the aipp rics rde guide to buying a property in spain · the costs of buying property in spain 33...

THE AIPP / RICS / RDEGUIDE TO BUYING A PROPERTY IN SPAIN

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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN

03 Why this guide?

04 Who are the AIPP?

05 Who are RICS?

06 Who are the RDE?

07 Frank and Diane want to buy abroad 08 The property search Property portals, search engines, print, high street agencies, propertyfinders.WhybuythroughaRICS/AIPPmember.

12 Spain’s variety environment Thecountryside,smalltownsandvillages,cities,seaside, urbanisationsandresorts

14 Where in Spain? CostaVerde,Catalonia,CostaBlanca,CostaCálida, theSouthernCoast,theBalearicandCanaryIslands

16 Planning to view Howtoview.Shouldyoutakeaninspectiontrip?

17 Team Frank and Diane Lawyer,gestor,currencyspecialist,gettingamortgage

Contents19 Viewings Allowingforbuyingcosts,checklist,whattolookfor

20 Buying the property Thereservationagreement,obtainingyourNIEnumber,eight thingsyourlawyermustcheck. 23 Preliminary sales contract (arras) Payingfromataxhaven,delayingthesale

24 Contract of sale (escritura) TheNotary,powerofattorney,rentedproperties

26 Registering ownership

27 Inheritance

28 Contributing authors

29 APPENDIX ONE Applying for Registry information

31 APPENDIXTWO The costs of buying property in Spain

33 APPENDIX THREE Related links

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We are going to tell a simple but exciting story, about a couple who buy a house in Spain.

Ourcouple,FrankandDiane,havedreamedaboutthishomeforalongtime.Theyhavetalkedaboutit,planneditandsavedforit.Buttheyareworried.AftertheirmainhomeintheUKthiswillbethemostexpensivethingtheyeverbuyandtheyintendtodoitright.Theyhaveheardaboutpeoplewhohadthesamedreamanditallwentwrong,whoendeduplosingmoneyorevenhavingtheirhomesdemolishedbecausetheyweredeclaredunsafeorillegal.Thisisthestoryofhownoneofthosethingshappentoourcouple.

Butitcouldhavedone.WewillfollowFrankandDianeastheygothroughtheprocessesofbuyingahomeinSpain.AlongthewaywewilllearnthedifferencesbetweentheSpanishregionsandenvironments,fromthewetandwildcoastofGaliciatothedesertsofAlmanzora.WewillinvestigatetheprocessesofSpanishpropertybuyingandshowyouhowtobuysafely.WearebasingFrankandDiane’sexperiencesonthethousandsof

peoplethatweattheAIPP,RICSandRDEhavemetandadvisedoverthepasttenyears.FrankandDianearenotspecificpeople,buttheyhavethesamedreamsandfacethesamechallengesasthetensofthousandsofrealpeoplewhowouldliketobuyabroad.WewillfollowthemfromtheirlivingroomsomewhereintheUnitedKingdom,togettingthekeysandsettlingdownintheirvillaonaSpanishseaside.AlthoughFrankandDianeareBritish,theycouldjustaseasilybe

LarsandLottefromBelgium,MaxandMiafromGermanyorShirleyandSheilafromAustralia.Thedangersareallthesamewhenfolks“leavetheirbrainsbehindattheairport”andtherewardsarethesamewhentheydoitright.Wehopeyouwilldownloadthisguideandkeepithandy.Feelfreeto

printitoffandpackitinyoursuitcase.IfyouhaveafriendthinkingofbuyinginSpain,pleasesenditontothem.Weknowitisimmenselyrewardingtodeeplysavouranothernationthroughimmersionintheircultureasfacilitatedbypropertyownership,andwehopethatthisguidehelpsyoutomakeawonderful–andsafe–startonyourjourney.

Why this guide?

©CopyrightAIPP/RICSSpain/RegistradoresdeEspana

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TheAssociationofInternationalPropertyProfessionals(AIPP)isanot-for-profitorganisation,setupin2006,operatingintheinternationalpropertymarketandisbasedinLondon.TheAIPPnowhasover350corporatemembersin28countriesaroundtheworldincludingestateagents,developers,lawyers,banks,FX,media,technical,advisory&otherinternationalpropertyprofessionals.

The AIPP focuses on two key things:

1. Championing & delivering buyer education and protection through our free buying guides & seminars backed by the AIPP’s Code of Conduct, Arbitration and Dispute Resolution Services. Allofourservicesarefreetopropertybuyers.TheAIPPpresentedtheindustryWhitePapertoUKMembersofParliamentintheHouseofCommonsinNovember2014,withcallsforanAPPG(AllPartyParliamentaryGroup)fortheinternationalpropertyindustry.TheAIPPisalsoaTrusteeoftheInternationalPropertyEthics&StandardsCoalition.

2. Guiding the international property industry to best practice. The AIPP,withitspartners,isnowbringingtothetradeasignificantnewdigitalinitiativetotransformhowdevelopers,agentsandbuyerscantransactamoresecurepropertysale.

Thesaleofpropertyisusuallyan(officially)unregulatedactivityinforeigncountries(itisintheUKtoo,althoughRICSBlueBookisaimingtoimprovestandardshere),yettouchesuponsignificantfinancial,tax,estateplanningandotherownershipissues.Ifyouareatallunsureabouthowtonavigatethemanyissuesthispresentsthenpleasedocontactanindependentfinancialadviser.TheAIPPisnotregulatedtogivefinancialadviceand,accordingly,wedonotseektodosohere.YoucanfindoutmoreabouttheAIPPatwww.aipp.org.uk,which

includesatwo-minutevideoonwhatwedo,free,forbuyers.Dotaketheopportunitytoresearchandconnectwithourmembersinyourcountryofchoice.Unfortunately,wecannotassistmembersofthepublicwithissues

arisingwithnon-AIPPmembers.Membersarelistedonourwebsitewithcurrentmemberstobefoundonourhomepagethroughthesimplesearchfacility.Acoupleofquicktipsbeforeyouread-on:doensureyouuseatruly

independentlawyertohandleanypurchaseyoumakeandyoumayalsobenefitfromreadingourfreegeneralbuyingguide‘How to Buy Overseas Property Safely’andour‘Guide to UK Pension Changes & Buying a Foreign Property’.Youcandownloadthesefreeofchargefromourhomepage.

Who are the AIPP?

Peter Robinson, Managing Director, AIPP

TheAssociationofInternationalPropertyProfessionals

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Confidence through professional standards.

TheRoyalInstitutionofCharteredSurveyors(RICS)promotesandenforcesthehighestprofessionalqualificationsandstandardsinthedevelopmentandmanagementofland,realestate,constructionandinfrastructure.Ournamepromisestheconsistentdeliveryofstandards–bringingconfidencetothemarketsweserve.Weaccredit118,000professionals,andanyindividualorfirm

registeredwithRICSissubjecttoourqualityassurance.Theirexpertisecoversvaluationandresidential/commercialpropertypractice;propertyfinanceandinvestment;projectmanagement,planninganddevelopment;quantitysurveying;facilitiesmanagement.Fromenvironmentalassessmentstorealestatetransactions,

ifourmembersareinvolved,thesameprofessionalstandardsandethicsapply.Webelievethatstandardsunderpineffectivemarkets.Withupto

70%oftheworld’swealthboundupinlandandrealestate,oursectorisvitaltoeconomicdevelopment,helpingtosupportstable,sustainableinvestmentandgrowtharoundtheglobe.Withofficescoveringthemajorpoliticalandfinancialcentresinthe

world,weareideallyplacedtoinfluencepolicyandembedprofessionalstandards.Weworkatacross-governmentallevel,deliveringinternationalstandardsthatwillsupportasafeandvibrantmarketplaceinland,realestate,constructionandinfrastructure,forthebenefitofall.Weareproudofourreputationandsustainit,soclientswhowork

withaRICSprofessionalcanhaveconfidenceinthequalityandethicsoftheservicesprovided.

Alfredo Millá, Chairman of the Property Professional Group of RICS Spain

Who are RICS?TheRoyalInstitutionofCharteredSurveyors

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The Colegio Nacional de Registradores de España, usually shortened to Registradores de España, is the Spanish Registrars Association.

Weareapublicandlegalbody,bringingtogetheralltheLandandCompaniesRegistrarsinSpain.Theseregistrarsarepublicofficersandlegalprofessionalsresponsibleformonitoringthelegalityofdocumentsauthorisedbynotaries,issuedbyjudgesandadministrativeauthoritiesorsignedbyindividuals,toensurethatonlycompletelyvaliddocumentscanberegistered.Tobearegistrar,itisnecessarytobeSpanish,withadegree

ordoctorateinlaw,andtopassacompetitiveexaminationonthecurrentlaw.TheessentialpurposeoftheLandRegistry,andthereforethebasic

functionofregistrars,istoensuresafetyinlegalrelationsconcerningpropertyrights.Bythepublicationofpropertyrightsthroughregistration,afterdebuggingdefectsallegedlyvitiatingthedeed,ifneeded,overallenforceabilityisachieved,makingtheserightsreachundisputedcategory.Onceregistered,noonecanclaimtoignoretheexistenceofthepropertyright,itscontentortheidentityofthepersontowhomitbelongs.TheAssociationwasfoundedin1886andbecameanofficial

professionalassociationinMay1934.Ouraims,apartfromcheckingmembershipandenforcinginternal

rules,aretocoordinatetheprofessionalactivitiesofregistrars,ensuringprofessionalethicsandtheproperexerciseoftheirfunctions,tocollaboratewithadvisorybodiesandpublicadministrationsonmatterswithinthecompetenceoftheregistrar,andtopromotethemodernisationoftheregistries.Topromotebestpracticesinregistrationmatters,withspecial

attentiontoconsumers,theAssociationalsoworksinternationally. Thatiswhywearepleasedtohelpinwritingthisguide.

Who are the RDE?The Spanish Registrars Association

Gonzalo Aguilera Anegón, Dean and President of the Spanish Land and Mercantile Registrars Association

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Itis6.20onaTuesdayeveningintheUnitedKingdom.Sittingonthesofain theirhomeareFrankandDianeJones. ThecouplearewatchingAPlaceintheSunonChannel4,wherethepresenterisshowingacouplearoundavillainMojácar–somewhereFrankhadneverevenheardof.Theyhavewatchedtheshowbefore,butonthisparticulareveningtheyarelookingwithrathermoreinterestthanusualbecausetheyhavefinallydecidedthat nowisthetimetobuyahomeinSpain.Spreadoutonthecoffeetablearepiles

ofbooks,magazinesandnewspaperpropertysupplements,allaboutbuyingpropertyabroad.Sometheyhavebought foradviceandsomebecausetheylistproperties.TheyalsohaveDiane’siPadopenandhavebeenflickingthrough onlineproperties,lookingatmapsand

photosorproperties,evendronefootage.Theyhavegatheredalotofinformation,

becausetheywanttodoitright.Theyaredeterminedtheywillnotbethosepeoplewhorunintotroublewiththeiroverseaspropertypurchases.FrankandDianeareintheirmid-50sand

liveintheUK.Whyaretheythinkingaboutbuyingabroad?Althoughbothareworkingtheyalsobothhaveaneyeontheirretirement.Itwillnotbeanidleretirement;theyareasfitastheyeverwereand arefeelingadventurousaboutlife. Theirchildrenhavelefthometostart theirownfamiliesandFrankandDianeseeitastheirchancetoshineagain.Theywant toopenthemselvesuptonewexperiences,learnanewlanguage,meetnewpeople.WhybuyahomeinSpain?“Whynot?”

saysDiane.

Frank and Diane want to buy abroad

The World � Spain!

FrankandDianearefollowingalongtraditionofforeignersfallinginlovewiththeSpanishculture,lifestyle,environmentandweather.IthasbeenwrittenaboutpoeticallybyGeraldBrenanandLaurieLee,andhilariouslybyChrisStewartandPeterKerr.Readtheirbooksforatasteoftheexpatlifestyle.No-oneknowspreciselyhowmanyforeigners

liveinSpainbecausethelinebetweenlongholidayandsemi-permanentresidenceoftenbecomesblurredandmanypermanentresidentsdon’tinformtheauthoritiesoftheirpresence*.WhatwedoknowisthatBritonshavetraditionallybeenthebiggestforeignbuyersinSpain,witharound750,000BritsbeginningnewlivesinSpain.TheSpanishRegistrarsAssociationfoundthattheBritishmadeup16%ofpurchasesbyoverseasbuyersin2014(downfromnearly40%in2008).NextcametheFrenchwith10%andbuyersfromRussia,Germany,Belgium,SwedenandItalyallwithmorethan5%ofthemarket.Spainisstillattractingrecordnumbersof

tourists;65millioninternationaltouristarrivalsin2014setyetanotherrecord,againwithBritonsmakingupthebiggestcontingent.Itseconomymayhavesufferedinrecentyears,butSpainismorepopularthanever.

*When overseas residents don’t register with the authorities the government doesn’t allocate money to care for them in the health services, so it is vital for people living in Spain to register.

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WhenFrankandDianeboughttheirUKhome20yearsagoithadbeenveryeasy.Achoiceoftwoorthreetownscloseenoughtoeachothers’workplaces,relativesandadecentschool,thebudgetdictatedbytheirdepositandearnings.Theyjustlookedthroughthelocalpaper,wentintoafewestateagentshopsandahandfulofviewingslatertheychoseahousetheybothloved.Everythingwassortedoutbythelawyersandestateagent.Niceandeasy.WiththeirSpanishproperty,thechoicesare

infinitelywider.Sotheirfirststepsaretoseewhattheycangetfortheirmoney,decidewhatsortoflifestyletheywouldlikeinSpain,andwhere.Theyhavebeentoldthattheyshouldbudget15%forbuyingexpenses.Ontheother

hand,theywouldhopetonegotiatealittlemoneyofftheaskingprice,sotheyhavedecidedtolookatpropertiesonorslightlybelowtheirbudget.

