision to actually buy a property, we can help you make that decision by giving you all the information we possibly can before and not after the event.

If you are looking for or contemplating a holiday home in Spain then perhaps the coast will be where your sights lay. However, if you are contemplating a permanent move to Spain you can do a lot more with your money than you would ever believe by moving a little inland. By a little I mean around half an hour that’s all it takes and you are still close enough if you want the hustle and bustle of coastal living or far enough away if you don’t. Ask yourself do you really want to listen to parties and noise until well into the night if you are a permanent resident- think - maybe you would be better a little further from the coast, alternatively if you are buying a holiday home then this could be exactly what you are looking for.

Whatever you do decide your search starts here with this website where you can find out everything you need to know, and possibly more than you thought you needed to know. If you would like help with moving to Spain or the purchase of property simply email or telephone us we will do our utmost to answer your questions or if we can’t ourselves we will try and find out from someone who can on your behalf .

Groundwork or initial considerations

This decision is a very personal one and depends on a multitude of things, it is very important before jumping in on such a major commitment to consider very carefully what you really hope to achieve and when you wish to achieve this. It is not worth spending too much time going round properties until you know what you are looking for from the outset, and that all parties invloved in the purchase agree at least on the basic issues.

Ask yourself some questions - when, where, what & budget

Where to live?

You need to consider where you want to be foremost with regards to Schooling & children’s ages and needs, if you have them, airports and convenience, amenities, coast, towns etc, make a list of what amenities you will require to give yourself a better idea. Not forgetting all the other reasons as previously mentioned for making this decision

What type of property?

You then need to decide just what type of property suits your individual needs, do you want new, resale, how many bedrooms do you need, do you want a swimming pool- now maybe later if you are not moving permanently just yet ( It costs for the upkeep of a pool how often realisitically will you use it, if you are not here who will maintain it?)- later -at all, what types of views do you prefer, how far from the shops, schools, restaurants & bars etc would you prefer to be

When

One of the most important questions. If you plan to buy your property in the next 6 months then now is the time to start looking at individual properties in your chosen area. For example a resale property can go through in as little 6-8 weeks; however a new property might not even be built- all things to consider.

 

The big one!

Deciding how much you want & or can afford to spend on your property, and whether or not you need to or want arrange a mortgage, if this is the case it would be wise to arrange this, at least in principle before you go too far. It is quite easy to do this and you need much the same papers as you do in the UK for example passports, proof of income etc and most Spanish banks are willing now to give mortgages to ex pats without too much grief, you will pleased to know that the rates too are less than the UK at the moment. YOu also need to carefully consider if you are moving whilst you still need an income, how long do you need to set up how much will living for a set time before I have work etc will it cost me. This is the big one for young families it is quite frightening the amount of money you can get through here when starting out. It can be great life here but if you have no money and no income that can soon be short lived, believe me I have seen it........

Who pays what? Purchaser or Seller

Up until recently it has been the practice for the seller to pay the notary's fees and the plus valia tax and the buyer to pay the impuesto de transmisiones and the registry fee. Today the practice has become for the contract to state that the buyer will pay all the expenses arising. There is nothing illegal about this because as mentioned, the parties are free to contract as they please.The seller will pau the plus valia which is a tax on the land the property sits on and depends how long the owner has lived there, this can only be calculated after the sale has gone through so has to be estmated and retained.

You may think this is unfair,  but it has become necessary if only that that tax bills, in particular the plus valia, have often gone unpaid. This has been especially true of non-resident sellers who had long since gone by the time the new owners realized that they had been left with bills they were going to have to pay. Charging the new owner with all the taxes is simple, straight forward and avoids complications which people new to Spain can well do without. Remember though one day you will be a seller, at which time the system will be totally fair. Your solicitor should make sure this is all in order.

When buying a property in Spain

Before a title deed for a newly constructed building can be registered in a new owners name tax has to be paid by the buyer, these taxes are calculated on the declared purchase price which is stated on the deeds and this normally works out at approximately 7% of the purchase price.

