Buying rural property in Spain

Last week we received the following enquiry from someone buying property in Spain:

Question: We have paid a deposit on an ‘old’ property in Almeria. We later found out that the property has no Escritura and our estate agent and Spanish solicitor have both said this is not a problem – that the Escritura can be applied for and will be issued in our names and a Spanish mortgage granted. English banks will not provide a mortgage based on a newly issued Escritura as they say their policy is to wait two years to guarantee ownership and to ensure the property is not claimed back i.e. by a family member or a neighbour. My concern is not necessarily raising the money or getting a mortgage but the possibility of the property being taken away from us after we’ve paid for it, therefore loosing our money and the property.

Answer: Buying a rural house in Spain is a complicated process which can be full of problems if you do not look into all of them. The title deed (escritura) should be signed at the same time as when all the money is paid. The alternative is to pay first a reservation deposit and sign a private purchase/sale contract with the vendors or with the legal representatives (always get your lawyer to check the documentation presented by them to make sure they have legal rights to represent the real owners of the land and property).

Another very important piece of advice. The present owners of the plot of land where the house is must notify the owners of the land adjacent to the boundaries of your plot before selling to you because they actually have preference of purchase over you. By law the vendors should send formal letters to all of them offering them first refusal of the land and property you are going to buy. If within the legal period established, no (affirmative) reply is received, you are free to buy the land without any risk.

If you don't make sure the above is properly carried out, you could become another innocent victim of what can go terribly wrong when buying rural properties in Spain. Furthermore, if, as is often the case in Spain, you have agreed at the vendor's request to pay some of the purchase price in cash (so that the declared price in the deeds differs from the real rice you have paid), and if the owners of the adjacent land have not been notified and given the time established by Spanish law to answer, then they could take advantage of the lower "declared" price as stated on the title deeds, deposit the same amount with the Spanish courts and take over ownership of your property. You will be paid the money deposited with the courts, but you will have lost the cash payment as well as your new property.

Buying off plan property in Spain

Buying off plan property in Spain continues to be popular among non-resident buyers, especially as an investment.

If you are considering purchasing off plan, then it is very important that you are aware of your rights and the promoter's obligations. Whether you are buying an apartment or a house within a complex which is still not built, or whether you are have bought land and are having a villa built, you should make it clear that you expect the promoter (off plan) or builder(land) to fulfill their obligations, including the famous "libro del edificio" (literally, book of the building).

The libro del edificio is a relatively new document introduced by a clause in the Ley de Ordenación de la Edificación in 2000 largely to protect the rights of house buyers in the event of any potential future problems related to possible faults in the building. This is why it is in your interests to have a copy. If anything goes wrong once you are living in your new home and you believe it is the responsability of the builders to correct it, then you need the libro del edificio in order to prove your case.

The promoter must hand over the document to the comunidad de propietarios when the building is complete (or to you if you have had a house built). Members of the comunidad (i.e. all property owners within the complex) can ask for a copy.

The libro del edificio is essentially a users manual about the building. It should include:

• the plans of the project,
• details of materials used in the building and how they should be maintained,
• instructions on how to use and maintain all buildings and facilities within the complex (not only housing, but also pool, sports areas, parks, gardens....),
• the original building project with any modifications which may have been made during the building process,
• the acta de recepción de la obra (document certifying when the building was completed and received) and
• a list of all companies and professionals who have participated in the process (building company, electricians, plumbers, carpinters.....).

Getting a NIE in Britain

Non-resident property buyers in Spain can apply for a NIE (foreigner's identification number) in any of the Spanish consulates in Britain which could save them having to come to Spain a few days early and endure long queues in an often badly-managed (to put it politely) and over-crowded Oficina de Extranjeros in a Spanish police station.

Anyone intending to sell or buy property in Spain (or indeed anything else which involves paying tax to the Spanish inland revenue) needs a NIE by Spanish law for tax purposes. Applying at your nearest consulate is more expensive than getting a NIE in Spain but it still may be an advantage for alot of non-resident property-buyers.

If you do decide to apply while still in the UK, then you need to get together all necessary documentation and then go to the consulate where you will be asked to sign the NIE application forminfront of a consulate employee. Your signature will then be given an official validation stamp (which is where the fee comes in - £22).

You will need the following documents:

- A stamped (also at the consulate) photocopy of your passport
- 2 recent passport size photos. The background must be plain, and people who wear glasses and/or earrings must take them off for the photo
- An original copy + photocopy of a document which explains why you need your NIE. This may be the private sales contract you have signed with the estate agent, promotor or private vendor, if you are going to work in Spain, the job offer... We suggest ringing the consulate beforehand to find out what to take depending on your personal circumstances
- A self-addressed envelope
- An envelope big enough to contain all the above + NIE application form addressed to the central police HQ in Madrid: Comisaría General de Extranjería y Documentación, Dirección General de Policia, C/ General Pardiñas, 90, 28006 Madrid, Spain:

One the NIE application form with your signature and passport have been stamped, the consulate will send the envelope containing all the above to Madrid. Then you will have to wait to receive your NIE.

