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Avoid the traps when buying a property in Spain

Added by Berlad Graham
July 8, 2020

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When looking to purchase a property in Spain it is important to use an independent lawyer to look after your interests. The reason for this is that those lawyers’ dependant on referrals from estate agents will find it more difficult in providing truly independent advice. An independent lawyer will be more objective and will be able to freely advise against a purchase should they find problems. Further, an independent lawyer will normally roll their fees onto the next purchase should the first one fall through and therefore are not limited to act for a particular estate agent.

It is important to speak with an independent lawyer as early as possible in the process in order to have them on board to check any documentation presented to you by an estate agent. Often estate agents will rush you into signing a reservation agreement before you have had chance to check the legalities of the property. They are usually set to receive large commissions once they secure a sale and as it is not their duty to make sure there are no legal problems or debts, therefore it is in their interests that you sign on the dotted line. This is the nature of the business not a criticism of the estate agent profession and they are usually professional and trustworthy but as always, the buyer must be aware. Any documentation that an estate agent asks you to sign you should ask a lawyer to check it and explain the implications and if necessary, negotiate the terms. It is often the case that deposit, or reservation contracts will state a date by which completion should occur.  When signed in a rush this means that the time period needed to gather the funds is not properly considered and the buyer is then at risk of losing the deposit if they go over the date. Further it is important to check the ownership of the property at the land registry and if there are any existing debts.  

If you consult an independent lawyer at the beginning of the process, they will carry out the important checks first and then check or draft a detailed reservation agreement. They can also negotiate a reduction in the amount of the deposit from to the usual 10% to a lower amount in order to minimise the risk. Where required inventories can be included for those buyers wishing to purchase a furnished property.

Prior to committing to a purchase, a lawyer should check with the buyer what they wish to do with the property. Does the buyer wish to live in it as their principal home or only part of the year? Further, will they be planning on letting it out as a tourist apartment. As properties destined as tourist apartments are required to be registered with the authorities it is important that they have a licence of first occupation from the town hall.  For those older properties it might be that a licence of first occupation does not exist which would mean that it could prevent the property from being let out as a tourist apartment.   

It is also important to check that those rural properties are fully legal and are not in breach of planning legislation.

There are many other aspects that an independent lawyer will advise on such as tax, future inheritance implications and residency.

Finally, having a fully independent lawyer in place to assist with a property purchase as early as possible in Spain will save time, money and potential headaches.