Finding a property DianeisalittlemoretechsavvythanFrank, sosheislookingviatheinternetandheisgoingforthetraditionalmedia.

Property “portals”Propertyportalsdidn’tevenexistthelast timeFrankandDianeboughtahouse.Now,virtuallyallpropertiesappearonthem,ineverycountry.Portalsarenotestateagents,theyaremorelikeanonlinemagazinewhereindividualestateagentspaytolisttheir

The property search

Property Portals

Whatportalsdowellisshowingthepropertiesinauser-friendlywaywiththeverylatesttechnology.Theycanevenbeusedonthemove,toresearchpropertyforsaleinaSpanishvillage,forexample,whilesittinginthevillagesquare!Onhertabletdevice(iPad,Nexus,Hudl,etc)Dianeisabletobringupanonlinemapanddrawwithherfingeronthescreenaroundtheareainwhichsheisinterested;instantlyeverypropertywithinthatareaappearsonherscreen.Thebiggestportalsineachcountry–

RightmoveintheUK,SelogerinFrance,Immobilienscout24inGermany–eachhaveaninternationalsectionwithhundredsifnotthousandsofSpanishproperties.Dianealsodiscoverssomespecificallyoverseaspropertyportalssuchaswww.aplaceinthesun.comandSpainspecialistssuchaswww.kyero.com.ThereareportalsaimedatSpanishbuyersbutwithlistingstranslatedintoEnglishtoo,suchas www.idealista.com/en,andiftheyarenotinEnglish,suchaswww.pisos.com,herbrowser(Chrome,Safari,etc)hasasettingthatgivesheraninstanttranslationfromSpanishtoEnglish.Bytheendofhersearch,Dianehassaved50

propertiesinvariouspartsofSpainthatshehaskeptforacloserlook.

CRUNCH POINT: Onedownsidetoportalsisthedifficultyinknowingifapropertyisreallyforsale.Thereisa

tendencyamongsomeagentstolistattractive(orattractivelypriced)propertythatisnolongeravailable,toenticecustomerstotheirownwebsites.Mostportalsaredoingwhattheycantodiscourageagentsfromdoingit.Youmayalsoseethesamepropertylistedbydifferentagents.

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properties.Tousetheportal,Dianegoestothewebsite,typesintothe‘Search’boxherchosenarea,typeofproperty(villa,apartment,farmhouse,landetc),minimumandmaximumbudgetandnumberofbedrooms.Instantlytheportallistsallthepropertiesthatmatchhercriteria,fromarangeofdifferentagents.Shecanthenflickthroughthemandsave

toherowndedicatedlistanyshewantstotakeacloserlookatlater.ShealsoprintsthedetailsoftheonesshelikestoshowthemtoFrank.Withacoupleofthepropertiesshelikesmostofall,Dianeclicksonthecontactdetailstoseewhotheagentisandwhatelsetheyoffer.

Search EnginesPortalsarenottheonlyresourceonline. AfterafewsecondsofGoogling,Dianefindshundredsofestateagentwebsitesandonlinemagazinestolookat.Aswellasthese,shealsofindsherself

invitedtosignupforfreeguidesofferingadviceonbuyingpropertyinSpain.

CRUNCH POINT: This is a potential risk.Peoplewiththemoneytobuyapropertyabroadareatempting

targetforanyone,honestornot,tryingtosell“investments”.TherelaxationofUKpensionrulesin2015hasmadethoseover55evenmoretempting.Thefirststepingettingyoutopartwithyourmoneyoftensoundsinnocentenough–a“pensionreview”forexample,orafreedownloadableguide.Thevastmajorityoftheseareentirelyinnocentandoftenveryuseful;atworstyoumaygetasalescallfroman“investmentexpert”.Butwhengivingoutpersonaldetailsuseextremecare,especiallywhenitcomestofinancialdetails.

Six critical reasons to buy through an AIPP/RICS member

Sadly,thesecommentsaretypicalofthoseyouhearwhenbuyingpropertyinSpain.AIPPandRICSmembersareboundbyCodesofConducttoofferanhonestservice.AIPPManagingDirectorPeter Robinson answerssixcommonquestions:

1. Is buying a home in Spain difficult? Notatall!However,potentialheartache,timeandmoneycanbesavedbyjust‘startingright’.Mostpeoplepurchaseaforeignhomewiththeirspouseorpartnersoitisveryimportantthatyouarebothcompletelyinagreement,thatyouwantthesameoutcomes,samecountry,region,propertyandlifestyle.Takesomequietandreflectivetimetopondertheseissuesandperhapswritedown,separately,whatitisyoureallywantbeforeembarkingonyourjourneytogethertowardsapurchase.SelectingagoodagenttoworkwithisevenmoreimportantthanintheUKastheprocessofbuyingandthensupportfollowingapurchaseisdifferent.Itcantakemuchlonger(often6-18months)tofindtherightlocationandpropertyinSpainanditwillbeamorecomfortableprocessifyouragentisreputableandcanofferyoutheappropriate,expertguidance.BeingamemberoftheAIPP/RICSisagreatstart.

2. Any tips on budgeting? Ifyouhaveapropertyinyourhomecountryyouunderstandwhatitcoststobothbuyandownaproperty.ButwhilethesalespriceofyourSpanishpropertymaybeappealing,theactualcostofbuyingand

owningitmaybehigherthanyouthought.Forexample,whenjudgedagainstaUKor

Australianpropertybynumberofbedroomsorpersquaremetre,aSpanishpropertymaybeverywellpriced.Butyouneedtofactorinaround12%-15%forbuyingcosts,especiallywhenbuyingusingamortgage.Thesecostsneedtobepaidforincashandcovermainlylegal,notaryandlocaltaxes.Therunningcostsmustbecarefully

consideredtoo.Hotterweatherandtheeffectsofseaaircanmeanspendingmorecareandcashonyourproperty.Detachedvillaswithprivatepoolsneedmorecaretakingthananapartment,forexample,andtherewillbelocalmunicipaltaxestopaytoo.Itiswiththisinmindthatbuyersshouldconsidertherentalappealoftheirproperty,andindeedwhetherlocallawsallowthemtorenttheirpropertyout.Rentingoutyourpropertyevenforashorttimecanhelptooffsetorcompletelycoverthecostsofmaintenanceandownership.However,thisincomewillbesubjecttotaxationsodoyoursumscarefullyandcheckwiththeauthorities.

3. Could we save by not getting a lawyer?FewBritishpeoplewouldbuyapropertyintheUKwithoutappointinganindependentlegalrepresentative,andthesamegoesinmostcountries.Sowhytaketheriskwhenbuyingabroad?TheAIPPandRICSadviseappointingatrulyindependentlawyer(abogado)whoonlyhasyourbestinterestsatheart.Alawyerlinkedtotheagent/developersellingthepropertymaybe

“Thatcrack?Purelycosmetic.”“Youdon’tneedasurvey,no-onegetsthem.”“I’vegotamatewho’salawyer;he’lldoitmuchcheaperandquicker.”“Okay,ithasn’tgot‘official’permission,butthisisSpain!”“No,it’ssimpletogetutilitiesconnected,they’lldoitonyourfirstmorning.”

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Magazines, newspapers, booksFrankishappierusingoldtechnologyandoverthecourseofaweekhasgatheredupapileofmagazinesandnewspapersupplements.Mostnationalnewspapersincludeapropertysupplement,especiallyattheweekends,andtherearealsomagazinesdevotedtooverseasproperty,suchasAPlaceintheSunintheUK,orglobaltitlessuchasAbode2.ManycountriesalsohavespecialistmagazinesdedicatedtoSpain,suchasLivingSpainintheUK.Allofthesecarryadverts(aswellasadviceandinformation)forpropertyinSpain.Frankhasalsobeentohislocallibraryand

orderedbooksonbuyingpropertyandretiringtoSpain.Lookingcloser,henoticeshoweverthatmanywerewrittenatleastadecadeago.

BUYING TIP Asafirststepintheirsearch,Frankhasboughttwoidenticalcopiesofapopular

overseaspropertymagazine.HekeepsoneforhimselfandgivesonetoDiane,andeachofthem,separately,circlespropertiesinthemagazineusingcolouredpens.ApropertyFranklovesgetsagreencircle,onehequitelikegetsorangeandapropertyhedislikesgetsred.Onlyafterfinishingcirclingalltheirpropertiesdotheyswapmagazinestoseewhattheotherreallylikes(andhates!).

Six critical reasons to buy through an AIPP/RICS member (cont...)

workingforthe‘deal’.Bewaretheterm‘solicitor’too.InEnglishitnormallymeansaqualifiedlawyerbuttranslatedfromSpanishitmayrefertosomeonewithoutanyformallegaltrainingbutwithabusiness‘advising’onpropertysales.YoucanfindabogadoswhoareAIPPorRICSmembersat www.aipp.org.ukandwww.ricsfirms.com.

4. What about a survey?YounormallygetasurveydoneonaUKproperty,sowhynotonaprospectiveSpanishhome?Manyrepossessedorunsoldhomesbuiltintheboomof2000to2007havelainempty.Unlessyourpropertycomeswithaspecificguaranteethatyourindependentlawyerverifies,thenAIPP/RICSrecommendyouhaveabuildingsurveycompleted.Ifyouarebuyinga“resale”property,previouslyownedandoccupied,asurveyiswellworthhavingtoo.Spanishbuildingregulationshaveimprovedimmeasurablyoverthelast20yearsorso,butevenmorerecentpropertiesmighthavebeenbuiltby‘cuttingcorners’andneedcheckingoverbyaprofessional.

5. What issues do permanent emigrators face?Relocationforshort/longperiodsoronapermanentbasisbringsdifferentconsiderations.SchoolstendtorequireapplicationsinJanuaryfortheautumnintake.Taxresidencyisabigsubjectandyoushouldtakespecialist,regulatedadvice.IfyouarereceivingapensionintheUKyouneedtoconsidertheupside/downsideofsterlingcurrencyfluctuationsintoeuros.Acurrencybroker(severalmembersarelistedontheAIPPwebsite)canhelpyoumanage

yourmoneyanddeliverbanktransfersthatcouldsignificantlyimprovewhatyoureceiveversusyourbankdefaultoption.HealthcareisfreelyavailabletoEUcitizensinmemberstatesbutyoushouldregisterwiththelocaldoctorandsatisfyyourselfthatyourSpanishlanguageskills,orthedoctor’sEnglish,aregoodenoughtobeunderstood,perhapsinanemergency.HospitalsvaryintheirabilitytounderstandEnglishandcanbehard-pressedtocopeifasignificantnumberofolderexpats(ofmanyforeignnationalities)liveclosebyandarefrequentusersoftheirservices.Planningeverydayconsiderationsaroundanup-to-datepassport,Europeandrivinglicenceandthelogisticsofmovinghousecontentsinalorryforapermanentmove,alsoneedcareandattention.

6. Planning for the future MakingalegallybindingwillinyourhomecountryandSpainisveryimportant.Inheritanceandsuccessionplanningmaybesobersubjectsbutyouwillneedtopaycarefulattentionifyouaretoleavetoyourfamily/beneficiariesallthatyouintended.On17August2015,EuropeanUnionlegislationon‘forcedheirship’changedaccordingtoregulationnumber650/2012.AnypersonthenowningpropertyinaparticipatingEUstate(whohastakenappropriateactionbeforetheirdeath),canchoosebetweenthelawofthecountryoftheirhabitualresidence,orthelawoftheirnationalitytogovernthedevolutionoftheirEUestate.Betweenyourhomecountry,SpainandtheEuropeanUnion,rulescanchangefrequently,sogettingproper,up-to-dateandregulatedtaxadviceisessential.

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On the high streetWhenevertheygotoSpain,FrankandDianeenjoylookingatestateagentwindows.It’sagoodplacetostart,becauseevenwiththegrowthofportalsandtheweb,goodpremisesisanearlyindicationofarespectableagent.Alocal,trainedandexperiencedagent

shouldbeeveryhomebuyer’sbestfriend.Althoughpaidbytheseller,itisthebuyertheyneedtoimpressandtheyshouldbepricingpropertyfairly,buttosell.Theywillbeabletoofferguidanceonallaspectsofthearea,thepropertyandthebuyingprocesses.Manywillstayintouchandhelpbuyerslongafterthesale–thisisaspecialisedmarketwherewordofmouthrecommendationgoesalongway!YoursafestbetistobuythroughanAIPP

and/orRICSmember,astheyaretrained,vettedandhavesigneduptoacodeofconduct.ToseeAIPPandRICSmembersworkinginSpain,consulttheirwebsitesatwww.aipp.org.ukandwww.ricsfirms.com.

BUYING TIP Spainhasprofessionalorganisationsforestateagents,bothatlocallyandnationally.Bestknown

nationallyareAPI(AgentesdelaPropiedadInmobiliaria,www.consejocoapis.org)andGIPE(GestoresIntermediarioenPromocionesdeEdificaciones,www.gipe.es/en).APIandGIPEmembersshouldbetrained,butensurethattheagentyouchooseisstillamember(orwaseveramember)bylookingattheorganisations’websites.Frankispuzzledtoseethesamepropertyon

rivalagents’websites.Therecouldbeseveralexplanationsforthis.Thesellermaybetryinghisluckwithtwoormoreagents,justastheydoinothercountries.Theagenciescouldbeteamingup–whichmakessenseinSpain,whereoverseasbuyersoftensearchacrossawiderangeoflocationsandispossibleduetotherelativelyhighcommissions.Anotherpossibilityisthattheagentislistingpropertyheisunauthorisedtosell,tomakehiswebsitelookmoreenticing–magicallythepropertywillhavebeensoldwhenyouasktoviewit!Rememberthatjustbecauseanagentis

fromyourcountryorspeaksyourlanguagewell,youshouldnotabandonallcaution.