Declared value

This is the value on the Escritura (Title Deeds) and is normally less than the actual value and quite a normal procedure in Spain where this saves both the purchaser and the buyer tax, be aware though that you could receive a tax bill after the sale if the tax agency thinks your property has been under declared and or a fine! If the Hacienda thinks the difference is irregular. This seems a very alien practice to us expats but quite the normal procedure in Spain everyone knows about it and everyone does it apparently...... normal practice, However things are changing and the law is tightening up Big Brother is not only on channel four he is here in Spain and he is very real if you under declare your property you are breaking the law and there is a risk so again take legal advice and come to a compromise the buyer and seller can decide but at the end of the day you are left holding the keys so to speak whilst the seller has long gone and you could have a hefty Capital gains bill to pay when you in turn come to sell......

Solicitor or not?

For many people, once the decision to buy a property has been made, their thinking switches to what they can avoid doing (normally this has a great deal to do with saving money) as opposed to that which must be done. . 
Cutting out the solicitor can save a few hundred euros and some may say that he should be cut out, on the grounds that they think or assume he doesn't do much anyway, however, if he does his job correctly, which is what you need, what he does do is vital. If he becomes involved in hours of complicated work on your behalf, no doubt something somewhere is wrong.

Ask yourself would you buy a property in the UK without the help of a solicitor? In a different country where the laws are different I would say it was money well spent even if only for peace of mind, you may even make yourself a friend for life, a very useful one at that!

Not all Solicitors charge the earth!

In the United Kingdom buying a house requires a contract to be drawn up and executed within certain laid down principles. In Spain, the situation is much the same but with one very important consideration: the buyer and seller are free to contract whatever terms they may care to. There are no laws which require that one of the parties must pay any particular tax, only that it must be paid by one of them.

 It is important to know that one tax, the plus valia, can be charged directly against the property with the result that the new owner could be left with a debt he is legally responsible for if the seller failed to pay. Failure to pay could be dealt with by seizing the property and selling it at auction. If the property concerned was a holiday home, the owners may not even be aware of what was going on. So this can be estimated and an amount withheld at the point of sale.

Another good reason for you to ensure that someone in Spain represents your interests during the times you may not always be available- This may be where you can save yourself a few hundred pounds instead of having to fly over yourself to deal with minor problems should they arise.

If you buy a property in Spain you need the services of a competent, experienced Spanish solicitor who knows the area well and if you are buying a new property - knows of the builder from whom you are buying it.

Spain is different from the UK and sensible people do research before embarking on such a major commitment, occasionally you will have heard from the media and the many holiday programs and reports about horror stories involving people being cheated,  sold illegal properties, which are unfortunatly much more common in this part of Spain than you can imagine. It has to be said that some of these stories are probably true so you need be fully aware and only make proper informed decisions on the information you receive.

The Purchase

If you choose to follow this advice it is really not so nerve-racking when it is all actually happening.

So you have decided to buy a house, we have made all the preliminary checks ie you have all the relevant paperwork or rather your solicitor has such as the nota simple and the utility bills or copies of and everything seems to be alright. The next step is to reserve it.

You can reserve a house by any amount agreed by both parties more often it is a figure of 3000 initially untill the proper checks have been carried out....

A house is then reserved by means of a contract called Sales consideration (Arras).

Advance Payment – The Down payment

This is an amount of money paid on account of the final house price, by which both parties the buyer and seller confirm their intention one to buy and the other to sell.
If we read in our reservation that this is “payment & down payment”, the money we deliver is part of the final price. From this moment, both the seller and the buyer may demand compliance of the contract in case of waiver of the other party, whatever the cause. If the seller does not want to sell, the buyer may demand the sale at the price determined and, on the contrary, if the buyer changes his mind, the seller may demand purchase at the price agreed. Really, the reservation according to payment and down payment is a true sales contract from the moment of being signed by both parties. What normally happens in real terms is that if a buyer puts down a first deposit of say for example 3000euros he could if he pulls out for reasons other than the fault of the seller, lose this deposit, on the other hand if the seller backs out he can in fact be made to pay the buyer double the amount paid!

Legally, this figure is called confirmatory down-payment.

If this were the case in the UK there would almost certainly be no gazumping and therefore a lot less heartache concerning house buying and selling.

The Sale

The sales consideration, as already explained in real terms. Above is a contract according to which, an amount of money is delivered for a purchasing right. If we read in our document for delivery of down-payment, we are dealing with article 1.454 of the Civil Code and an option from which both parties may withdraw: the seller from the selling and the buyer from the buying. The latter looses the amount delivered if the waiver is his and the seller has to return twice that received if the waiver is his.

