Posts Tagged ‘property’
A) INTRODUCTION: Spain has an enviable climate & quality of life but if you have the intention of moving here to live you need to know all that is necessary so that your dreams do not turn into nightmares. Spain, as we know, is suffering a property crisis, we do not know its roots but it runs very deep. Here we are giving a simplified but concise guide with the “key-points”:
I. - URBAN LAW IN SPAIN IS CONFUSING AND HARSH:
- Why confusing?: There exists a national legislation,- covering all of Spain as well each autonomous region (county council) also as its own legislation, in addition to this each local town hall has its own local legislation.
- Why harsh?: Faced with an infringement of urban law of which the foreign buyers have been victims, national, regional & local legislation is followed with conviction, treating the buyers/owners as the only person/persons culpable regarding the infringement: fines & demolitions, without consideration that the buyers purchased in good faith and that they have been defrauded by an unscrupulous builder.
- Spain has this problem because urbanistic and property crimes committed are difficult to prove and the fines/penalties against the offenders are low, this acts as an incentive for corrupt and unscrupulous constructors to continue with their illegal activities, defrauding innocent foreign residents with almost total impunity.
- Even thought this problem exists should one still take legal action (denounce) against urbanistic fraud?: YES ALWAYS
- They do not guarantee refund of deposits.
- They do not guarantee imdemnization for possible damage to the building.
- They do not build to the building regulations stated by law, concerning noise; humidity/damp; thermal insulation; accesses for handicapped & elderly people;
- They charge the buyer for builder’s electricity & water, this is prohibited by law.
- They do not provide a license for the work nor a license for first occupancy without these the buyer will not be able to contract electricity, water & gas supply.
- They use contracts that are previously written with abusive clauses against the buyers.
- They use solicitors that are on the payroll of other companies, they charge their fees through these firms, making proof of payment more difficult.
- They hand over the properties without them being finished, with damage and construction faults that affect habitability of the house or the whole urbanization.
- They make multiple extra charges: damage repair; finishing incomplete work; legal action, contracts, disputes & reclamations.
- They declare themselves bankrupt when they receive judicial reclamations so that the buyer has to then “quita” (which means, be paid less), and also has to “esperar” (which means, in most cases wait various years to recover part of the money).
B) WHAT TO DO IN THE FOLLOWING SITUATIONS ( real situations which our law firm are defending at the present time)?:
4º) Problems with the seller: If the farmer sells the land to a speculator, this being done under the cover of another company can then be sold by private contract to the unsuspecting foreigner, without anything being registered at the land registry and without the knowledge of the actual registered landowner, and in the process the value of the land that doubled or tripled in price from its true market value, and later the company that has carried out this “speculation” goes out of business.
II. If you purchase a house on plan that never gets built: The buyer will have to reclaim the refund of what has been paid, in the penal and civil courts. Important judicial costs involved.
III. If you purchase a property & before it is handed to you, the property Developer declare themselves bankrupt ( for example “Grupo San José”): The buyer will have to try to recuperate their money at the penal & civil courts, they will also have go to the Company Courts (for those that have gone bankrupt) Juzgados de lo Mercantil (los de la quiebra) as soon as possible, because the later you act, less money you will be able to recuperate & the longer it will take. Also important judicial costs.
IV. If you purchase an urban plot and when you try to build a house, the town hall because it is in “floodable area” even though it has more than 10.000 square metresSi usted compra un terreno urbano, y al intentar construir una casa, el Ayuntamiento se lo prohíbe porque está en “zona inundable”, aunque tenga más de 10.000 metros cuadrados: One thing that is not known is that in the Comunidad Valenciana, the land is exposed to periodical serious floods. There is a law that defines the level of flood danger in each area, which also specifies what this land may not be used for, to avoid deaths & damage. If you are in this situation you must take out a lawsuit against the Town Hall & against the seller.
V. If you purchase a property with a private contract, & without a public deed of sale escritura de venta, then one day you find out that the seller has again sold the property to a third person with whom they also failed to sign a deed of sale at the Notary escritura de venta:
Another thing you should know about Spain is that there are three different types of owners of properties: the owner by Escritura Pública (PUBLIC DEED OF SALE); the owner by contrato privado (Private Contract); & finally, the owner that does not have a contract or Escritura but for some reason is “owner” as he lives in the property.
The first situation the most preferable by far you are protected by the law. The second situation second preferable, but nothing goes against information registered at the land registry. The third & last situation you can with the passing of time (30 years) acquire the property, but later before buying the property you have to prove there is NO existence of a third owner.
C) CONCLUSION: Do not trust intermediaries or the solicitors recommended by the estate agent (most likely on salary from the promoters or estate agents) & always consult with independent solicitors & experts in this area, like RICOR ABOGADOS, from the first moment: when choosing your land or property to purchase, when choosing the promoter/estate agent or intermediary, and when choosing the contract and clauses within that contract therefore ensuring your rights. Remember at the first moment of the appearance of any problems or symptoms of problems, you must not wait; it must be dealt with immediately in order to resolve the problem, time is always against the trusting buyer.