Property findersAnotheroptionistoemploytheservicesofa“propertyfinder”.Theyaremostpopularwithexpatriateexecutiveswhoareshortoftime,butreceivearelocationbudgetfromtheiremployer.Propertyfindersareusuallyexpatsthemselvesandsoareabletoofferasupportive“handholding”roletonewarrivals.Thebenefitsincludebeingthebusybuyer’sfriendontheground,siftingthroughpropertyandhelpingtonegotiatepricesfromapositionoflocalknowledge.Intheorytheycouldpaybacktheirownfeesbygettingyouacheaperpriceandsavingyoutimeandeffort.However,thisisanunregulatedactivityand

youneedtobesurethatapropertyfindergenuinelyhascontactsandknowledgeinyourchosenareaandpricerange.

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ForFrankandDiane,asformanypeople,buyinginSpainisaboutmorethanwarmweather.Itisthechancetoreassesstheirlivesandtheirpriorities.WhattheywanttodoinlifewilldeterminewhattheywantfromtheirSpanishproperty.Dotheywishtotakeonthechallengeof

livinginanentirelynewculturewherealmostno-onespeaksEnglish,orwouldtheypreferthesafetynetoffellowoverseasresidentsnearby?Dotheywantsomelandtoenjoyamorerurallifestyle?Couldtheycopewithlookingafterchickensandolivetrees,orwouldtheyreallyprefertojustrelaxbythegolfcourseandpool?Eveniftheywouldliketo,couldtheymeetthosechallenges,physically?Ifbuyinginretirement,dotheyhaveaplanforwhentheybecomemorefrail?Howaretheywithextremeheat?WilltheybeabletolearnSpanish;theycouldfeelveryisolatedinruralareasorsmalltownsiftheycannot.WilltheybespendinglongenoughinSpaintomaintaintheirowngardenandpool?Willtheyeverwanttorentthepropertyout?Ontheotherhand,cantheyaffordtobuythestress-freepropertieswhereeverythingisdoneforthem?Thesedecisionswilldeterminethesortof

environmentwheretheychoosetobuy.Hereareafewoptionsforthemtothinkabout.

Living in the countrysideSpainhasaround95peoplepersquarekilometre.TheUKhas265,Belgium370andtheNetherlandsnearly500.SofornewarrivalsfromnorthernEurope,Spainisbigger,emptier,hotterandfarmoremountainous. Gojustafewmilesinlandfromthecoast andit’snotunusualtoseefarmersridingdonkeysandshepherdstendingflocks. Thisisthe‘campo’,thecountryside. Peoplearejustaswarmandfriendlyas onthecoasts(maybemoreso),butthey areunlikelytospeakEnglish.Livinginthecampocertainlyhasits

attractions–thequiet,thespace,thebeautybothofthecountrysideandthefarmhouses,andallatamuchlowerpricethanyouwouldnormallypayforBritishruralproperties.Iflookingtobuyinthecountrysideyouneedtopaycloseattentiontowhereutilitysupplieswillcomefromandhoweasyaccesswillbein

weatherextremes.Historically,therehavebeenproblemsoverplanningandownershipofruralpropertiessoalwaystakeextracaretogetagood,experiencedlawyer.Bealittlecautiousifyourlawyerisrecommendedbyyourestateagent;mostareentirelyreputablebutinasmallcommunitytheycouldbecloselyconnectedsociallyorbyfamilyandbemoreloyaltotheagentwhoregularlysendstheworkthantothe‘oneoff’housebuyer.Certainly,youshouldnotusethesamelawyerastheseller.

Towns and villages50yearsago,thevastmajorityofSpaniardslivedinvillagesandsmalltowns.Fromthe1970stothe1990smorethan10millionmovedprovinces.Manyoftheyoungerpeoplemovedtothecoastslookingforbetterpaidworkinthetouristtradewhilemillionsmoremovedtothecities.Sincethen,however,inthesouthandeastespecially,expatsfromBritain,northernEuropeandevenfurtherafieldhavearrivedseekinganewlifestyleandrevivingvillagelife.Schoolshavereopened,villagefiestasbegunagainandlocalpeoplehavecashedinonoldpropertiesandland. Inthenorthernprovinces,therearestill entireabandonedvillagesforsale,while inAndalusiathepicturesque“whitevillages”havebeengreatfavouritesamong Britishbuyers.IfFrankandDianechoosetoliveinasmall

town,whetheronthecoastortheinterior,theywillhaveahugechoice.Theycouldlivein

Spain’s varied environment

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atownlikeTorrevieja,inAlicante,withalargeBritishpopulationthathascreateditsowninstitutionssuchasweekendcarbootsales,andstartedthesameclubsandsocietiesasat‘home’.Ortheycouldoptforatownintheinteriorwithhardlyanyforeignresidents–butwithrichtraditionsandfiestasbasedaroundtheCatholicfaithortheruralwayoflife.TheymightnotfindmuchEnglishspoken,butwillbeabletoimmersethemselvesmorefullyinoneoftheworld’sgreatlanguagesandcivilisations.

The citiesBudgetflightstoMadrid,Barcelona,Alicante,Málaga,PalmadeMallorcaandsomanySpanishcitieshavemadetheideaofaweekendboltholeveryappealing.Whilecityapartmentsareoftenhighlyexpensive,andcitiescanbepollutedandnoisy,Spainhasinvestedheavilyinthosethingsthatbringintourists,suchastransportinfrastructure,museums,theartsandculture.Comparedtomanycountries’cities,Spain’sareclean,safeandwell-managed,withextremelygoodshoppingbothinstreetmarketsandhigh-endinternationalbrands.Andofcourse,thecafécultureintapasbarsandstreetcafésisunsurpassed.Therental

potentialforapropertyinthecitycanbe verytemptingtoo.

The seaside Mostoverseasbuyerscomefortheseaside.Itisn’tjustthechancetoswiminit,thecoastalstripalsohasthefacilitiesandinfrastructure–airports,golfcourses,nightlife,internationalschools,attractiveproperty,English-speakingprofessionals–aswellascoolingseabreezesandaready-madeexpatsociallife.Pricesare,ofcourse,moreexpensive,butyoumightnotnecessarilyneedaseaviewandmanyoftheseasideadvantagescanbehadafewmilesinland.Spainisblessedwithtwowonderfulislandgroups,theBalearicsintheMediterraneanandtheCanariesfurthersouthofftheNorthAfricancoast(whichmakesthemwarmallyear).

UrbanisationThewordurbanisationmaynotsoundveryenticing,buttherearesoundreasonsforexpatstochoosethem.Essentiallytheyarehousingdevelopmentsbuiltoutsidetownsandvillageswheretheownersformthemselvesintoacommunityandmanage thedevelopmentamongstthemselves. Thebenefitsofbuyingonanurbanisation

include:farlessriskofbuyingan‘illegal’property,theyareagoodwaytomeetthelocals(theSpanisharejustaslikelytobuyonanurbanisationasforeignersare),andyoucanhaveasayinhowyoururbanisationis runifyouchoosetogetaplaceonthemanagementcommittee(indeedyoumayhavetowhetheryoulikeitornot!).

Resort propertyThisisundoubtedlythestress-freeoption(solongasmoneyisn’tshort).BuyonaresortandFrankandDianewon’thavetoworryaboutcleaningthecommunalpool,wateringthegarden,maintainingtheroadsorfindingrentalguests.Dependingontheresorttheychoose,ofcourse,theyarelikelytobelivingamongawiderangeofforeignownersaswellasSpanish.Therewillbesocialandsportsactivitiesonsite,oftenincludingbeachclubs,golfcourses,tenniscourts,gymsandspas.Thedownsidesincludetheexpensive

managementandmaintenancefees,thesomewhatartificialnatureofsomeresorts,thecontroloverhowyoucandecorateyourhomeoutside(thiscanbethecasewithurbanisationstoo),thefactthatmanyofyourneighboursmaybeanendlesschurnofholidaymakers.

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Costa VerdeNorthernandsouthernSpainhaveverydifferentclimates.Thenorth-west,stickingoutintotheBayofBiscayandtheAtlanticandknownasGreenSpainorCostaVerdecomprisesGalicia,Asturias,CantabriaandtheBasqueCountry.Itisgreenerbecauseitiswetter,withmountainsthatarestillhometo(afew)wolvesandbears,leadingdowntolushmeadowsandforestsandontofishingvillagesonthecoastthatstretchessome800kilometresfromFrancetonorthernPortugal.Howwetisit?It’swetterthanWales,with1,545mmofrainonSantiagodeCompostelacomparedto1,150mmonCardiff.TheCostaVerdeismuchlesstouristythantheothercoasts,butthatismoredowntotheunpredictableweatherthananylackofbeauty.Thereisa goodchoiceofruralpropertyhereatreasonableprices.

Catalonia and the North EastThemostwell-knowncityisBarcelona,themostfamouscoasttheCostaBravawithresortssuchasBlanes,LloretandTossadeMar.Itisagreen,ruggedandmountainouscoastwithsandybays.Althoughitattractedlargenumbersofpackagetouristsintheearlydays,ithasmadeaconcertedattempttogoupmarketinrecentdecadesandpricesherearerelativelyexpensive.Climate-wise,theweatherisperfectfor

summers,butcangetchillyinthewinter.IndeedanyonelookingforwinterwarmthshouldheadsouthofValencia.

The Costa BlancaSouthofValenciatheweatherwarmsupallyearandthemostpopularexpatareasstart.IthasaclimatejudgedbytheWorldHealthOrganisationtobethehealthiestintheworld,withwarmthallyearbuttemperedbyMediterraneanbreezes.CostaBlancaNorthisgreener,moremountainousandwithsmaller,quieterresortsandexpat-friendlytownslikeDéniaandJávea.Inland,theJalónValleyispopularwithoverseasbuyers.WhenyoumovesouthofBenidormtheCostaBlancaSouthisflatteranddryer.Whileithassufferedfromoverdevelopment,itisalsocheapertobuyinresortssuchasTorreviejaandOrihuelaCosta.ThehistoriccityofAlicantesitssouthofBenidormandtheCostaBlanca’sbeautifulinteriorincludesodditiessuchasthepalmforestofElche.Year-roundgolfisaspeciality.

Costa Cálida and Costa AlmeríaSpainbecomesmorearidasyouheadsouthfromtheCostaBlanca,includinganactualdesertatAlmanzora.However,itisalsoamajoragriculturalsuppliertoo,especiallyinMurciainthenorthernsectionandinlandtothesouthofAlmeriacity.SouthofMurcia,withinAndalusia,Almeriawasarelativelyquietandpoorprovinceuntilthetouristsandnewresidentsarrived,pricedoutoftheneighbouringcostas.InMurciatherearewell-knownresortsaroundtheMarMenor,inthenorthinwhatiscalledtheCostaCálida,andfurthersouth,MojácarandRoquetasdel

Where in Spain?Spain’s Regions

1. Andalusia2. Aragón3. Asturias4. Cantabria5. CastillayLeón6. Castilla-LaMancha7. Cataluña8. Extremadura9. Galicia10. IslasBaleares11. IslasCanarias12. LaRioja13.Madrid14. Murcia15 Navarra16. PaísVasco17. ComunidadValenciana

Costa Verde Costa Blanca

SpainismadeupofAutonomousCommunities(“autonomies”)whichfurtherdivideintoprovinces.ForbuyerslikeFrankandDiane,thedifferencesmaybeofonlypassinginterest,butprocedurescanvarybetweenregions,forexample,ingettinganNIEnumber,andtherearesmalldifferencesinlawsbetweenautonomieswhichyourlawyershouldbeawareof.Languagestoo,canvary:Catalonia,Valencia,theBasqueCountryandtheBalearicshavetheirownlanguages,sowhileDiane’srudimentaryCastilianSpanishwillallowhertobeunderstood,thelocallanguagesaremoreincommonuse.

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MarontheCostaAlmería.Intheyearsuptothefinancialcrisistheseareassawamajorpropertyconstructionboom.

The Southern CoastThesouthofSpainincludesthewell-knownCostadelSolinthemiddle,thelessfamousCostaTropicaltotheeastandCostadelaLuzrunninguptoPortugal.WithresortslikeAlmuñecar,Nerja,

Torremolinos,Fuengirola,Mijas,MarbellaandEsteponaitistheclassicSpanishproperty-buyingdestination.TheBritisharestillthebiggestbuyershere,buttherearealsolargenumbersofRussians,Belgians,GermansandScandinavianstoo,attractedbytheunrivalledopportunitiesforfun,withgolfandwatersportsfortheenergetic,alongwithgreatshoppingandrestaurants.Hotinsummer,warminwinter,openallyear,ifyouwantyoucanliveherelikeinEssexorRotterdamwithsunshine;yettraveljustafewmilesinlandandyou’restraightbackinoldSpain,withitsroughruraltraditionsandgrandhistoryincitieslikeGranada,Málaga,Córdoba,Seville,JerezandCádiz.

The Balearic IslandsMallorca,MenorcaandIbiza(andthetinyislandofFormentera,offIbiza)formtheBalearicIslandsintheMediterranean. OnMallorca,themadnessofresortslikeMagalufsitsalongsideclassyseasidevillagesandresortswheretheSpanishroyalfamilyspendsitssummersandthelikes ofRichardBransonhavehomes.Ithassomethingforeveryone,includingthebeautiful(andexpensive)cityofPalma, artycommunitieslikeDeiàandValldemossaalongthenortherncoastandthemorefamily-orientedresortsoftheeastcoast. Aswellasvillasandholidayapartments,beautifulandhistoriccity-centreapartmentsandconvertedfarmhousesintheinterior arealsopopular.MenorcaisespeciallypopularwithBritish

families.Itisquieter,moreeasy-goingandlessexpensivethanitsneighbours,buttravellingthereislesseasyinwinter.NoproblemsgettingtoIbizaallyear,wherethepartyneverstops.Althoughitmaybeknown

foritshedonisticlifestyle,Ibiza’sattractionsalsoincluderollingpine-coveredhillsandhiddencoves.PropertyisamongthemostexpensiveinSpain.