It is necessary to clearly indicate in delivery of the down payment that it is a sales consideration, since if not specified it would be understood as a down payment with the consequences we have already mentioned. In other words if you are waiting for all the checks to be done before you wish to sign a full sales contract then you should make sure that is what you are signing a simple deposit contract as once a sales contract is signed it has to be carried through with and in a court of law can be forced. As you will see below...

The Sales Contract

After reserving our house, the following the following step is a sales contract.

This is a document in which the house is clearly described and by which the seller is obliged to deliver it and the buyer to pay its price.

This contract may be private between the parties, which is binding and valid between them.  Yet another reason then to be represented by someone who knows the law in Spain.

If we finance the purchase with a mortgage loan, the financial institution is entrusted with assuring the operation through the purchase and mortgage contracts. The Bank and the Notary do not do as many checks as the solicitor does!

Most banks require-

• wage slips for the last three months 

•  P60

• Or last years' audited accounts for the self-employed.

• Mortgages are available for new and resale property.

• Repayments in Spain are found at rates of  approximately 5%

Try this site for a broker who can shop around for the best deal on your behalf there is also a mortgage calculator here to help you work out what you can afford............

Notorial Document & Register

Once all the purchase terms have been agreed, whether or not a down payment has been made, the formal sales proceedings is made by means of a contract signed at the notary’s , and is called public document.
This document is taken to the Property Register after settling the corresponding expenses and taxes. Only public documents and others of a legal or administrative nature have access to the Register.

The document perfectly details: situation, characteristics, bordering areas, surface area, price, payment terms and all the conditions referring to possible deferment of payment and other terms, if any.

The proceedings of the documents before the notary, the payment of taxes and corresponding expenses, as well as preliminary and later arrangements are carried out at a Notary

A notary public (sometimes called a notary or a public notary) is an individual authorized by state or local government to officially witness signatures on legal documents, collect sworn statements and administer oaths. A notary public uses an embossing tool to verify his or her presence at the time the documents were signed. Most states issue a unique identifying number to each notary public in order to prevent fraudulent use of the embosser.

Still sounds complicated- try not worry this is all done for your interest and protection and not nearly so drawn out as it sounds, remember this is all for your information so that you are well and properly informed whether you take any or all of this information is your decision and as stated before is not meant to be taken as fact but only as honest helpful advice in our opinion taken from our own enthusiasm and experience from moving to and living here in Spain

Solicitors Fees

The one other thing you have to pay is your solicitor’s fee. These can be anything you have agreed and if you haven't agreed - anything! Ludicrous Amounts have been charged to some unfortunate people for relatively little work carried out by unscrupulous solicitors.

Make sure this price is agreed before purchase to be a reasonable amount.

Do note that your solicitor’s costs could rise considerably if he discovers that the person from whom you are buying your house has no title deeds of his own. It would do you well to agree on a price before you commence whatever the outcome if you can. A good honest solicitor should not charge you until the sale is under way, in other words if you don't happen to get past the initial deposit- say there is a problem with the deeds or you can't obtain the required mortgage he should not make a charge. In other words No Sale no fee It is also wise to use a solicitor totally independent from the agent who is selling the property you wish to purchase.

Having said this I am now going to praise the solicitor I work with on a regular basis without doubt I do not think I would be running my business so successfully without his never ending guidance and support

So if you were to use my services and my solicitor although you are under no pressure at all to do so I have worked with others on the odd occasion that my client is already using another but for an example Juan Carlos charges my clients 1% of the sale price normally and this has a minimum charge of 2000 euros & IVA (but this will include the writing of two Spanish wills. I originally shopped around and for the amount of work involved and the thoroughness of his work is worth every cent! For example if there is no sale you do not pay a penny and if there is a problem it is sorted within that price, i once had a client who went through the uinitial process and checks with 3 properties before we could find a property we could go ahead with and the fee remained the same.

He will

• Check legalities
• The town Hall for debts
• Check for any partial plan which could affect the property now or in the future and report on it
• Arrange for POA if necessary
• Make sure the property is up to date if not can arrange for an architect to do the necessary to make sure it is at point of sale
• Give legal and tax advice when necessary
• Make the changes to the utility contracts so they are in the correct name
• Arrange with the bank with regards what funds are needed for what and also liaiase with the bank if a mortgage is required
• He can arrange for a survey should you require one to make sure the property has no defects
• The list could be endless, he will do whatever is necessary to make sure you property is up to date and you know exactly what you are buying

Please note that everyone including my own clients are free to choose whoever they wish!