The consulate will not be able to provide you with an application form, so get someone to get one from their local police station in Spain and post it to you or simply download a NIE application form . This form is provided by the Spanish Interior Ministry. Scroll down to the bottom of the page and click on the yellow IMPRIMIR button to print it out (Imprimir means Print).

There are 3 Spanish consulates in the UK.

If you live in:-
Northern Ireland, Cheshire, Cleveland, Clwyd, Cumbria, Derbyshire, Durham, Manchester, Gwynedd, Humberside, Lancashire, Lincolnshire, the Isle of Man, Merseyside, Northumberland, Nottinghamshire, Shropshire, Staffordshire, Tyne & Wear or Yorkshire, please apply to:
The Spanish Consulate General, 1 Brooks House, 70 Spring Gardens, Manchester, M2 2BQ. Tel: 0161 236 1233

Scotland or the Scottish Islands, please apply to:
The Spanish Consulate General, 63 North Castle Street, Edinburgh, EH2 3LJ. Tel: 0131 220 1843

And if you live anywhere else within the UK apply to the London office: 20 Draycott Place, London SW3 2RZ, Tel: 020 7589 8989, Fax: 020 7581 7888

The Spanish Consulate in Britain's website gives no indication just how long it takes for the NIE to arrive from Madrid, so check with staff either by phone beforehand or while you are there to get an idea of how long you should expect to wait.

Rights of tenants to buy rented property in Spain

We received this email from a Euro-resident in Spain last week:

"We have been living in rented accommodation ever since we moved to Madrid 8 years ago, simply because prices here meant we couldn't possibly afford to buy a flat. We found a lovely top-floor flat, within walking distance of our work, shops, parks, cinemas, belonging to a women who earns a living from renting out several flats she owns in Madrid. She lives in the same building, and we have always had a good relationship with her and, during the past 8 years, we have made the attic into our home, changed the floor, put heating in, decorated, changed the bathroom..... All at our own initiative because we understood that this was going to be our home for a long time. Our 2 girls were both born here. Four years ago we purchased a small house near Cadiz which we use for holidays and rent out to family and friends. We decided to do this rather than buy somewhere in Madrid because we love our flat so much. Last week to our horror, the flat owner told us she had put our atico up for sale and we had 3 months to find somewhere else to live. The original contract we signed states that either party has to give notice of 3 months, but we assumed this was just a formality and she has always said that we could live in the flat for as long as we wanted. Is there anything we can do to stop her from selling the flat, or have we acquired any rights during the 8 years we have lived here?"

The answer to the first question is no, you cannot stop her from selling her property, unless a clause in the contract you signed 8 years ago specifically gives you the right to do so (this is very improbable). If however, as seems likely, the contract makes no reference to any possible ownership rights of the tenants, and simply mentions a 3-month eviction notice, then the owner has complied with her side of the deal.

The answer to the second question is yes, you have acquired a very important right as tenants: the right to buy your home in the event of the owner putting it up for sale.

In Spanish this right is called "el derecho de tanteo y retracto". The first part "tanteo" refers to the fact that a tenant has the right to buy the property he/she is renting and should be given preference over any other potential buyers. The second "retracto" refers to the right of a tenant who discovers that his or her rented home has been sold to a third party, to re-purchase the property from the third party at the same price.

According to Spanish law, all property owners must give their long-term tenants 30 days notice if they decide to put their rented property on the market. In theory this gives tenants time to either find a new home or negotiate a purchase price with the owner and buy the property themselves. If the property owner fails to give the 30-days notice, then tenants can resort to their second right and purchase the property from the new owners (which is one reason why it is very important, if you are a buyer, to find out the exact conditions of any property you decide to purchase in Spain).

In your circumstances we suggest you try to negotiate a deal with the owner of your property based on your right, as long-term tenants, to have preference over other potential buyers. The fact that you have a good relationship with her should work in your favour. And you will have to decide whether you love your home enough to sell the house you have bought in Cadiz and use the money you make on it as a down payment.

Good luck!

Lawyers in Spain

We receive lots of queries from visitors enquiring about lawyers fees in Spain.

We always recommend use of a lawyer when purchasing property here, but do advise our users to be wary of two things:

Never ever use a lawyer recommended to you by the estate agent that showed you the property you are purchasing. The job of estate agents is to sell property, not to protect your rights as buyers. And they will inevitably recommend a lawyer known and regularly hired by them, who will naturally protect the sale rather than your rights. It is very important to find an independent lawyer.

Lawyers fees. We have heard all sorts of fees charged to buyers who have little idea of average solicitor fees in Spain and so can easily be overcharged. Bear the following facts in mind

Some lawyers charge a percentage of the purchase price as their fee (anything from 1 to 1.5 percent). So, the more expensive your property, the more you have to pay, even though size and price do not necessarily mean more work.

Some lawyers charge another fee on top of the percentage, which they call a "documents fee". We had a message recently from one Euroresidentes user whose lawyers wanted to charge him 1 percent + .75 percent "documentation fee". He was going to be charged a total of over 2500 euros, which was about double the average price for lawyers services in the area of Spain where he was buying his house.