The Canary IslandsTheCanaries,sittingoffthecoastofMorocco,arewarm,butnotespeciallyhot,allyear.Buyhereandyoucangetfourseasonsofenjoyment(orrental).Theyarecomprisedofsevenislands:Tenerife,Lanzarote,Fuerteventura,GranCanaria,LaPalma,LaGomeraandElHierro.Eachisdifferent,somesandy,somemorevolcanic,otherswithvibrantnightlifeandcheapholidayapartments,othersquieter.Buyinghererequirescarefulconsiderationaseachislandissodifferent–it’snotlikebuyingintheCostadelSol,whichhasabitofeverything.TheCanaryIslandsmaybeknownfortheirinexpensive,year-roundholidayvibe,buttheyalsohavegreatnaturalbeauty,deepgorges,bananaplantationsandSpain’shighestmountain.

Costa Almería

Balearic Islands

Canary Islands

Costa del Sol

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A trip to SpainFrankandDianedecidetomaketheirownwaytoSpain.Theycallafewoftheagentsintheirchosenareaandtakeadviceonhowmanypropertiestheycanviewinaday.Oneagentinparticularseemsverypushy.“Don’tworryaboutanyotheragentsinthearea,”shesays,“weallpoolourpropertiesanyway,soIcanshowyouthemall.Infactwecandoitallforyou,wehavelawyers,ourownin-housesurveyor.Youcanevenstayinoursubsidisedguesthouse!”Agentsdoindeedoftenshareproperties,butyoushouldneverusean“in-house”lawyer.Frankdecidestosteerclearofthisagent.

CRUNCH POINT Take Control!Hereisthecruxoftheproblemfor

ForeignpeoplebuyingpropertyinSpain:thelegalsystemisdifferent,thelanguageisdifferent,theprofessionalcultureisdifferent.VitallegalandplanningdocumentswillbeinSpanish.ProfessionalswhoserolesFrankandDianethinktheyunderstandmaybehardertofind,whiletheyaresuddenlyexpectedtounderstandwhata‘gestor’or a‘notary’does.Itcanfeellikecostsare

mountingupallthetime,whileattheback oftheirmindtheyarerememberingthenewsreportsofpeoplelosingtheirlifesavingsorhavingtheirhomesbulldozed!Andtheyarenotdoingthisfromthe

comfortoftheirownhome,withfriendstoconsultwith,butinSpain,probablyfromahotel,withtheclocktickingbecausetheyhaveflightshomescheduled.Thisiswhatisknownasbeingoutofyour

comfortzoneandexplainsexactlywhysomanypeoplemakemistakes.Subconsciously,buyersarelookingforsomeonetotrust,buttheonlypeopletheyaretalkingtoaretryingtosellthemanexpensiveproduct,aproperty.Nowonderpeopledroptheirguard!

BUYING TIP FrankandDianeneedtogetbackincontrol.Theyshoulddothisbeforetheyevenleavethe

UKbypreparingforeacheventualityandrecognisingpotentialproblemsinadvance.Firsttheyneedateamofpeoplebehindthem.SowhileDianeischeckingflightprices,Frankisorganising“TeamFrank&Diane”.Forastarttheymustalwaystakeindependentlegaladvice.

Planning to viewInspection trips vs. going it alone

CRUNCH POINT: Withsomuchplanningalreadydone,Frankiskeentogetontheinternetandbookflights.

ButthenDianeseesanadvert:“Inspectiontrips,just€49!!”AninspectiontripisashortbreakinSpain

subsidisedbytheagent,whowillbeyourtourguideonthetripwhiletryingtosellyouaproperty.Inthelastbuyingpropertyboomtenyears

ago,entirejetswerebeingcharteredbydeveloperstobringBritonsoverfortwoorthreedaysasacaptiveaudience,whilecommission-desperateagentsblastedthemwithhard-selltechniques.Theygainedsuchabadreputationthatthesedaysinspectiontripstendtobecalledsomethingdifferent–“discoveryvisits”or“viewingtrips”perhaps.Theadvantagetothehouse-hunter,however,wasacheaptriptoalocationtheymightlike,withexpert(ifbiased)guidancetothelocalareaandnoneedtoworryaboutbookinghotelsorcars.Thedaysofthosekindsofmassinspection

tripmaybeover,butmostagentswillhelppotentialclientsinotherways.Forexample,theagentmaygivethemafreenightinaresort,orpromisetorepaythecostofflightsiftheydoagreetobuy.Thereisnothingwrongwithtakinganinspectiontrip,butyouneedtobeawarethatyouarenotstayingwithfriends,butwithanagentwhowon’tearnacentfromthetripunlessyoubuyaproperty.

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LawyerThelawyerisyourmostimportantteammember.Itissensibletoensurethatthey areonyoursideandhavenofinancialconnectionwiththeestateagentordeveloper.Thiscanbeeasiersaidthandoneintheexcitedflushofmakinganofferonahome.Whatwillyoudowhentheagenttellsyouaboutthebrilliantlawyertheyalwaysworkwith?Manyagentswillindeedbeabletorecommendagood,fairandreasonablypricedlawyerwhospecialisesinproperty,sowhynotusethem?Ifyoudo,however,doaskformorethanonerecommendationandasktoseequalificationsandreferences.Onewayaroundtheissueistoengagethe

lawyerinadvance.Feesvarydependingontheservicesprovided,butareunlikelytobelessthan1–1.5%ofthepropertyvalue,plusVAT.Younormallyonlystartpayingwhentheystartworkingforyou,perhapsongettingyouridentitynumber(NIE)andopeningabankaccount(whichshouldalsobedonebeforefindingaproperty).Youwouldtypicallypayupto€1,000atthispoint;therestbystages.FrankandDianecanfindspecialist

Spanishpropertylawyersinanyofthemagazines,booksandwebsitestheyvisit.

WithaBritish-basedlawyertheyshouldfirstcheckthattheyarequalified,reliableandhaveexperienceoperatinginSpain.Mostimportantisthattheyareconscientious,astheywillbetakingthebuyer’splaceinthenegotiationsand“duediligence”.CantheybetrustedtoaskallthequestionsFrankandDianedon’tknowtoask?FrankchecksthattheUK-basedlawyersareregisteredwiththeappropriateLawSocietyintheUK–eventhoughtheworkinSpainwon’tberegulatedbythem–andthattheyarequalifiedaslawyers,“abogados”,inSpain.Theyshouldalsobespecialistsininternationaltransactions.Agoodplacetostartwhenlookingfor

alawyeristheAIPPwebsiteortheRICSwebsite.ThereyouwillfindlistedseveralSpanish-specialistpropertylawyersasmembers–basedbothintheUKandSpain.

Currency (“FX”) specialistWhentransferringlargeorregularamountsofmoneyabroadthebestmethodisviaaspecialistcurrencybroker.Theywillgiveyouabetterrateofexchangethanusingoneofthemoreobvioussuchasyourdebitcard,highstreetbankorairportcurrencyshop.

Team Frank and Diane

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Ontheotherhand,ifthepoundstrengthensto€1.40bycompletionthenthehousewouldhaveonlycost£98,570hadtheyboughttheeurosatthelastmoment,andtheyhavelostout.Frank,beingmoreofarisktaker,wasratherlookingforwardtotrackingtheexchangerateastheprocessmovedon,butDianeconvinceshimtoplaysafe.Buyingaforwardcontractmeanstheyknowexactlywhatitwillcost.Andthegoodthingis,theydidn’tneedto

paythemoneywhensettingtherate,onlywhenactuallycompletingonthepurchase.

BUYING TIP GestorThisrolegoesbacktothedays

whenmanypeoplewereilliterate,andneededarepresentativetodealwithbureaucracy.Nowtheyarehelpfulnotonly indealingwithbureaucraticaspectsoflife,likeavoidingendlessqueuing,butalsoin, forexample,organisingtheconnectionofutilitieswhenyouhaveboughttheproperty.Alawyercouldalsoassistwiththis.

Howmuch?Around3or4%ontheexchangerateandusuallywithnotransferfees.Ona£100,000propertyanFXfirmshouldsaveyouseveralthousandpounds.FrankandDianefindtheprocessisquite

simple:theygotothewebsiteofoneofthecurrencybrokers(theyareregulatedbytheFCAandassafeasabank)andareinvitedtosetupatradingaccount.Thentheydecidewhethertomakea“forwardcontract”,whichsetsthepriceoftheeurosnomatterwhentheyareactuallytransferringthefunds.Theadvantageofthisisindeterminingexactlywhattheywillpayfortheirproperty.Exchangerateschangeeverysecond,andwithoutaforwardcontracttheywouldneverknowexactlywhatitwouldcostuntilthedayofpurchase.FrankandDianehavesetabudgetof£100,000andagreetobuyeurosat€1.38,whichtheyknowtheycanafford.Iftheypurchasefor€138,000butbythetimetheycompletethepoundhasdroppedto€1.36,thentofind€138,000wouldhavecostthemanextra£1,470,perhapstakingthepropertyoutoftheirreach.Buyinginadvancehassavedthemthatrisk.

Getting a mortgage

Manybuyerswillfinancetheirhousepurchasewithamortgage.Themortgageproviderwillnormallyrequirethefollowingdocumentation:• Incometaxdeclarationforthepasttwoyears• Bankstatementsfromthepastyear.• Payrollorotherproofofincomeforthe pastsixmonths.• Alistofmortgageloansalreadyheld.• Astatementofyourassetsandliabilities, confirmedbyanaccountant.• Acopyofyourpassport.

Whenlookingforamortgageloan,consider:• Thebankwillinsistthatthepropertybe registeredinyourname.Thecontractof sale,receiptoffundsandconstitutionofthe mortgagewillhappensimultaneously,soan agentfromthebankwillbepresentatthe signingofthedeedsandwillforwardthe moneytotheseller.• Mortgagesaregenerally“adhesion”(takeit orleaveit)contractswhichincludegeneral conditions.Yourlawyershouldensurethat yourmortgagetakesintoaccountconsumer protectionlegislation.• Thepropertymayalreadyhaveamortgage onitsignedbythesellerordeveloper.Ifso, thebuyermustensurethatheorshewill notbesubrogatedtothismortgageloan (i.e.becomeresponsibleforit). Ifthebuyerdoessubrogatehimselftotheloanreceivedbythesellerordeveloper:• Heshouldrequirethesellertoshowa certificateissuedbythecreditorbank, statingtheoutstandingbalancedue.• Hecanaskthecreditorbankforamore favourableinterestrateandtermfor payment,andiftheyrefusetodoso,may requestanotherbankorentitytoimprove suchconditions.Thenthenewentitypays thecurrentholderofthemortgagethe outstandingsumandmovesintoitsplace asacreditor.Suchoperationsarevirtually free,beingtaxexempt,withnotary,registry andbankfeesstrictlylimitedbylaw.

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ChecklistFrankandDianehaveflowntoSpain.Theyknowwhattheywant:avillaontheCostaBlanca.Theyknowtheirbudget:£100,000,whichwiththeirforwardcurrencyarrangementisguaranteedtobuythem€138,000.Outofthistheymustpayasmuchas13%extraforbuyingcostsandtax,and2%moreiftheyaregoingtogetamortgage,whichismadeupofthefollowing:

Taxes (VAT/ITP): 10%Notary fees: 1%Registration of property: 1%Stamp duty: 1%

Andincasetheyneedamortgage,theywillhaveanextracost:

Other fees (gestoria, Registry, property valuation, notary) 0.8%Mortgage stamp duty: 1%Bank mortgage commission: 0.25%

Themostsignificantoftheseistax,whichissubjecttochangedependingonthepoliticaloreconomiccircumstances.FrankandDianedecidetolookatproperty

ofupto€140,000andhopetonegotiatethepricedowntoamorecomfortable€120,000.Theyarestayinginahotelandhave

checkedthattheyhaveaccesstotheirphoneandtheinternetsotheycancontacttheirlawyerquickly.Whentheyneedit,theycaneasilyandcheaplysendmoneyforadeposit,ortopayalocalsurveyor.Theyhavearrangedasmanyviewingsas

possible,butwithplentyoftimeforrelaxinganddiscussingwhattheyhaveseen.Theyhaveborneinmindthedistancesandlocalterrainwhenconsideringhowmanyhousestheycancomfortablyviewinthetime.Theyhaveinstructedtheestateagentsnottoshowthemanypropertyoutsidetheirpricerange.Theyhaveareliablecamerasotheycantakeplentyofphotosandpossiblyavideo(onwhichtheycouldrecordtheirownverbalfirstimpressionstoo),anotebooktowritedownanyextrainformationtheestateagentsgivethem,orquestionstheywillneedanswering.Lastly,theyhaveachecklistofinformationrequirements.

BUYING TIP Frankhascreatedhisownscoringsystemforeachproperty.Thishastheadvantageof

listingthosecriteriathathehasjudgedmostimportant.Allofthisinformationwillbeorganisedintoafiletorereadatthehotel.Now,let’sseesomehouses!