Although the absence of title deeds is normally associated with farm type and inland buildings, it can also apply on the coasts, particularly the resort areas, where property is bought and then sold quickly to make a profit. With the property registry taking several months to process an escritura, it is not uncommon for deeds to be unavailable.

Other problems which may affect your solicitors work are unpaid taxes. He'll not be able to proceed with the sale until such times as he has protected you from the responsibility of having to pay them.

It will be checked at the notary on the signing of your contracts whether there are any charges on the property.

Certificate of Habitacion

This is simply a certificate to show that the property is fit for habitation.

It has a lifetime of 15 years. Then it needs to be renewed, however it will probably be at a time if and when you come to sell that you may need it. It is obligatory to have this certificate in date if you rent a house and contract gas Electric and water services. The seller has to request it.

For an example the owner of a house which has no mains water would need to obtain this certificate first from the town hall in order to be put onto mains water, but only if thiswas an option for that actual property.

Habitual Residency

According to Spanish legislation on entry and residence in Spain of an EU member any non employed foreigners including EU citizens and including those on pensions or benefit from their member state of origin are legally obliged to get a residence card. If any retired person habitually resides in Spain for more than three months they must also get a residence card.

Social Security and NHS healthcare are based on residence ithe UK and not on the payment or NI contribution or income tax.

Is your property registered At the Catastro and at the registro

 

Did you know there are two property registers in Spain?

 

Which means that a property is registered or at least should be, in two different places each one holding different information? These two bodies unfortunately do not share this information with each other very well and this sometimes causes confusion

 

1. The Catastro- If you are paying your IBI tax sometimes referred to as the suma then your property’s catastral reference will appear on the IBI receipt.

From this reference you will be able to obtain a catastral certificate which will tell you the properties boundaries, its physical layout and its exact location. The certificate is cheap to obtain and will provide you with a plan as well as a full description of the property in words in addition the Catastro deals with the official valuation of a property and holds the valor catastral which is the sum upon which your IBI is calculated

 

2.The registro de la Propiedad- This registry holds information confirming the details of the registered owner as well as the charges and debts which are registered against the property. Many people think that an Escritura in a persons name is proof of ownership, and will show if the property has a mortgage registered against it amongst other things. Once again the cost of obtaining a Nota Simple is tiny compared with the value of information it holds.

 

Property has exchanged hands on the strength of a Nota Simple or less for many years in Spain although this is gradually becoming less and less common and foreign purchases are thankfully becoming more informed.

It is still quite often the case though that a buyer will be encouraged not to worry about the Catastro records and many different reasons will be given. Do not be put off though and ask to see them as discrepancies need to be found and corrected at the point of sale.

 

There is probably nothing to worry about with your property but it is always better to check for your own peace of mind.

 

Money spemt at point of sale on a good solicitor now can save you later in worry!

 Buying Unregistered Property

The legalization of a construction is different to it simply just being described in the title deeds. In the absence of planning permission, quite common in particular areas, where laws state that a dwelling cannot be legal after being built after a certain date on less than 10,000 m2 of land! Properties are constructed in accordance with the local planning regulations and can then be registered in the land registry by virtue of the granting of a deed before the notary, that is based on a certificate granted by an architect which reflects the number of floors, total area of the plot and M2 of the construction plus any other usable element with which to recognize the building. At the same time the architect must make a reference to the age of the construction as if it is more than four years old. If it is not you could have problems as you are deemed to dealing here with a proeprty that can not be claimed as legal and the laws are getting tighter.

The right of the local Town Hall or corresponding authority to take action due to any breach of planning regulations would have been already prescribed, if after 4 years no action has been taken the property may then be registered as a "legal" construction. See now new laws below...............................

If in doubt don't buy anything you are not completely satisfied is legal. Let your solicitor earn his money and do all the possible checks on the property to make sure you are as sure as you can be. There are stories about people losing their homes and some ARE true!

 

Royal Decree 1093/1997.

Extensions and permissions

 

There has been a change in the law recently and it seems that up until now the administrative regulations on extensions to property in particular their legality meant that if there had been any illegal building works i.e. any type of additions to properties without the proper license from the town hall (for example if you obtained a minor or small works license but were actually extending your property and really needed a major works license) then after 4 years from the works being completed if the town hall had not raised any complaint or fine then they would be out of time for doing so. In addition, and this is the major difference, the land registry would then be obliged to register the extended building.