Other lawyers charge an hourly fee, which can range between 100 and 150 euros per hour, depending on the law firm. House transactions do not actually entail much work for a lawyer in Spain. The paperwork is very straightforward and experienced lawyers will need no longer than a few hours to check everything.

If you are getting a mortgage with a Spanish bank, the bank lawyers will usually check the deeds and property register themselves, and a small fee will be included for this in the mortgage set-up costs. This does not mean that you should not hire the services of your own lawyer, but it is something to bear in mind.

We would advise all property buyers in Spain to take the following steps:

• Find a good, independent and recommended local lawyer who has thorough knowledge of the area in which you are purchasing your property. Ask your local consulate - staff there may be able to help. Alternatively send an email to Euroresidentes (euroresi@euroresidentes.com) specifying where you are looking for (or have found) a property to buy, and we will forward the name of a local reputable lawyer experienced in serving the needs of non-Spanish property buyers. We have a long list of lawyers who have been successfully hired by Brits who have purchased real estate in Spain (See this testimony received from a recent satisfied customer: Recommended lawyer in Costa Tropical).
• Once you have found a recommended Spanish lawyer, agree on the fee before you do anything else. If you decide to be charged a fee based on an hourly rate, ask for an estimated number of hours before you agree. If you are lucky to have more than one recommendation of independent lawyers, get two estimates and compare them.
• Don't use a lawyer recommended to you by the property vendor, whether it is a private sale or an estate agent. In both cases the priority of the vendor is to sell as quickly as possible and at the highest price possible. The buyer's interests however are to ensure that this is a legal sale, that the property itself is legal and sellable, the price is fair, the paperwork is correct, the vendor is in a position to sell, legal services are charged according to local rates and, very important, that the property is in no way under threat from local urban policies.

Related:
Spanish lawyers

Mortgages for non residents in Alicante

We have received this message from a British financial advisor of a branch of Caja Madrid in Benidorm.

In our area (Alicante) Caja Madrid currently offers non residents finance up to 85 percent of the value of their chosen property, at a standard rate of Euribor + 0.90 for 25 years. Of course, depending on the client and the amount, these rates may be subject to some flexibility but I am sure you are aware that in the current market, this offer is very interesting indeed

We can also offer a network of international branches along most of the south and east Costas of Spain, a network which is growing all the time. In our international branch in Benidorm, I am one of two specialist advisers, my colleague being a French financial adviser. We pride ourselves on our speed and flexibility and not only can we offer great mortgage deals to non residents but we can also offer a level of customer service that enables all euro resident clients to feel comfortable and relaxed, especially when dealing with such stressful events as purchasing property. We can also promise the same level of service from our German, Dutch, Belgian, Italian and Spanish euro resident colleagues..

The conditions are certainly very good. Usually the top mortgage amount for non-residents is 80 percent of the declared property value over a period of 20 years and euribor + 0.90 is a good deal. We have asked for more information regarding set-up costs and other details and when we receive them we will publish them here.

Anyone interested in further information, send us an email and we will forward it on to the Caja Madrid branch in Benidorm.

Related:
Mortgages for non-residents in Spain
Ranking of Spanish banks

Buying property in Spain

The Spanish property market continues to thrive as more and more people buy houses here as an investment, as a holiday home, as an extra source of income (buy to let) or as a permanent home. And Spain is a wonderful place to make a new home.

However, despite the numerous websites offering advice, financial help, houses for sale in Spain... alot of people fall into one of the many pitfalls when purchasing their Spanish property, and their dream turns into a nightmare. Lots of our visitors have been successful buying a house in Spain, but we do still hear too many horror stories of people who, in the words of the Consul in Alicante, "don't do their homework properly" (often because they don't know where to turn) and end up losing alot, even all, the money they invested in property here.

Euroresidentes offers a section about the Property market in Spain, aswell as sections on Spanish mortgages, property taxes in Spain, Spanish real estate news and a free noticeboard where people can post properties for sale in Spain or properties to rent in Spain.

Because of the popularity of this section among our visitors, we receive hundreds of emails each week from people asking questions, sharing a success story, warning other users against using the services of a certain estate agents, sharing a horror story, praising a certain service.....

So we decided to set up a blog from which to channel this flow of information which could be of interest - and maybe of vital importance - to anyone interested in buying (or selling) property in Spain. We will include all the latest news relevant to house-buyers - good and bad, special offers and real estate promotions, new mortgage deals from all major Spanish banks, news on the state of the Spanish property market, real experiences sent in by our visitors....

If you have any suggestions or want us to cover a specific subject, write to us. If we don't know the answer, we will find out. Euroresidentes is run by a very small team of people who live and work in Spain and have first-hand experience of the property market here. And we work closely with lawyers, bankers and consultants who are always prepared to clarify doubts.

We do not sell houses in Spain, we do not offer mortgages and we do not make any profit when offering advice to our users. Our opinions are objective, and if this blog can contribute to helping you make sense of the very complex, and often ruthless, Spanish property market, then it will have been worth our while.