What to look for? FrankandDianeknowthatwhateverisstatedonalatercontract,thesellermustprovidewhatislistedontheinitialsalesinformation,includingallservicesandfacilities.Sowhenconductingaviewing,theycheckthatthepropertymatcheswhatislistedonthedetailsintermsofqualityofmaterials,stateofrepair,views,thelocalneighbourhood,noise,accesstotransportation,etc.Theybringanyissuestotheattentionoftheselleroragentshowingthemthehouseand,iftheyarenotconvincedbytheagent’sexplanations,theymayreturnaccompaniedbyaprofessionalarchitectorsurveyortoinspectitandgetavaluationtocorrectit.Anycompanysellingorpromotinghousing

shouldmakethefollowinginformationavailabletothepublic:

1. Thetradename,companyname,address.2. Whereappropriate,thedetailsofthe seller/ownerenteredintheCompanies Registry.(Orjustaskforthesimplenote, “NotaSimple”,oftheproperty–which containsalltheinformation).3. Amapshowingthelocationoftheproperty andideallyafloorplan.4. Apropertydescription,showingitsgross overallareaandideallyitsinternalusable area(seebox,right)and,where appropriate,ageneraldescriptionofthe buildinginwhichitislocated,thecommon areasandancillaryservices.5. Energyperformancecertificate(CEE), listingmaterialsusedinconstruction includingacousticandthermalinsulation, buildingandcommonareas,and ancillaryservices.Makesurethatitis stampedasbeingregisteredwiththe RegionalAuthorityasonlythenwillitbe acceptedbytheRegistrar.Thecertificateis validforuptotenyears.Ithastobe

ViewingsSurface area

Thesurfaceareasofpropertymaybelistedinseveralways:• Grossfloorarea/constructedarea (superficieconstruida) Thisspecifiestheouterareaofthebuilding anddefinesalltheenclosedspace,including allbuiltspaces,partitions,wallsand facilities.• Usefularea(superficieútil) Thisalsospecifiestheouterarea,butonly thebuiltspacesthatmaybeusedbythe inhabitants.Itdoesnotincludethepartitions, structureandfacilities.

Ifthedwellingispartofacondominium,thereisathirdconceptofsurface:• Grossfloorareaincludingcommonelements(superficieconstruidacon repercusión de elementos comunes) Thisisthegrossfloorareaofeachflatofthe condominium,plustheproportionatepartof thegrossfloorareaofallpublicareasofthe samebuilding.Thesearecalculated accordingtosharessetbythestatutesofthe home-owners.Itincludesallthespacesof theapartmentplusapartofthecommon areas(entrancehall,staircase,broomcloset andmachineroom,elevatorshaft,etc.)of thebuildinginwhichitislocated.

providedbythevendoranditisnormally attachedtothetitledeed(escritura).6. Instructionsontheuseandmaintenance ofanyfacilitiesthatrequirespecial knowledge,andtheevacuationofthe buildinginanemergency.Aso-calledBook oftheBuilding(LibrodelEdificio)mustbe givenbythebuildertotheagent,withall thisinformation,tobepassedonbyevery sellertoanewowner.Insomeregionsthe bookmustbeatthedisposalofanynew owner,inpossessionofanotary,orinthe LandRegistryinwhosejurisdictionthe propertyislocated.7. Identificationdetailsoftheregistrationof thepropertyintheLandRegistry,or astatementofnotbeingenrolledinit.

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AsEuropeanUnionmembers,theBritishhavethesamerighttobuyinSpainastheSpanishdo,althoughwithafewrestrictions.However,therearesignificantlegaldifferencesinthesalesprocessesbetweencountries,suchaspropertylaw,urbanplanningandcoastallaw,buildingregulation,taxlaw,moneylaunderingregulations,mortgageregulationsandconsumerrights.Whatfollowstherefore,isjustageneraloverview.LikeFrankandDiane,youshouldalways

getindependentlegaladvicebeforeattemptingtobuypropertyinSpain.

Reservation agreement. FrankandDianehavefoundtheproperty theylike.Theiragentnowtakesthemtoalocalbartocelebrateandexplainswhatwillhappennext.Firstlytheyaregivenadocumenttosign

andaskedtopay€5,000asdeposit,becausetheagentssaysthereareotherpeoplelookingatthehouse.Indeed,itcouldwellbebeingmarketedbyotheragentstoo,whomustbeinformedthattheownerhasagreedandstoppedallviewings.MostlegaldocumentswillbeinSpanish–

thatbeingthelegallanguageofthecountry–soatranslationmustbegivenandboth

signedbytheownerandthebuyeror theirrepresentatives.

CRUNCH POINT: Frankfeelsuncomfortablesigningthiscontract,andinsiststhattheywillconsult

theirlawyerfirst.Hedoesn’twanttobecommittingtobuythepropertybeforeanylegalcheckshavebeencompleted.Itmakesforaslightlyawkwardcelebrationbut,asFranksaystoDianewhiletheagentisn’tlistening–betterthatthanspendingyearsregrettingit.Assoonastheygetbacktotheirhotel,Franksendsacopyoftheagreement totheirindependentlawyer.Frank’slawyercallshimbackandexplains

thatafterreadingitthrough,hecanconfirmthatthisissimplya“reservationagreement”totakethespecifiedpropertyoffthemarketfor,usually,15-30days,atthestatedprice. Itisquitenormaltopayadepositofbetween€3,000and€10,000,whichwillbetakenoffthefinalpurchaseprice.ByFrankandDianemakingtheagreementsubjecttopreliminarylegalchecks,mortgageloanavailabilityonthepropertyandabuildingsurvey,thedepositshouldbereturnedifthereareproblems.Estateagentsareunderstandablykeentogetoverseasbuyers–whoarepronetogetting

Buying the propertySpeedy Spain

CRUNCH POINT: TherearemanywaysofbuyingpropertyinSpain.Thetypeofcontractwilldependonthetypeof

property,whethernewbuildorresale,thenationalityofthebuyer(understandably,sellersaremorekeentogetabindingdepositfromanoverseasbuyer),thespeedwithwhichthebuyerswantmattersconcluded,andhowmuchtheytrusttheseller.IfalltheduediligencecanbecompletedquicklyitispossibletobuyapropertyinSpaininadayortwo,butneverattempttobuyquicklyifitmeansskimpingonyourlegalprotection.Inthisguidewedescribetheusualprocessesforaforeign(UK)couplebuyingaresaleproperty.

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Obtaining your NIE

ExpatriateslivinginSpainwillusuallyalreadyhaveanNIE,asyouneedoneformanytransactions;certainlyanythingthatinvolvespayingtax.PropertybuyersarrivingfromoutsideSpain,however,willneedtogetone.NIEstandsfornúmerodeidentificacióndeextranjeroandisessentialforbuyingproperty,obtainingmortgagesandgettingutilitiesconnected.SinceFrankandDianearebuyingthepropertyjointlytheyeachneedanNIE.Itisnotcomplicatedtoget,butitcan

takefromonedaytosixweeks.Sinceyouneedittosigntheescritura,youwillneedtoapplyatanearlystageinthebuyingprocess.Itisoftenthefirstthingyoudoafteragreeingonaproperty,andoftentheestateagentwillhelp,takingyoudowntotheimmigrationortaxofficeandensuringyouhaveallthecorrectdocumentation.Mostpeopleapplyinpersonbutyoucan

alsoapplyviaaSpanishembassyorconsulatebyfollowingthislink:http://tinyurl.com/pvf2un3.Youcanapplythrougharepresentative,orbypost.

Howyoumayapplycanvarybetweenregions.Toapplyinpersonyougotoanimmigrationoffice(oficinadeextranjeros)withinaspeciallydesignatedpolicestation.

Youmusttakethefollowingdocuments:• Originalandonecopyofyourcurrent passport.Ifyouprovideonlyonecopy, itshouldbenotarised• Officialform(EX-15)filledout.

Whenyouhavepaidthesmallfeeyouwillbegivenadatetocomebackandcollectit(orthereisaprocessforarepresentativetocollectitforyou).YouwillalsoneedtheNIEtoopena

bankaccount.Moneylaunderingregulationslimithowmuchyoucanpayincashandsetoutthechoiceofpaymentmethodsaspartofthesaleagreement.Paymentwillnormallybebybanktransferorbankcheque,soitissensibletoopenaSpanishbankaccountandtransferfundsfromtheUK.

coldfeetwhentheyreturnhome–tosignandpayupwhilethere.Anditdoessecurethepropertyforthecouple.However,iftheydidn’tbelieveanybodyelsewasimminentlytryingtobuyit,andwerenotentirely100%surethemselves,whatwouldbetheadvantageinpayingup?Itisasignificantamountofmoneytoloseiftheylaterpullout.However,FrankandDianedecidethatthey

will“lockin”theirdecisionsotheysigntheagreementandpaythe€5,000.Nowtheyarefinallyreadytocelebrate!Thenextday,withtheirlawyerorestate

agenttheygototheimmigrationofficetostarttheprocessofobtainingtheirNIEnumber(seebox,right).Theyhavealsogivenadown-paymentto

theirlawyer,whostartsthesearchprocesstoensurethatthepropertyislegallytheseller’stosell(andifitisjointlyowned,getconfirmationthatalltheownershaveagreedtosell),hasnodebtsorsalerestrictionsonitandhasplanningpermission.Atthisstage,iftherearelegalproblemsnotmentionedinthesaleparticularstheywillbeentitledtobackoutandgettheirdepositrepaid.Thiswouldnothavebeenpossiblehadthey,assomeagentswillattempttogetbuyersto,signedapreliminarysalescontractinsteadofareservationagreement.

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Eight things your lawyer will be checking

1. Whoownstheproperty,andtherefore whohastherighttosellit.2. Iftherearedebtsagainstit.For example,amortgageorcourt judgement.3. Iftherearesittingtenantsinthe property.4. Ifitissubjecttoanyspecialrulessuch assubsidisedhousing.5. Incaseofanurbanisation,whetherthe sellerisup-to-datewiththecommunity fees.6. Iftheannualrealestatetax(theformer “contribuciónurbana”)hasbeenpaid.

Ifithasnotbeenpaidwithinthelast fiveyears,thenewownerwillbe responsibleforpayment.7. Forneworoff-planhomes,ifinsurance isinplacetocoveranydamagethat mayresultfromstructuraldefectsof thebuilding.8. ForSubsidisedHousing(VPO),or AppraisedPriceHousing(VPT),ifthere isanyprohibitionagainstsellingitor anyrightsoffirstrefusalfrom theauthorities.

Yourlawyerwillgetallthisinformation fromtheLandRegistry.Abuyercould alsogettheinformationherself,ortheseller,estateagentoradministrative managercoulddoitforyou.Eitherway,donothandoveranymoneyotherthanareservationdepositorsignanycontractotherthanareservationagreementuntilyouhavecheckedthisinformation. See Appendix One for further information on applying for information from the Spanish Land Registry

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Paying from a Tax Haven

Ifyourmoneycomesfromaterritoryconsideredasataxhaven,youmustinformandexplaintheprojectedinvestmenttotheSpanishGovernmentatleastsixmonthsinadvance,usingformDP2.Oncethepurchasehasbeenformalised,youinformtheSpanishTaxOfficeifthemoneycomesfromataxhaven,oriftheamountexceeds€3,005,060,whatevertheprovenanceoftheinvestedcapitalmightbe.

asdescribedinthebuildingsurveyreport.Theyandtheowner(ortheirrepresentatives)thensignthecontract–thereisnonotaryatthisstage.Theyalsoarrangeforthepaymentof10%ofthepricetobetransferred.

BUYING TIP GiventhatFrankandDianearedefiniteaboutbuyingtheproperty,

itmightbeintheirintereststopayashigh adepositaspossible,todissuadethesellerfrombackingout.Ontheotherhand,ifthesellerisanon-residentandthemoneyisnotprotected,youneedtoknowthattheywill notdisappearwithyourmoney,leavingthemortgagecompanytoreclaimtheproperty.Thepaymentmethodwillalsobeagreed

betweenparties.Itwillusuallybeabanktransferorabankchequeshowingthenameofthepartyreceivingthemoney.Thepartiesmaysignacontratoprivadodecompraventawhichcreatesabindingagreementandsetsforacompletiondateaswellasthetermsandconditionsofthesale(price,wayofpayments,contractualdeadline…).Ifthesellerbreachesthatagreement,thepurchasermaytaketheoptionoffulfillingtheagreementormaychoosetowithdrawfromthesaleandclaimfordamagesincurred.Thedifferencewiththecontratodearrasistheoptiontoenforcecomplianceofthepurchaseagreementbeforeapplyingforcompensation.

Beforethe15-30dayssetoutonthereservationagreementhaverunout,FrankandDianewillsignthesalescontractthatcommitsthemtobuyingthepropertyandthesellertosellittothem.Thereareseveralwaysofdoingthis,forexamplewithapreliminarysalescontract(contratoprivadodecompraventa)oradownpaymentcontract(contratodepagayseñal).However,formanyoverseasbuyersitwillbeadepositcontract(contratodearras),whichissometimestranslatedasthe‘earnestmoneycontract’).Thearras/earnestmoneycontractisa

privatelegalagreementwhichreservestherighttopurchasethepropertyatasetprice atasettimetableandpenalisesthebuyer orselleriftheybreaktheagreement.• Itsetsouttheexactdetailsofthe housingtobesold–location,owner, basicfeaturesandknown encumbrances.Ifthereisfurniture included,itwillalsohaveadetailedlist ofthoseitems,ideallywithphotos.• Itshouldalsofixthefinalprice,payment methodandthemaximumtimefor completingthesale.• Itwillmentiontheamountthathasbeen alreadydeliveredasadeposit,specifying thatthemoneyisonaccountofthesale andwillbedeductedfromthefinalprice whenthedeedisconstituted.Usuallyit willrangebetween10%and20%ofthe finalprice.Ideallyitwillbeheldinan escrowaccount,butwhoeverisholding it,themoneyshouldnotbetransferred totheowneruntilthedayofsale. Althoughthepartiescanagreenotto includetheseconditions,thelaw establishescertainpenaltiesforeither partywhobreachesit:• Ifitisthebuyerwhobreachesthe agreement,heorshewilllosethe amountalreadypaid.• Ifthesellerisinbreachtheymust returnthedepositDOUBLED.