 

It now seems that this is not the case. Whilst the town hall can still be time barred from raising a fine the land registry can now refuse to properly register the extended property so you will be left with a title deed (escritura) that does not accurately reflect the true size of the property. Which in reality may mean that anyone wishing to buy the property after these works have been carried out would have to accept the property as it stood i.e. without the true dimensions being registered, this may be acceptable to the buyer or not and unless of course the new buyer needed a mortgage and then the property may not reach the true valuation for the asking price of the property as the bank will only value the registered dimensions i.e. those on the deeds and not what actually stands.

 

The answer would seem to be to ensure that you apply for the correct license in the first place if you are doing anything other than very minor works and to do so you need to have an architect prepare a project that accurately reflects what work is to be carried out. That project has to be submitted for approval by the college of architects and then to the town hall for the license. Only then, once the license has been granted should any works start. Once the works are finished you will need certificates from both the architect (a fin de obras) and the town hall confirming that the works have been carried out and completed properly and in accordance with the project and license. Without these documents the land registry will not register your extended property.

 

 

 

 

I know some of this may sound obvious but it is easy to mistakenly accept the word of the builder and architect that there will be "no problem" and assume they are dealing with matters properly and rely on verbal assurances. Unfortunately quoting such verbal assurances cuts little ice with the land registry.

 

Our advice now is to make sure you take firm control of the situation and insist on confirmation in writing of any important assurances, check the plans carefully before they are submitted to the college and town hall to make sure they match what you intend to build.

 

You could hold back a reasonable amount of any architects fees until you have the approval from the college of architects and the license from the town hall and make sure it is the correct form of license. Only then give the go ahead to the builder to start work but make sure he has read the architect's project and will be building in accordance with it.

 

If you or your builder or architect have not followed the requisite steps correctly in the first place then it is unlikely you will be able to get the necessary documents once the works are completed. If for example the work carried out differs from that in the architects project and/or the license you obtained was for small or minor works when you have actually had big or major works carried out there will be problems. In this case you need to get your architect to prepare a modified project showing what has actually been done and then submit it to the town hall for "modification" and see what the town hall comes back with in terms of fines or required action. Once they have been dealt with, if that is possible, the architect and town hall should then be able to give you the final certificates. Unfortunately this approach creates a worrying period of uncertainty that is best avoided. 

 

It is also important to note that depending on the town you are applying in you may not in fact get permission in the first place especially if you are asking for permission to extend a property that is on less than 10,000m2 on rustic land as already there may be too much built on the land. For example on a plot of 10,000m2 only a land surface area of 2% may be built on, any more than this if it is not already stated in the deeds would be illegal.

 

In the case of plots under this size most properties already exceed this build size so you just would not get planning in any case.

 

 

 

 

This guide has been prepared by the following companies: For the sale of Rustic properties especially those in the municipality of Albatera

This guide is, of necessity, both brief and general, and is therefore no

will be happy to provide on request.

Corredera, 37

03202 Elche (Alicante) SPAIN

TLF:+34 966 614 384/FAX: +34 965 420

960

jc@tlacorp.es

www.tlacorp.es

And Edited by Sharon Richards

Working with you all the way here to make life easier

www.livespainforlife.com Telephone 0034 965990976 / 0034 618364956 Email: info@livespainforlife.com

Update for 2007

Documents to be presented before the sale

:

• ESCRITURA FROM THE PROPERTY (PROPERTY DEEDS)
• WATER AND ELECTRIC BILLS (It is not always necessary to give the latest ones)
• SUMA - It is absolutely necessary to present the latest one. (If the property is not in the SUMA, it must be inscribed in the Suma office before completion.

For this inscription, an architect must visit your property to make the plans and measurements and, together with a copy of the rest of the documents (deeds, padron, plan of location of the plot, photos, etc.) these must all be presented in the SUMA offices.

If the property is not inscribed in SUMA, once the process of the inscription is finished, the Town Hall will withdraw the bills for the last 4-5 years. Usually the bills will be delivered to the property one or two years after completion, and must be paid by you although you were not the owners then. So, in these cases, it is common to calculate the amount of the bills before the sale, and provide the new owners with enough provision of funds to pay them this coming from the present owners for when the new owners receive them in the future

 

- CERTIFICATION FROM THE TOWN HALL.- This is called “Certificado de No Infracción Urbanística”. This is a certification made by the Town Hall, establishing that the property is free (or not), from any fines or penalties established by the Town Hall over any constructions added to the property or in fact any fine on the actual property itself

WHY……… because It serves to show to the eventual buyers that the property you are selling is free of any debts, and fines for the main building of the house, or for construction extensions over the property.

