Wednesday, January 09, 2008

Legal advice( thanks to RTNews)08/01/08

RTN Canarian Lawyer
Written by Rivero and Mendoza
Tuesday, 08 January 2008

Buying a property is one of the most exciting and important projects in our
life. If the property to be purchased is outside our home country it usually
creates additional excitement as it will be either the place to enjoy
holidays or a new home for a new life abroad.

The excitement and importance involved in the purchase are good enough
reasons to consider the issue as a serious matter and not to be undertaken

Therefore, our first advice for people planning to buy a property in Spain
is to bear in mind that the procedure to complete a successful and pleasant
transaction requires an accurate knowledge and understanding of the legal
formalities and obligations to be fulfilled both by the vendor and the

Only a registered Spanish Lawyer can guarantee proper and professional
advice about the legal considerations to be taken in account. Once the
decision to buy a certain property has been taken and the price has been
agreed with the vendor, the wisest move is to instruct a local lawyer to
start dealing with the legal issues involved. The main point at this stage
is neither to sign any document nor to pay any amount or deposit before your
lawyer provides you with his/her professional advice about the best way to

First of all, your lawyer should provide you with an approximate estimate of
all costs and taxes involved in the purchase procedure: Notary and
Registration fees, Transfer Tax / IGIC (Canarian VAT), Plusvalía Tax (if
any), compulsory tax retention for cases in which the vendor is not a Tax
Resident in Spain, etc. Once you know the total amount involved in the
purchase you will be able to confirm whether or not you are financially
ready to proceed.

Secondly, your lawyer should check the legal situation of the property in
order to avoid any kind of unpleasant surprises regarding mortgages,
attachments or any other kind of problems that could affect your ownership
after completion.

Once confirmed that the property is free of those encumbrances your lawyer
will be in a position to draft a private document between you and the vendor
in which all the terms and conditions of the agreement will be ratified on
paper. The usual practice is to draft an "Option contract" by means of which
the vendor grants an option in favour of the buyer to have a priority to buy
the property within a certain term and according to the conditions agreed.
The buyer is normally required to pay a deposit in advance (5%-10% of the
price) to obtain this option from the vendor. This document is of huge
importance to secure a safe outcome for your interests as it is the contract
in which both parties definitively state essential issues such as the price
of the property, the payment conditions and the prospective compensations to
be awarded in case of breach of contract.

Although private contracts are fully valid and enforceable according to
Spanish Law, the Spanish property system requires the previous notarisation
of every document to be registered at the Land Registry. Therefore, the next
step in the purchase procedure is to sign the Public Title Deeds at the
Notary´s office. Your lawyer will provide the Notary Public with all the
relevant information and documents required to draft the Title Deed.
Further, on completion's date it will be very important for you to be
assisted by your lawyer during the reading of the public document by the
Notary, so that you fully understand the contents of the "closing ceremony"
of the purchase procedure.

Finally, your lawyer will also be able to undertake on your behalf the
"after-completion" tasks: Payment of all relevant costs and taxes within the
relevant legal term and subsequent Registration of your Title Deed at the
local Land Registry in order to obtain full and public protection of your
rights to ownership.

As a conclusion, our main duty is to be prudent and to avoid unnecessary
risks when purchasing property in Spain. Correct professional advice
provided by a duly registered Spanish Lawyer will guarantee a safe outcome
for your investment and your only problem will be to enjoy your new home!

Esther Rivero Rodríguez and Miguel Mendoza Martín are duly registered as
Spanish Lawyers at the Law Society of Las Palmas. The lawyers are centrally
situated in offices in Edificio Mercurio, Playa del Ingles. If you have any
questions or enquiries please contact them on 928 730 161 and 679 76 29 83
and they will be delighted to give advice. Both partners are fluent
English-speaking Lawyers.

As a new service to our readers, Rivero & Mendoza have kindly agreed to
answer a selection of readers' legal questions in future editions of RTN.
Just send your question to canarianlawyer@rtncanaryislands.comThis e-mail
address is being protected from spam bots, you need JavaScript enabled to
view it

Letter to Canarian Lawyer

Dear Editor, We are trying to purchase a property in Gran Canaria but are
having problems with the estate agent. They want us to give them 10 percent
deposit before they will accept our offer. They say that this is normal! We
are very unhappy about doing this as we thought that the deposit should be
held by a lawyer. We are very uneasy about giving what amounts to giving
25,000 euros to an estate agent. What happens if they go out of business?
We would be grateful for your advice. Can you pass this to the RTN Lawyer
please? Thank you, John and Sue Humphries

Canarian Lawyer replies: The deposit should be paid directly to the vendor,
but never before signing a contract by means of which the said vendor binds
himself to sell the property to you according to the terms and conditions
agreed. Payments to Real Estate Agents should only be handed over after
checking that they are duly empowered by the vendor to receive those amounts
and to sign the previous contract on his behalf. We highly recommend
prospective purchasers to instruct a Spanish lawyer prior to signing the
said contract as that document is the one in which the essential conditions
of the future purchase will be agreed (price, deadline for completion, legal
circumstances of the property, compensations to be awarded in case of breach
of contract, etc). Your lawyer will then be able to secure from the
beginning that the procedure of your purchase will have a safe outcome for
your interests.

Note by AUN:This is good general advice-the problem comes when it comes to
enforcing a contract and especially in regaining a deposit if things go
wrong when, for example the estate agent goes under, the lawyer refuses to
answer letters or phone calls, and the courts never deal with the issue,
etc. Unfortunately none of this is uncommon in Spain


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