FrankandDiane’slawyergoesoverthecontractwiththem,withatranslation, andtheyagreethatthepropertyanditsdescription,location,price,boundariesandsoonareexactlyastheyhadexpectedandare

Preliminary sales contract (the arras)

Delaying the sale

Supposethecouplewanttobuy,butarenotreadytocommittoafinalcontractdate?Therearemechanismsfordelayingtheprocess.Thecontractfor‘booking’housingisacontractofsale,butoneinwhichthebuyerandsellerpostponethesale.Itstermswillvarybetweenexistinghousesandoff-plansales.Foroffplan,ifthehousewillnotbereadyintime,orindeedconstructionnotevenstarted,thesellermustprovidesomeguaranteesforrepaymentoftheadvancedsums,plusthestatutoryinterest. Notethefollowinghowever:

- Thespecificationofthepropertyisfixedand neitherthesellernorthebuyermaychangeit exceptbymutualagreement.Some developerswilltrytoofferadifferent property.- Thepriceisalsofixedandthebuyeris obligedtopaythissum.Iftheydecidenotto completeonthepurchasetheywillloseany moneytheyhavealreadypaid.

Forexistinghomes,thisisquiteacommonproblemforbuyersandcanincludethefollowingscenarios,inbothofwhichthereisasalecontract,andboththesellerandthebuyerareobligedtodeliverthehouseandtheprice:

- Thebuyerwantstobuybutdoesnothavethe money.Ifthebuyeriswaitingforfinanceit maybebettertobookthecontract,while waitingtogetthemortgageloan.- Thebuyerhasthemoney,butthesigningof thecontractisdelayedforsomereason.

IfFrankandDianewanttimetothinkagainortoobtainfunding,whilemakingsurethatthesellerwillnotsell“their”housetoathirdparty,theycouldconsidersigningthecontractbutaskingforaconditionthatthesalewillbedelayeduntiltheyhavereceivedfinancing.Thenifthebankrefusesthemortgageloan,thesalewillbecancelled,withorwithoutcompensationtotheseller,asthepartieshaveagreed.

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Thedateforsigningtheescritura,completingtheprocess,hasbeensetbytheagentsandlawyerswhensigningthearras.Itissignedinfrontofthenotary.[seebox,below]itcouldhavebeendonebyPowerofAttorney,butFrankandDianewouldratherbetherefortheprocess.Thepaymentprocesshasbeenagreed(abankguaranteedchequefromtheirSpanishbank)andFrankhasdrawn upalistoffinalarrangements.ThelawyeraccompaniesFrankandDiane

tothenotary.Asbuyerstheyhavetheright tochoosethenotaryandhaveleftittotheirlawyertochooseone.Signingtheescritura–fullnameescritura

pública–involvestheformalhandoverofthepropertythroughthedeliveryofitskeysand

paymentofthepurchasepricebalance,eitherfromthebuyerorthemortgagecompany/bank.Afterthispoint,neithersidecanturnback.Theprivateagreementbetweenthepartieswillbedeclaredasapublicchangeofownershipwithsignedpublicdeeds.Foroff-plansales,peopleusuallygo

throughaprivatecontracttoformalisethedeliveryofstagepaymentsandtheobligationtobuildanddeliverthehousing.Importantly,eveniftheysignaprivatecontract,eitherpartymayrequesttheothertoproceedtoconverttheprivatecontractintoapublicdeed,andiftheotherpartyrefuses,mayseekjudicialintervention.ToregisterthepurchaseattheLandRegistryitwillalways

The sale contract (escritura)

The Notary

What is a notary? Are they like a solicitor?TheSpanishnotary(notario)isapubliclyappointedofficialandverydifferentfromaBritishsolicitor.Theirjobistotakeaprivatecontractand,bywitnessingit,turnitintoapublicdeed,adocumentprovingtoeveryonethatyouaretheowner.Thatmakesitquiteaprestigiousjobinthelocalcommunity.Theirjobistoprepareandwritethe

deed,ensureitsprovisionsarelegal,ensurethatthepartiesunderstandthecontractandinformthemoftheirtaxliabilitiesarisingfromthesigningofthedeed.Allthisisfromanimpartialandprofessionalviewpoint:theSpanishnotaryisnotanadvisorandwillnottellyouwhatisbetterforyoutodo,butensurethatthelawisenforced.Thenotarywillkeeptheoriginalofthedeed,issuingyouwithasmanylicensedcopiesasyoumayaskfor,eachwiththesamevalidity.

Are they absolutely necessary?Youcouldkeepthechangeofownershipasaprivatecontract,whichshouldbe

enforceableincourt.However,foroverseasbuyersitistheonlysafewayofestablishingtitle,providingthehigheststandardoflegalsecurity.Itisalsoessentialifyouarefinancingthroughamortgage.

Who pays the notary, and how much?Thepurchaserpaysmostofthefeesandalsogetstochoosethenotary.Feesareusuallyfrom0.1%ofthevalueonthedeedsforexpensivepropertyandupto0.4%forcheaperproperty.Eachcopyofthedeeds(copiasimple)costsafeweurostoo.

What is the process?Ontheappointeddayallthepartiesattendthenotary’soffice,whichcangetquitecrowded.Thenotarycheckstheidentityofthosepresentandreadsoutthedeeds.Ifyoudon’tspeakSpanishyoushould

takeatranslatoralongtoreadthedeedinEnglishandaskquestionsonyourbehalfifnecessary.ManynotariesinthemainBritish-buyingareaswillspeakEnglishanyway,ormayinsistthatyou

haveatranslatorpresent.Ifrequested,thedeedwillcomealreadytranslatedwiththetextintwocolumns,oneforeachlanguage.Eachpartywillthenbegiventhedeedtosign.Thenotarywillconfirmthatpaymenthasbeenmadeandthekeyswillbehandedover.ThebuyerwillbegivenacopyofthedeedsandtheirlawyerwillfaxnotificationtotheLandRegistry.Laterthelawyerwillcollecttheoriginaldeeds.

Can we use a British notary? BritonsbuyingfromotherBritonscouldconsiderusingaBritishnotary(whoisalsonotasolicitor).UsingtheCROBECOsystemcreatedbyEuropeanLandRegistryAssociation(ELRA),aBritishnotarymayelectronicallyconnectwithaSpanishadministrativemanager(gestor),whowillprovidethenecessaryinformationandthedocumentationrequiredbySpanishlawtoachieveregistration.Forfurtherinformation,pleasevisitthewebsiteofELRAatwww.elra.eu/elra-european-land-registry-association

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Rented properties

Therearespecialrulesforpropertythatisrentedoutatthetimeofthesale.

Asageneralrule,thetenanthastherighttoreplacethepurchaserintheeventofthelandlordwishingtosell.Theseaspectsofrentedpropertydependuponthetenancyagreementandcanbecomplex.Anindependentlawyerfamiliarwithlandlordandtenantlawshouldbeengaged.

Ifthepropertyyouarebuyingisrentedout,yourlawyermustdealwiththisissuebeforeyoupartwithanymoney.

Power of attorney

ItcanbeinconvenientforoverseasbuyerstoreturntoSpaineachtimeadocumentneedssigning,somanywillgrantPowerofAttorneytotheirrepresentative–perhapstheirlawyeroragestoriftheyhaveone.Thisauthorisestheattorneytosignonthebuyer’sbehalf.Boththebuyerandwhoeverisgettingthe

PowerofAttorneywillgotothenotary’soffice,provewhotheyareandexplainthetermsandlimitationsofthepowerofattorney.YoucanalsoorganisetogetPowerofAttorneyinSpainbygoingbeforeanotaryintheUK;youcanfindthemthroughanysolicitor’sofficeorviathiswebsitewww.facultyoffice.org.uk/notary/. YoucanalsoappointPowerofAttorneyviatheSpanishconsulatesinManchesterorLondon.Theprocesswillcostaround£250intheUK butmuchlessinSpain.

benecessarytograntthepublicdeed.Thepublicdeedisadocumentauthorised

bythenotary,reflectingthewilloftheparties,listingtheiridentitiesandresponsibilitiesandincludingtheseonthedocumentastheyintended,butalsoinaccordancewithlegalrequirements.Itwarnsthepartiesabouttheobligationsanddutiesarisingfromtheagreedcontractforeachofthem.Thenotarywitnessestheauthenticityof

thedocument,sothat,whateverthebuyer,theseller,orwhereappropriate,themortgagelender,declaresbeforethenotaryisincludedinthedeed.Thisservesasproofforeveryoneandneitherpartycandenythestatementscontainedwithinit.Notarisedrecordsarethehighestlegalstandardofevidenceamongparties.Theexecutionofthedeediseffectivelythe

deliveryoftheproperty,andthebalanceofthepurchasepricewillnormallybedeliveredtothesellerinthepresenceofthenotary.Thenotarymustidentifyinthedeedtheprice,statingifitisreceivedbeforeoratthetimeofexecutionofthedeed,theamountandpaymentmethods–i.e.bankchequemadeouttothesellerorpayabletothebearer,banktransfer,directdebit.Ifthepricehasbeenpaidpriortothetimeofexecutionofthedeed,thenotaryshallstate

thedateordatesonwhichitwasmade andthepaymentmethodusedineach.Beforeauthorisingthedeedthenotary

willasktheLandRegistryforasimplenotestatingtheownershipandchargesoftheestate.Immediatelyafterithasbeensigned,ifthepartiesrequestit,thenotarywilllettheRegistryknowthatthedeedhasbeenauthorised.Thispreventsthebuyerfrombeingaffectedbyanylienorchargethatthesellermayagreeoncethecontractisconcluded,butwhicharepresentedtotheRegistrybeforethepurchasedeedisgranted.

Home sweet home!ThehousenowbelongstoFrankandDiane.Theyaregiventhekeysatthenotary’sofficeanddrivetotheirnewvilla,pausingonly atasupermarkettobuyabottleortwoofsomethingcoldandsparklingwithwhich toraiseatoast.Therearestillthingstodoandtocheck–

ensuringthatelectricityandwaterareconnected,forexample,andthateveryaspectofthepropertyisastheyexpected.Butnow,withinsixweeksoffirstsettingeyesontheproperty,FrankandDianeareabletositontheverandaoftheirnewSpanishvilla,lookoutovertheirCostaBlancaview,waveafriendly“hola”totheneighboursandlookforwardtoawonderfulnewstageintheirlife.

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Thelegalprocesseshavenotquitefinishedyet,however.Withtheescriturasignedandthetaxespaid,thefinalstepistheregistrationofFrankandDiane’srightsattheLandRegistry.

Who manages the registration?ToregisterpropertyrightsintheLandRegistry,thefollowingdocumentsmustbepresentedatthelocalRegistryOffice:• Acertifiedcopyofthedeedofsale.• Printedtaxself-assessmentform, showingpaymentoftaxesatabank.• Themostrecentpropertyownershiptax (IBI),oracadastralcertificateshowing thecadastralreferenceoftheproperty. Thesedocumentsshouldbeincorporated intothedeedanditscopies.• Proofofsubmissionofacopyofthedeed tothelocaltaxauthorityforthepurposes oftheMunicipalTaxonIncreaseinValue ofLandofUrbanNature(plusvalía).

ThehousingauthoritiesfromtheAutonomymayalsorequirethesellertodeliveracertificateofhabitability,provingthatthepropertymeetsallthetechnicalrequirementsforhabitation.Resaleproperties,aslongastheyhavethesuppliescontractinplace,willnotneedtoshowtheselicences.Thepresentationofthesedocuments

totheLandRegistrycanbedonedirectlybythebuyer,anagency,thenotary,thelawyer oragestor.Howeveryouchoosetodothis,oncethese

documentsareattheRegistry,registrationmustbecompletedwithin15workingdays.Otherwisetherewillbea30%reductioninfees.Theregistrarwillverifythattheagreementhasbeenmadewithfulllegaleffectandthepropertyrightsofthebuyer willberecordedattheLandRegistry.Iftheregistrarseesthatthedocumentshavedefectspreventingtheirregistrationthey willnotifythefilerofthedocumentand theattestingnotary.Defectsnotedbytheregistrarmaybe

corrected,orifyoudonotagreewiththeregistrar,youmayrequestasecondopinionfromanotherregistrarwhomayreplacethefirst.ThecorrespondingappealmaybesubmittedtotheDirectorateGeneralof

RegistriesandNotaries,oryoumaydirectlychallengeitbeforetheCourtofFirstInstanceinthecapitaloftherelevantprovince.Thisregistrationisnecessaryforthebuyer’s

newlyacquiredrighttobefullyprotected:• Youwillbeconsideredtheonlytrue ownerunlessjudgedotherwise.• Youareprotectedagainstcreditorsof theseller.• Youareprotectedfromhiddencharges againsttheproperty.• Youmayobtainjudicialprotectionof yourrights.• Onceyouhaveregisteredyourrights,no onecaneffectivelyacquireanyrights overyourhomewithoutfirstobtaining yourconsent.• Youcanobtainamortgageloanto financethepurchaseofhousing.Onlyif thebuyerregistershisorherrightof ownershipmaythebankregisterthe mortgagethatguaranteesrepayment.

Thechangeofownershipwillbenotifiedtothecadastresotheywillknowthatthepropertytaxeswillnowbepaidbythebuyer.Forallthesereasonsitisessential,aswe

havealreadyexplained,tocheckifthereisanyseizure,mortgageorotherchargeinregistrationhistoryofthehouseorthelandonwhichitistobeerected,andtobuyonlyfromthepersonlistedasitsownerintheLandRegistry.Itisalsoessential,onceyouhavesignedthedeed,tocompletetheregistrationofyourrightsintheRegistry.