© Mr. Oscar Ricor. Solicitor. RICOR ABOGADOS
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Investors craving property in Spain should wait out slump
Spanish property has long been favoured by second home owners from all reaches of the world. The Southern European country was the second most popular destination for international vacationers in 2006, behind France, according to the World Tourism Organization (WTO). But after the Spanish property markets recent downswing, is Spain still the attractive vacation home locale it once was? For now, those interested in Spanish property investments may be better off waiting to see what the market does.
About the Spanish property market
In the aftermath of the bursting of the property bubble, Spain´s property market is struggling. Spain´s construction industry fell by 3.9 percent between October and November 2007, the greatest drop in the Euro Zone, according to Eurostat. In second place, Portugal´s construction sector ecreased by 2.8 percent, with Slovenia close behind at 2.6 percent.
Germany and France were a distant fourth and fifth, with drops of 0.7 ercent and 0.4 percent, respectively. the average drop for the entire Euro one was 0.8 percent. At the height of the property boom, Spain became increasingly dependent upon the property market to fuel its economy. In 2005, 7,000 real estate agents were in operation on the Costa Blanca alone, according to The Daily Telegraph (U.K.). In 2006, Spain constructed more new homes than Germany, France and the U.K. combined, even though Spain has about one fifth of the total population of those countries. So when the bust inevitably reared its ugly head, the country was left with a long way to fall.
Mark Stucklin, head of SpanishPropertyInsight.com and writer of the Spanish Property Doctor´s column in The Sunday Times (U.K.), estimated that approximately 18 to 20 percent of Spain´s economy is dependent on the construction sector. In comparison, other European countries average 8 to 9 percent, he said. This means that a hefty correction is likely in order before Spain´s market can truly begin to heal. “Spain´s economy has become too dependent on construction and now that´s going to have to adjust,” Stucklin said. “I can see it coming down to the EU average, which means knocking 10 percent off of Spain´s GDP.” The adjustment of the construction sector could be responsible for recent job losses in the country. 53,000 Spaniards lost their jobs in February, bringing the country´s unemployment rate to 8.3 percent, according to Mr. Oscar Ricor, a lawyer with the firm “Ricor Abogados” in Spain.(http://www.ricoraboagados.com). He also said that the country´s manufacturing sector is the weakest it has been in six years. “At the moment, from my professional point of view, a U.S. investor should be extremely cautious before making the important decision [to invest] in Spain, because the Spanish economy is worsening rapidly,” Ricor said in an e-mail interview. “The tourism industry, however, is still going strong. The number of international arrivals increased 4.8 percent from 2005 to 2006, and Spain´s tourism sector brought in over $51 billion U.S. in 2006, according to a WTO report. Depending on where investors existing properties are located, it is possible that they could take advantage of Spain´s successful tourism industry and weather the slump by renting to international holidaymakers. There are the coastal regions which are in great part driven by foreign buyers. And then you have the interior where it´s a more domestic market and immigrants and economic migrants abide.” Although he said that both sections of the market are dead as far as purchasing goes, investors with property along the coasts may be able to find enough holiday renters to get them through these hard times.
Purchasing Spanish property
The fate of the economy is still up in the air, and investors would be wise to wait and see where the market is heading before deciding to invest in Spain. “Unless you specialize in distressed sales and that means a lot of work constantly looking at the market and being ready to luck into a distressed sale then now is not the time to buy. I don’t see anywhere in Spain offering good value yet from a financial returns point of view,” Stucklin said. “I would say you can quite easily sit out 2008 and not miss any great opportunity.” However, those looking for a personal vacation property or planning to retire in Spain may still be interested in buying now, despite the sorry state of the market. These buyers will need to apply for an NIE number before taking any other steps in the process. NIE stands for “Número de identidad de extranjero,” which roughly translates to “foreigner identification number.” Foreigners need an NIE before they can purchase property, apply for a mortgage or open a Spanish bank account. Buyers can apply for an NIE through a trusted Spanish solicitor. Multiple sources recommend against using a solicitor recommended by the estate agent with whom homebuyers are working. Stucklin said he strongly advises homebuyers to use a Spanish lawyer to ensure that all the proper taxes are paid. Homebuyers must complete an especially thorough due diligence process on any Spanish property they intend to purchase. A large number of homes were constructed illegally during the boom, and such a home could be demolished by the government with little or no reimbursement to the owner.