In the past, obtaining of these certifications was free, and this information was public. Right now, it is restricted to owners, or to professionals with written authorization from you.

So now, this certification is ESSENTIAL to sell the property, and must be obtained from you before completion.

ALE:

How you obtain the Certificado de No Infracción Urbanística?:

The way to obtain it is to go in person, or through your lawyer, with an authorization signed by you, to the construction Dept. from the Town Hall (“Departamento de Urbanismo”), and ask for it.

 with you are the following documents:

To do this you will need

• Copy of the escritura (deeds of the property)
• Copy of the SUMA
• Water and electric bills sometimes can help
• Authorization signed (if you have instructed a lawyer).

Please, be sure that you, or your entitled person, bring these documents with you when you make the application of this certification in the Town Hall. Or you may have to return with them.

ORIGINAL NIE NUMBERS: In the past, you could buy the property without NIE numbers, or with a copy of them. Right now, you need the ORIGINAL ones to sell the property, otherwise the notary and the land registry could refuse it.

If you do not have the NIE numbers, or if they are lost, or you only have a copy, you must apply for the original ones in the NIE number offices in the area. The process will be exactly the same than to apply for a new one. If your original one is lost they will give you a copy with the same number.

- ELECTRIC.- In rustic land, it sometimes occurs that the property is built in land of less than 10.000 sqm. In these cases, Certification of Habitation (Certificado de Habitabilidad ), will never be obtained.

How this affects the electric connections?.- Your property could be in one of the following situations:

A) Your property already has an electric connection, with the proper contract of supply. In this case, usually, the contract will not be for House Supply (Vivienda), will be just for Farm Shed (Almacén Agrícola).

It means that, for the supplying company, your house is not a house, is a farm shed. This is very common but consequently, the supply given to your house will be for farm purposes, because, in theory, in less than 10.000 sqm., in rustic land, only farm sheds must be built and not houses.

Also, it seams that if, for any reason, the supplying company inspects the connection in your property, and they detect that you are using it for family and habitation purposes, they can fine the property although this is rare as it is so common normally if your property is over 6 years old you it is accepted without too many problems

If it is used for a different use than the one authorized (for farming) . For your peace of mind Our companies have not detected this kind of inspection in the area yet but the buyer must be informed, in the initial steps of the transaction, about the current situation of the electric contract, in order to avoid problems in further stages of the process.

On completion, you must sign and formal authorization to transfer the contract to the new owner.

B) Your property has connection with a “Construction Contract”. This means that the builders, when they were building your property, contracted the supply to build your house. Once they completed the building, as the electric company only supplies power when the certification of habitation is supplied then the electric company would take over the contract from the builder.

If in your case, this certification is not supplied (less than 10.000 sqm.), the builders, simply, left the house with construction supply in order to provide you with enough power for living.

In these cases, the problem is bigger than in the previous one, because, legally, the electric company (Iberdrola) is not allowed to supply connection for construction purposes for more than 2 years.

Passed this time through, they can cut the supply in any moment, fining the owners who are using the supply in this way.

If your property is in this way, please, ask a specialist.

THIS IS IF THE ELECTRIC IS STILL IN THE BUILDERS NAME

C) If your property has electric, but you have not any contract, and you have not paid, nor received any bills during your stay in the house. In this case, please, consult your lawyer urgently.

D) If your property has supply for habitation purposes. It occurs in Aged normally older than 6 years and in houses with less than 10.000 sqm., or in houses with more than this surface. In these cases, there are not any problems.

E) If your property has supply for habitation purposes, but the contract is older than 20 years. It happens normally in aged houses. In these cases, to transfer the contracts to the new buyers, you, as vendors, must to provide a certification from an official electrician, guarantying that the old installation is in perfect conditions.

This document is called “Boletín Eléctrico”.

F) Whatever the type of contract it is but bills are coming on the previous owners name, but you are paying them.- This occurs when, for one reason or another, the electric company did not authorize to change the names in the supplying contracts. In these cases, a specialist must be consulted to clarify what was the problem.