Registering ownership

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FrankandDianewillgoontoenjoylongandhappylivesinSpain.ButintheeventofthedeathofourcoupleinSpain,itwillbetheirnationalityatthetimeofdeaththatgovernsrulesofinheritanceandsuccession. IftheyhaveretainedBritishcitizenship,forexample,thenEnglishorScottishlaw(dependingonwhichpartofBritaintheylive)willdeterminewhoshouldinheritiftheyhavenotwrittenawill,orhowitwillbeinterpreted iftheyhave,andhowinheritanceissettled. Iftheydiewithoutawilltheirestatewillbetaxedatthefullrate.Rulescanvaryprofoundlybetween

countries.EnglishLaw,forexample,allowsyoutodowhatyoulikewithyourassets.ButifyourassetscompriseonlySpanishpropertythenunderEnglishlawitistheSpanishlawthatmustbeapplied,andSpanishlawlimitsyourfreedomwhengrantingawill.Aportionofyourassetsmustbelefttocertainrelatives(legítima).Spanishlawwillalsobeappliedif,atthetimeofdeath,youhaveacquiredSpanishcitizenship.

Writingawillyoushouldconsider:• YoumaydraftyourwillinSpain, accordingtoSpanishlaw,usuallysigning beforeanotary.• Youmayalternativelydraftyourwill accordingtoEnglishlaw,butinthiscase youmustconsidertwocases:• Awilldrawnupbymechanicalmeans andsignedinthepresenceoftwo witnessmustbesubmittedtothe competentjudicialauthorityinBritainfor thegrantofprobate,withoutwhichthe willcannotbeexecuted,northeresulting propertyrightsregisteredatthe LandRegistry;• InaccordancewithEnglishlaw,youcan grantawillwhichrefersonlytoyour propertiesinSpain,andyoumaydoso withaSpanishnotaryorinthemanner prescribedbyEnglishlaw.Inthatcase, Spanishlawwillgovernthedistribution ofinheritances.

InheritancePROPERTY TAXES

BuyingapropertyinSpainmeanspayingpropertytaxesatthetimeofcompletion,whicharebasedonthesalepriceasstatedinthedeedofsale.However,ifthesalepriceisjudgedtobelowerthantherealvaluethenthetaxoffice(Hacienda)willsubmitanadditionalbillforthedifference.

- IfthebuyerisnotaSpanishresident,the sellerwillwithhold3%ofthepriceand giveittothetaxauthorities.- IfthesellerisnotaSpanishresident,the buyerwillwithholdthecapitalgainstax ontheincreaseinvalueofurbanland– formerlyknownasplusvalía.

Howmuchtaxispayablewilldependonwhetherthepurchaseisaprimaryresidence,abrandnewpropertyboughtdirectlyfromthedeveloper,orisaresale.

New homes: ThebuyerpaysValueAddedTax(IVA)totheseller.Atthetimeofwriting(July2015)thisis10%onresidentialproperty.IntheCanaryIslandsitis7%,andcalledtheGeneralIndirectCanarianTax(IGIC).ThebuyerpaysIVAalongwiththe

purchasepriceandthesellersendsitontothetaxauthority.ThebuyeralsopaysStampDutyTax(AJD)of0.5%ofthevaluedeclaredonthedeed(unlesssetatadifferentratebytherelevantAutonomy).Thiswillbeself-assessedonanofficialformandpaidintothetaxofficeviaacooperatingbank.

Resale homes: ThebuyerofaresalepaysTransferTax(ITP)ratherthanIVA,atarateof6%ofthevaluedeclaredinthedeed,butagaincanbesetadifferentratebythe

Autonomy.Itisalsopaidviaaself-assessmentformatacooperatingbank.

Deed of loan: StampDutyTax(AJD)ispayableat0.5%ofthetotalamountofthemortgageliability.Thisisnottheamountactuallyreceivedfromthebank,butthequantityguaranteedforrepaymentofprincipal,interestandcostsofenforcement.TheAutonomymaysetdifferenttaxrates.Ifyoubuysubsidizedhousing(VPO),taxratesaregenerallylower.

Paying property taxesTopaypropertytaxesyouobtainprintedself-assessmentforms,calculatetheamount,payittotherelevantentityandgivetheformnotifyingthatyouhavemadepaymenttothetaxoffice.Yourlawyerwillnormallypaythepropertytax,butitcouldbedonebythepurchaser,byanagencyorbythenotarywhohasdraftedthedeed. Abuyerpayingpersonallyneedstoknow:

1. Wheretosubmittheself-assessment formforITPorAJD.Forpropertyin provincialcapitalsitispaidtothe DelegationofFinanceofthe AutonomousCommunity.Forproperty outsidetheprovincialcapitalitgoesto theDistrictLiquidationOffice,which takesintheLandRegistry.2. PaymentofPropertyTransferTaxand StampDutyTaxmustbemadewithin30 workingdaysfromthedateofexecution ofthedeed.Delayswillleadtoasurtax beingimposed.3. Paymentofthosetaxesisrequiredfor youtotakeouttheregistrationofrights acquiredintheLandRegistry.

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Francisco Molina BalaguerFrancisco was born in Valencia and graduated with a Law degree from the University of Valencia in 1998. He has been a Land Registrar since 2002 and a partner in the International Relations Department of the Spanish Registrars Associationsince2012.HewasappointedDelegatetotheAssociationofficeinBrusselsinJanuary2014.Heistheauthor of several articles on tax and inheritance matters published in the Bulletin of the Spanish Registrars Association, and presented a paper at the IPRA (International Property Registries Association) conference in Amsterdam in 2012.

Christopher NyeFollowing a Bachelor of Arts from Leeds Beckett University and a career in cruise ships and hospitality management, ChriswasqualifiedbytheNationalCouncilfortheTrainingofJournalistsin2003. He has written on tourism, emigration and international property for The Times, BBC, A Place in the Sun, World of Expats and the Overseas Guides Company, where he is Investment Editor. A former resident and newspaper columnist in Mallorca, Chris has been Staff Writer for Everything Spain magazine, Features Writer for Living Spain magazine and Editor of Overseas Property Professional. Chris co-wrote Channel 4’s Guide to Buying in Spain.

Peter RobinsonPeter was formerly an agent in Spain where he also privately bought and sold property. Active in a variety of roles in theinternationalpropertyandfinancialservicesindustryintheUK,Spainandaroundtheworldsince2001,Peterhas worked extensively with property developers to improve how they bring their projects to market. Peter now heads the AIPP – Association of International Property Professionals – based in London.

Contributing Authors

César González Zarza, MRICSBachelors degree in Law from the University of Deusto, Spain;

Masters Degree in Urban Planning law from ULPGC; Executive Masters Degree in Town Planning from Garrigues School of Law, Madrid; Bar Association of Canary Islands and practising lawyer/solicitor;Member of ACADUR (Urban Planning Association of Canary Islands);MRICS nº 1297328CBRE, Representative Canary Islands

J M Anthony Fisher, MRICSBritish, and a chartered surveyor since 1977, Anthony’s career in property includes living

and working in England, France and Spain. Much of this career has been related to property management, more recently to the valuation and inspection of residential property. Anthony has served on various committees and working parties of professional associations, latterly in RICS España. He has written various articles in English on aspects of property in Spain for journals of the RICS.

Alfredo Millá, MRICSFounder and CEO of Sonneil. Before setting up Sonneil, Alfredo led the marketing and selling of properties to foreign clients at Banco Sabadell and Caja Mediterráneo real estate agencies for seven years. Prior to that, he worked as a strategic consultant. He holds a degree in Business Administration and Management and an MBA from ESADE Business School and the Advanced Management Program (AMP) at IESE (Munich and Barcelona). He is also member of the Board of Directors of RICS in Spain and Chairman of the Residential Property Professional Group.

Campbell D Ferguson, FRICSRICS registered valuer and expert witness to UKcourts.Owner/

Director of Survey Spain SL and organiser of the Survey Spain Network of Chartered Surveyors.

Survey Spain has been carrying out building/structural surveys and valuation surveys since 2003.

Originally from Glasgow, Campbell has been working in Spain for 16 years and surveying/valuing/marketing/appraising properties for 47 years.

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APPENDIX ONE

Applying for Registry information• Youoryourlawyercanapplyatanyof theRegistriesofSpaininperson,byfax, mailoremail.• Youcanalsoapplyviathewebsiteof theAssociationofRegistrarsofSpain www.registradores.org.Toreceivea “simplenote”inEnglish,usethenew portalforinternationalusers www.buyingahouse.registradores.org.

Aftercompletinganenquiryform,yourapplicationwillberedirectedtotheappropriateLandRegistry.Onceissuedandtranslated,thenotewillbedeliveredbyemailandyoucanpaywithanymajorcreditcard.TofindoutwhichLandRegistry’s

jurisdictionthepropertyisin,asktheConsumers’ServiceoftheAssociationofRegistrars,onfreephone900101141,atwww.registradores.orgorviaemailtoconsultas@registradores.org.Thesameway,youcanalsofindoutLandRegistryaddresses,phoneandfaxnumbers,emailaddressesandaskaboutanyotherregistrationmatter.

Theregistrationinformationmaybe obtainedas:• A“simplenote”,whichcontainsa descriptionofthehousing,itslocation, surface,appurtenances,itsshareinthe condominium,anyadministrative regimethatcouldaffectit(ifitisa publichousing),mortgagesthatmay remainonit,interestandcosts,liens, seizures,easements,anydisputesover ownership,fiscalconditionsand,in general,anythingaffectingthe homeownership.• Certificationondomainandcharges, whichmaybeofabroadercontentthan thesimplenote,andcouldbeused incourt.

ThemainpurposeoftheLandRegistryistopublishandprotectlegalentitlements.Whenitprovidesadescriptionoftheproperty,ittakesitfromthecatastroandfromdescriptionsoftheparties,whichmayormaynotbeup-to-date.TheCatastro(alsooftenspelledasCadastre),istheofficialinstitutioninchargeofgivingagraphicdescription.You

canchecktheaccuracyofthecatastroviatheirwebsiteatwww.sedecatastro.gob.es,orwithaRICSsurveyor.Youmayalsorequesttheregistrartoprovide

awrittenreportontheregistrationstatusoftheproperty,oraskhimorherforverbaladvice.Landregistrarsarerequiredtoverballyreportonmattersrelatingtotheregistrationstatusofproperties,andsuchlegaladviceisfreeofcharge.RegistrationinformationisprovidedinaccordancewiththeprovisionsoftheLawonProtectionofPersonalData.Inadditiontocheckingthehousing

situationintheRegister,thesellermustprovideyouwithcertainadditionaldocuments:• Forresalehomes,theauthorisedcopy ofthedeedinwhichtheacquisitionwas formalised.• Areceiptforthelastpaymentofthe PropertyTax.• Inthecaseofcondominiums,a certificateissuedbythepresidentor secretaryofthehomeowners associationstatingifthepropertyisup todateinthepaymentofcommunity fees.• Theformalstatement,onapublic document,thattherearenocurrent leasesontheproperty.

Non-EU foreignersForanytypeofpropertybeingboughtbyforeigners,legislationonnationaldefencecancomeintoplay.Instrategicareas,priorauthorisationbymilitaryauthoritiesisrequiredfornon-EUforeignerstoacquirehousing,whetherresidentsinSpainornot.ItappliesaroundCartagena,theStraitofGibraltar,CadizBay,Galicia,borderareaswithPortugalorFrance,theIslandsandCeutaandMelilla.Furthermore,itismandatorytoregisterthetransactionintheLandRegistry.

Off-plan property – urban and building regulationsExaminationofthephysicalandlegalsituationofthepropertyismoredifficultwhereithasnotbeenbuiltyet.Theonlydescriptionistheonetheagentshowsyou,anditwillonlybebuiltifthedeveloperfulfilshisobligationsin

accordancewiththecontract.Soforoff-planpropertydonotsigna

contractorpayanymoneywithoutfirstchecking:• Thedeveloperactuallyexistsandthe personsigningonitsbehalfisentitled todoso.Checkthatthesponsoring companyisregisteredattheCompanies Registry.Youmayobtaininformation abouttheregistrationofthecompany, itsadministrators,agentsandstatutes, throughacommercialregisterorwww. registradores.org.Thiscanbeobtained quicklyandeasilyovertheinternetwith acreditcardpayment.• Thelandonwhichthebuildingistobe erectedisregisteredinthenameofthe sponsoringcompanywithwhichyou signthecontract.• Theplannedpropertyhasbeen authorisedbythecouncilandgranteda licence.Thiscanbecheckedatthe LandRegistry,becauseifthe descriptionoftheplannedpropertyhas beenenteredintheRegistrythenthe licensemustalreadyhavebeenjustified totheregistrar.Ifthedescriptionofthe buildingisstillnotrecordedinthe RegistrythenyouwillneedtogotoCity Halltocheckifthesitehaspermission tobuild.

EachmunicipalityhasitsownurbandevelopmentplanthatwillagreewiththeplanningregulationsofitsAutonomousCommunity.Severalmunicipalitiesmaycreateajointplan,regulatingnewdevelopmentsoutsidetheurbangrid.Thisplanwilldeterminewhetheryouareabletobuildontheplot,andthepossibilityofbuildingandrenovatinginthefuture,or,ontheotherhand,theextremethreatofreceivingademolitionorder.Technicalofficesofthecouncilsshouldprovideyouwiththeinformationabouttheurbansituationandthechangesthatmayaffecttheplotinthefuture. Ifyouarerequiredtosignaprivatecontractbeforethebuildingisfullycompleted,andyouareaskedtopayanyamountonaccountoftheprice,youshouldconsider:• Ifthecontractincludesunfairterms,

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whichwouldbeconsiderednullandvoid evenifthepurchaserhassignedthem. Thesecouldbetermsclaimingto allowthedevelopertomake subsequentchangestotheproject withoutthebuyer’sconsent,orwaiving therightofthebuyertochoosea notary,sayingthatthebuyerhastobear thecostsofpreparingthe documentation.• Wherepaymentsaremadetothe developer,youmayrequirethattheyare paidintoaspecialaccount,onlytobe spentonconstruction,andthat insuranceistakenoutoran endorsementmadetoensuretheir returnplus6%ifconstructionisnot carriedoutordeliveryisdelayed.Itis mandatoryforthedevelopertogivethe clientan“aval”fromabankwhich guaranteesthepaymentsiftheproject isnotcompleted.