The Daily Mail (U.K.) told the story of one British couple who lost their Spanish retirement home because the property had been built illegally. Six years ago, the couple purchased two and a half acres in a Spanish coastal village and spent £350,000 constructing their dream home. In January, a demolition team unexpectedly arrived at their door and gave them two hours to evacuate the premises. The local council had been convinced by corrupted builders to grant planning permission, but, according to the regional government of Andalucia, the home was constructed illegally. “It is extremely dangerous to invest in Spain without having adequate and independent expert legal advice,” Ricor said. “Because many corrupted developers and estate agents are at the bridge of bankruptcy and subsequently seized by desperation, they don´t hesitate to swindle potential individual clients and corporate investors in order to sell properties”. So if investors choose to purchase Spanish property, it is best to go into the process with both eyes open to the legal issues that could arise. A trustworthy lawyer and meticulous approach could prevent much unnecessary suffering further down the line.
Published March 19,2008, By Cali Zimmerman ( Nuwire Investor, US)
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Top tips on avoiding legal complications By Oscar Ricor (Ricor Abogados). In all markets there are people who play by the rules and those who break them. The rapid explosion in the Spanish property market over the last decade and the arrival of many foreign purchasers both attracted a fair amount of sharks. Before starting, I do need to emphasise that Spain is mostly a well-regulated country and not the “wild west”. There are of course agencies, property developers and construction companies that operate legally and properly. Spain remains a top destination for people buying holiday homes or wanting to retire in the sun and there is no reason you can´t safely purchase property and have your rights protected. Over the years I have been in practice as a lawyer, I have had first-hand experience of most of the different scams and tricks that are used by the dishonest operators in the construction and property development businesses. Expatriates usually are at a disadvantage when it comes to knowing the language and/or much about Spanish property law. Additionally, many older people – especially the old and infirm – are more vulnerable as the may be coerced into accepting a situation. Common property purchase problems The following are examples of some of the areas where people have had problems and things to watch out for when purchasing a property in Spain: 1) Private sale agreements: this situation might be suggested as a way to avoid tax or simply the buyer might not realise that what they are executing may not be legally valid. A sale should be recorded as a public deed in the presence of a notary. The risk here is that the seller, sells the property again to another party. 2) Incorrect description of the property (fraud): this ranges from the misreporting of the number of square metres of the property itself to incorrect inventories of fixtures and fittings. 3) The introduction of a third-party into a transaction who acts as an intermediary between the owner of the property and the legally registered owner, who sells the property – usually under private agreement, with the issues raised above – and raises the sale price by 33-55%. 4) The sale of property built on agricultural or other land which has been constructed in violation of building regulations and/or in the absence of the required permits and/or on land which is then re-categorised as an urban area. In the first case, it is possible such a property can be ordered to be demolished and in the second, the “land grab” law can be applied to expropriate land for road/other use. 5) The sale of properties that does not have the certificate of occupancy or licence of first or second occupation, which might be due to the fact it has not been constructed with the necessary permissions and is not recognized by the local authorities. 6) The sale of off-plan properties (advance sales of a property in advance of its construction or completion)without there being refund insurance in place to protect deposits (illegal under Spanish law). 7) The sale of new properties which do not have three- or ten-year insurance in place to cover damages caused by hidden defects in the construction. 9) Sales in the presence of a notary through a “verbal representative” or “translator” provided and sent by the selling developer/builder to represent you as the buyer. As you might imagine this type of situation is open to abuse as this representative can act in the interests of the seller and not yours. Advice when buying property in Spain 1) Don´t fully trust any developer or estate agent. Part of the job is appearing trustworthy, being friendly and helping in every way they can as you consider buying a property from them. This co-operation is there to close a sale and ensure they get their commission; it often disappears completely when the deal is done. 2) Don´t be pressured into making a deposit on a property until a lawyer has been able to make a full evaluation of the legal status of it (enquiries with a Notary, Land Registry and the local town hall, etc). 3) Don´t sign any documents or purchase contracts before having them checked by an independent solicitor (that you have contacted yourself, not a referral from the seller). 90% of contracts of the contracts drawn up by developers that we have seen include unacceptable clauses, which range from unpleasant to expensive/abusive. Even if you have a good grasp of Spanish, some of these are not immediately obvious without good knowledge of Spanish law.
The best advice I can give is to make sure you fully understand everything you are being explained. You might feel uncomfortable or ignorant at times, but ask for clarification and get things in writing. Given the significant amount of your wealth you invest when you buy a property, make sure you protect that by always seeking third party independent advice from an expert. Professional help avoids complications and is relatively inexpensive. Sitting back in the sun in your new home in Spain without any legal worries is priceless… By Oscar Ricor – Ricor Abogados Tel: +34 687 888 873 Fax: +34 966 701 226 Pza. Cap de Pont Nº7. 1º-A. 03181 Torrevieja (Alicante), Spain. |
Charging for temporary (builder´s) electricity supplies which are only meant to be used during the construction period (illegal under Spanish law).