 

 

Taxes Involved in the Sale Non residents Before 2007

 

 

When you, as vendor, bought your property in Spain, you paid the taxes involved in the same transaction. These apart from other general expenses like notary, land registry or solicitor fees, the 7% for the Transfer Tax, and the 5 % for the Capital Gains retention (this last one, if the previous owners were non residents).

So, as buyers, you paid the 7 % of the price of the property as shown in the property deeds.

While you owned your property in Spain, you had to make the following declaration of taxes:

- After completion, the Spanish government considers that you, just for the reason to own a property in Spain, have to pay the 0.25 % of the official price of the property. It is paid only once, and specifically the year in which you bought the property. This tax is a part of the General Income Tax. You have to make the proper declarations of the

Income Tax, and the Wealth Tax. These taxes are calculated over the general incomes received, and from the official value of the property.

If you have not made any of these declarations, please, feel free to consult us in order to instruct you how to do it.

- You have to pay Capital Gains for the benefit obtained from buying-selling your property.Till 2007, the Capital Gains Tax was the 35 % of the net profit obtained from the price paid for buying the property, and the price obtained in the sale (considering “price”, as the one established in the deeds).

The system was even more complicated, because there was established a retention, or withholding, for the payment of this tax for the 5 % of the declared price in the sale.

Please, note the difference Now as this was in the past and Before 2007, the seller had to pay 35 % for CG, from the NET profit (which means Selling Price - Buying price – Less general expenses and taxes paid on the purchase- improvements in the property). Please, pay attention to the following example:

Example 1:

You bought the property for an official price (Declared) of 100.000 EUR. You paid 7.000 EUR Transfer Tax (7% over the declared value), and 4.000 EUR in the rest of general expenses (notary, land registry, etc.), and you have reformed your property, the reform costs being 12.000 EUR.

You are right now selling your property for 200.000 EUR.

The Net Benefit is :

200.000 – 100.000 = 100.000

Less 7.000

4.000

12.000

Net Benefit: 77.000 x 35 % = 26.950 EUR.

This figure had to be paid in the proper declaration after completion.

- B) As Before 2007, the Retention was 5 % OVER THE OFFICIAL PRICE OF THE PROPERTY (which is the price shown in the deeds). It seems that this 5 % is calculated, not over the net benefit obtained from the buying-selling of the property, just over the price for which you are selling. Following the previous example, the declared price from the selling of property is of 200.000 * 5 % = 10.000 EUR.

This system was acting in the following way:

Non-Resident Vendors were retained with the 5 % of the declared value on completion (10.000 EUR), being this payment a part of the rest to pay for the total CG (26.950 EUR). So, if the vendors, after completion, made their CG

declarations, they were reduced the final CG payments with the retention paid on completion. So, following the example, they had to pay 16.950 EUR (26.950- 10.000).

In the majority of cases, if the Non-resident vendor was returning to his country of origin, or to other country different from Spain, they never made the proper declaration of the CG, leaving the retention to the Spanish authorities. For

instance, the Spanish customs were satisfied with this retention, and they considered the case closed.

Sometimes, the retention could be higher than the same final figure to pay for CG. Please, note the example:

Example 2 :

Vendor bought the property per an official price of 100.000 EUR.

He paid 7.000 EUR Transfer Tax, and 4.000 EUR in the rest of general expenses (notary, land registry, etc.), and he has reformed his property, being the reform costs of 12.000 EUR.

He is now selling his property in 125.000 EUR.

The Net Benefit is :

125.000 – 100.000 = 25.000

Less 7.000

4.000

12.000

Net Benefit: 2.000 x 35 % = 700 EUR.

This figure has to be paid in the proper declaration after completion.

- The Retention was of 5 % OVER THE OFFICIAL PRICE OF THE PROPERTY. Following the previous example, the declared price of the property was 125.000 * 5 % = 6.250 EUR.

As you can see, there was a retention from the vendor of (6.250 EUR) higher than the one he had to pay for CG (700 EUR). In this case, vendors were making the proper CG declarations in order to obtain the difference back. So, if they were retained with 6.250 EUR, and they had to pay just 700 EUR, they had to be refunded with the difference (5.550 EUR). In order to apply for this refund, the vendor had to make the proper CG declaration after completion.

R 2007

I.- From 01-01-2007, the Capital Gains system for non-Resident vendors is the same, but with the following modifications:

- Capital Gains is now 18 %, instead if the previous 35 %.