Onceconstructioniscompletedbutbeforesigningthedeedofsale,youcaninsistthatthesellerprovesthattheworkhasbeencompletedasdescribedintheplan,andthatinsuranceisinplacetocoveranydefectsinconstruction.ThistoomaybecheckedbyaquerytotheLandRegistry,becausetoregisterthecompletionofthebuildingitmustreceiveacertificateoffinalcompletioninaccordancewiththeagreedplan.Thiswillhavebeensignedbythearchitectanddirectoroftheworkandwillincludetheinsurancecontractandatechnicalcertificateindicatingthedateofcompletionandsayingthatthebuildingfitsthelicense.Therefore,beforesigningthedeed,youmustverifythatthepromoterhasenteredthecompletionoftheworkintheLandRegistry.Inrecordingthecompletionofthebuilding

andregisteringconstructionalreadycompleted,youmustobtainatechnicalcertificateshowingthedateofcompletionandidentifyingthatthebuildingfitstheprojectforwhichitslicencewasgranted.Inanycase,youshouldrequirethesellerto

statethat,oncebuilt,theconstructionmeetsthetechnicalrequirementsfortheusetowhichitisintended(housing,commercial,

industrial,etc.),bydeliveringyouthefirstoccupationlicence,necessarytoconnecttoutilitysupplycompanies(water,electricity,telephone,etc.).Theselicensesshouldbedeliveredtothebuyeratthemomentofsigningthedeed.Withoutthem,youmayrefusetosign,astheyareessentialsinlaw.

Purchasing by the seashoreSpecialrulesapplyforlandalongtheseashore–whichcanincludeinlandwaters–andcontinueinlandasfarasaround100metres.Suchlandisdesignatedaswithinthepublicdomain.Youcanbuyahousealreadythere,andyouwillbeabletorenovatethehome,butwithoutextendingthesizeofthebuildingeitherhorizontallyorvertically.Tocheckifthehouseisonlandwithinthe

publicdomainyoumustgotoCoastalServiceortotheCityHall.SuchinformationwillalsoappearoninformationprovidedbytheLandRegistry.Fortheexecutionofthedeed,acertificatefromtheCoastalAuthoritymustbegiventothenotary,statingifthepropertyisonoradjacenttothepublicdomain,andanyrestrictionsarisingfromthat.Itisespeciallyvitaltotakelegaladvice

whenbuyingclosetotheseashore.

Purchasing an apartmentWhenyouarebuyingacondominiumyouacquirenotonlyyourpropertybutalsoashareofthegeneralbuilding,suchastheentrancehall,staircase,broomcloset,machineroom,elevatorshaft,etc.Yourshare–andhenceyourobligationtopaythecommonexpensesofthebuilding–correspondstoyourapartment.Theowneroftheapartmentmustpaysuch

expensesforthepreviouscalendaryearandtheunpaidpartofthecurrent,somakesurethesellerdeliversacertificatestatingwhethertherearedebts.Thesellermayaskyoutoexoneratehimorherfromthisobligation.Thisisquiteusual,butifyouagreeensureyouunderstandthefullextentofyourresponsibility.Askthesellertogiveyouacopyofthe

articlesofthecondominium,astheymayrestrictyouruseoftheapartments,theirdivisionorgrouping,andtheydeterminethe

commonpartsofthebuilding.IntheLandRegistryyoumayobtainacopyoftheclausesaffectingeventhosethatwerenotpartofthecondominiumatthetimethearticleswereapproved.

Purchasing rural landIfyouarethinkingofbuildingapropertyonruralland,bearthefollowingfactorsinmind:

• Thepricewillvarydependingonwhether itisdrylandneedingirrigation,ifitis plantedwithfruit,cereals,meadows, forests,etc.,andaccordingtothe Autonomyonwhichitislocated.• Checkwhetherthereisanyexisting buildingonthelandorifthereisthe possibilityofbuildinginthisarea, accordingtotheplanningrulesof theAutonomy.

Generally,rurallandcannotbeusedforresidentialdevelopment,unlesstheUrbanAuthorityrequalifiestheland:- itispossibletorenovateexisting buildings,eithertoliveinthemorto establisharuraltourismbusiness,butit isnotpossibletoaddnewbuildings.- itispossibletoerectnewbuildingsfor regularfarmingorhuntingactivity.- insomecases,youcanbuildsportsor culturalfacilities,orthoserelatingto environmentalcare.- eveninthoserarecaseswherenew residentialbuildingsmaybebuilt,the landmustbeofacertainsizeasdecided bytheAutonomy,toavoidthecreationof newvillageswithouttheproperchange ofuseorsufficientinfrastructureto supportthem.

Thepropertymustalsoholdthecorrectlicensefromthemunicipality.Theinterestedbuyer’slawyermustchecktheresidentialpotentialoftheland,byaskingforinformationattheCityHall.Ingeneral,informationfromLandRegistrywillalsostatewhethertheparcelissuitabletobebuiltornot.

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APPENDIXTWO

The costs of buying property in SpainCosts directly generatedBuyingahomegeneratesmanycostsforthebuyerinadditiontotaxes,anditisnotalwaysobviouswhyyouarepayingthemortowhom,yettheyaddappreciablytothecosts.

Who do you pay?

• To the selleryoupaythepurchaseprice, lessanydepositalreadypaid.

• The estate agent ispaidbywhoever contractedthem,whichisgenerallythe seller.Theyareusuallyincludedinthe salepriceandsoareonlypaidifthesale ismade.

• The notary’sfeesaredivided,bylaw:the sellerpaysforauthorisationofthedeed andthebuyerpaysfortheissuingof copiesofthedeed.Thebuyermustpay allnotaryfeesonlyifexpresslyagreed withtheseller.FeesaresetbytheTariff andRegulatoryFee,butallowfor0.5% –1%ofthepricedeclaredinthedeeds.

• Ifyouarepayingfortheservicesofa gestoritisimportanttogettheoriginal invoiceissuedbythenotaryandthe registrar,andtheletterofpaymentof taxes,sothateachpartyknowshow muchtopayforeachoftheservices provided.

• The Land Registry.Thebuyerpaysthe leveloffeescorrespondingtothe registrationoftheirright,andifagreed, ofthosecorrespondingtotheregistration ofthemortgage.Registrationfeesare governedbyatariff,whichyoucan ascertainateachregistryoffice. Allowfor1%ofthevalueonthedeeds.

• Your lawyer. Theusualrangeoffeesfor your lawyer–abogado–willbeinthe €1,500to€3,000range,butthisreally dependsonthevalueandcomplexities attachedtoapropertypurchaseandfees canbeconsiderablymore.

• Mortgage costs. Thiswillincludea valuationofaround€500plusthe arrangementfee.Itwillalsoincreasethe notary’scostsasyouwillhavetosigna differenttitledeed.

• Bank costs.Youwillneedtowritea banker’schequeorpayforatransferof funds.Allow0.5%ofthefundstransferred.

Beforemakinganypaymentensureyoureceiveinvoicesbreakingdowneachelementofthebill,theIVA,theidentityandTaxIdentificationNumber(NIF)ofwhoeverhasissuedthem.Forthoseissuedbynotariesandregistrars,ifyoudisagreewithanyofthechargesyoumayappealagainstthemasspecifiedbytherulesthatlaiddownthetariff.

Other costs

Municipal Tax on Increase in Value of Land in Urban Nature: Formerlyknownas“plusvalía”,thisisalocalcapitalgainstaxbasedontheincreaseofthevalueofthelandsincethecurrentsellerboughtthepropertyandmustbepaidbytheseller.Theratedependsontheperiodofpossessionandthepopulationofthetownorcity.Buyersneedtobeawarethatifthesellerisnon-residentinSpain,ifthetaxisnotpaidthenthebuyerwillhavetopayit.

Property Ownership Tax (IBI): Formerlyknownasthecontribuciónurbana,thisisalocaltaxpaidannuallyandbasedonthecadastralvalue(valorcatastral)andaccordingwiththevalueofthelandandthebuilding,butusuallymuchlowerthantheactualmarketvalue.EachMunicipalitydecidestheratetobeapplied.

Wealth Tax (Patrimonio): Payableannually,basedonthevalueoftotalnetassetsasof31Decemberofeachyear,afterthefreeallowanceof€700,000.Fornon-residents,thiswillbebasedonthetotalvalueoftheirnetassetsinSpain.Theratevariesfrom0.24%to3.03%atthetimeofgoingtopress.Asthistaxisappliedindividually,ifthepropertyisownedbymorethanonepersoneachofthemwillbetaxedaccordingtohisorhershareoftheproperty.Income Tax for non-residents (IRNR, Renta de

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No Residentes): • Iftheownerrentsthehousetheymust pay20%oftherent(24%ifthelesseeis anon-EUcitizen).

• Iftheownerusesthehouseheorshe pays20%ofthe1.1%ofthecadastral value(2%ofsuchvalueifithasnotbeen revisedsince1994).Fornon-EUcitizens, therateis24%again.

Income Tax for residents (IRPF, Renta de las Personas Físicas): AnypersonisconsideredtoberesidentinSpainifheorshelivesinSpainformorethan183dayspercalendaryear.Inthatcase,youhavetofileyourIncomeTaxannually,anddeclareallyourincomeregardlessofwheretheincomewasgenerated.

Estate Equity Income Tax (Ganancias Patrimoniales Inmobiliarias): Calculatedonthedifferencebetweenthepurchaseprice,plustaxesandexpenses,andsellingprice,minustaxesandexpenses,andapplyinganupdatecoefficientapprovedeachyearintheBudget.Allnon-residentsellerswillhavetopay20%ofsuchadifference,andarealsosubjecttoawithholdingtaxof3%ofthesalesprice,paidtothetaxoffice.Rubbish Collection Tax (Tasa de Recogida de

Basuras): Thisvariesaccordingtoeachpropertyandisusuallypaidonceortwiceayearataratesetbythelocalcouncil.

Water Supply and Sewerage Tax (Tasa de Abastecimiento de Agua y Alcantarillado): Payableataratesetbyeachcouncil,usuallyfourtimesayear,thisisworkedoutaccordingtowaterconsumptionincubicmetres.

Costs other than taxes

• community expenses: forcondominiums andurbanisations,assetandapproved bytheGeneralMeetingofOwners eachyear.

• gardening and cleaning services: the costsofcommunalgardensandpublic areasofcondominiumsareincludedin thecommunityexpenses(seeabove). Ifpayingfortheseservices yourself,however,theamountwill dependonwhetherthepeoplearepaid bythehourorarecontractedfullorpart time.Don’tforgetsocialsecurity contributionstoo,anadditiontothe monthlypayrollofaround40%ofthe salary.

• land telephone line and internet: Local

andnationalcompanieswilloffervarious dealsandpackages,whichcaninclude, inadditiontophoneandinternet connection,alsocabletelevision.Such servicesareusuallypaidmonthly.

• electricityispaidmonthly,withabasic ratepayablewhetherthepropertyis occupiedornot,andaminimumthatwill varyaccordingtotheestimateduse.

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APPENDIX THREE

Related linksAssociation of International Property Professionals (AIPP) - www.aipp.org.ukRoyal Institution of Chartered Surveyors (Spain) - www.rics.org/esColegio de Registradores de España (Spanish Registrars Association) - www.registradores.orgConsejo General del Notariado (General Council of Notaries) - www.notariado.orgAgencia Estatal de Administración Tributaria (Spanish Tax Offce) - www.aeat.esDirección General del Catastro (General Directorate for Cadastre) - www.catastro.minhac.esConfederación Española de Organizaciones de Amas de Casa, Consumidores y Usuarios (Spanish Consumers and Housewives) - www.ceaccu.orgOrganización de Consumidores y Usuarios (Consumers Organisation) - www.ocu.orgAsociación de Empresas Constructoras de Ámbito Nacional (Construction Companies and Infrastructure Commissioners) - www.seopan.esConfederación de Consumidores y Usuarios (Consumers Federation) - www.cecu.esAsociación Hipotecaria Española (Spanish Mortgage Association) - www.ahe.esAsociación de Promotores y Constructores de España (Spanish Developers and Constructors Association) - www.apce.esConsejo General de Gestores Administrativos Colegiados (Council of Gestors) - www.consejogestores.netConsejoGeneraldelosColegiosOficialesdeAgentesdelaPropiedadInmobiliaria de España (Estate Agents Council) - www.consejocoapis.orgBritish Embassy in Spain - http://ukinspain.fco.gov.uk/en

Autonomous CommunitiesAndalusia-www.juntadeandalucia.esAragón-www.aragob.esAsturias-www.princast.esCantabria-www.gobcantabria.esCastilla y León-www.jcyl.esCastilla-La Mancha -www.jccm.esCataluña-www.gencat.esCeuta-www.ciceuta.esExtremadura-www.juntaex.esGalicia-www.xunta.esIslas Baleares-www.caib.esIslas Canarias-www.gobiernodecanarias.orgLa Rioja-www.larioja.orgMadrid-www.madrid.orgMurcia-www.carm.esNavarra-www.navarra.esPaís Vasco -www.euskadi.netComunidad Valenciana-www.gva.esMelilla-www.camelilla.es

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