- Retention is 3 %, instead of the previous 5 %.

 

II.- In the past, the control for the Capital Gains from the part of the government was weak. It resulted in that hundred and thousands of transactions in the area were made with official prices reduced from the real ones, with the intention to reduce the Capital Gains payments from the vendors, and the Transfer Tax, from the buyers. In order to control transactions which could result in illegal reductions of prices, between buyers and vendors. It means that the control is extremely higher than in the past.

 

For instance, taxes are reduced for non-residents from 35% to 18%.

III.- Sometimes, non-resident vendors refuse to declare the real

Price of the sale,

Arguing that, when they bought, the previous owners reduced the official price of the property, and that they are loosing money from it now as the declared value is high. Unfortunate or not this situation must be re-considered now for four main reasons:

(18 % Benefit CG, and 3 % Declared Value Retention for CG).

-It is true that, as the previous vendors sold the property to the current owners at a low declared value, and they have to support a higher CG. 
But is also true that…………………………. the current owners saved

Also taxes with that reduction.

Please, follow the next example:

Example 4:

You bought the property per an official price of 100.000 EUR. The Real price was 150.000 EUR. You paid 7.000 EUR Transfer Tax, and 4.000 EUR in the rest of general expenses (notary, land registry, etc.), and you have reformed your property, being the reform costs of 12.000 EUR.

You are right now selling your property in 200.000 EUR.

The Net Benefit is :

200.000 – 100.000 = 100.000

Less 7.000

4.000

12.000

Net Benefit: 77.000 x 18 % = 13.860 EUR.

In the previous example, vendor pays 13.860 EUR for CG, but, as the property was declared in 100.000 EUR, when it was really paid for 150.000 EUR, the vendors has saved at least 3.500 EUR in Transfer Tax, because:

· He paid 7.000 EUR for transfer Tax (100.000 * 7%).

· Ha had to pay 10.500 EUR (150.000*7%).

10.500-7.000= 3.500 EUR

So, right now, what the vendor has to really pay for CG is 13.860 EUR, this amount less 3.500 EUR from the saving he had from Transfer Tax, makes a total of 10.360 EUR.

Also, the rest of taxes involved in the property after completion (like Wealth tax and Income Tax) are considered over the declared value base. So, as the base of the tax is lower, another 2-3.000 EUR are saved by the non-resident vendor.

Thus, 10.360 EUR less 3.000 EUR=7.360 EUR.

-

 If the Spanish customs detect a non declared value, from the past, and, in some situations vendors and buyers could be denounced and or fined not only for fiscal actions, also for money laundering.

Vendors Spanish Residents) VENDORS SPANISH RESIDENTS

- FOR CAPITAL GAINS:

· They pay 18 % of the net benefit.

· They do not have the 3 % Retention.

· If they are selling their main residence, and they invest in another main residence in Spain in less than 2 years,

they have 100% exemption of CG tax for the sale of the property.

· If they are aged than 65 years old, they have 100 % exemption for CG tax for the sale of the property.

 

 

“MAIN RESIDENCE”  this is considered when the vendors can demonstrate that they are living in the property for at least 3 years. The way of proof this can be the Padron, water and electric consumptions, etc.

Also, the “Spanish fiscal residence” can be obtained in the Spanish Customs just showing the Padron, the escritura, the Passport, and the NIE number. This is important for EU nationals, because they will not be forced to get the old “Residence Card” (Tarjeta de Residencia), to demonstrate that they are Spanish residents. They can demonstrate that they are residents with the Padron, or with the Spanish Fiscal Residence.

 

OTHER TAXES FOR VENDORS-PLUSVALÍA

Mainly, the PLUSVALÍA, is a tax over the increase of the value of the land in which your property is, from the buying and the selling time. It is the sole tax that we are not in the position to calculate previously to the sale, because it

depends on specific criteria from the town hall. And only after completion they quote it in some municipalities.

In these cases, a retention from the buyer to the seller is enough to cover the payment of this tax. Especially when seller is leaving the country after the sale.

 

LAND REGISTRY INFORMATION

From September 2006, buildings or extension of buildings younger than 6 years will not be passed to the land registry.

 

For more information, please, feel free to contact us in the following address:

Corredera, 37

03202 Elche (Alicante) SPAIN

TLF:+34 966 614 384/FAX: +34 965

420 960

jc@tlacorp.es

www.tlacorp.es