Buying or selling a property is a stressful time, not only because it is a vital change but also because of the considerable amount of money involved. Sometimes problems can arise, which is why we recommend seeking professional support, so you can foresee them and avoid unpleasant surprises.
We spoke to Uri Geigle, lawyer and founding partner of Dauss Abogados, to find out about the most common legal conflicts that can arise when buying or selling property for national and foreign buyers.
Most legal disputes are often related to the property's status, which is why lawyers perform legal due diligence before the transaction.
"The main legal disputes often arise at this stage, as when buying a property, it is often forgotten that not only the physical structure is acquired, but also all the rights and obligations that are inherent to it. When carrying out due diligence, it often turns out that there are charges unknown to the client," comments Dauss. These burdens can, of course, be a major drawback for the buyer.
There are several legal aspects to take into account when buying or selling a property: you must have the legal capacity to sell or buy this property, you must know the applicable legislation and all the possible scenarios, the different regulations, including regional ones, which can lead to very different scenarios (orders, expropriations, easements, etc.). Lawyers remind us of the documents needed for this important transaction. The seller should provide, as a minimum:
- The deed by which you are the legitimate property owner.
- Cadastral documentation and a nota simple of the property.
- Documentation accrediting that the property is up-to-date with the tax payments (e.g. IBI).
- Energy report and certificate.
- Certificate of fitness for occupation, in the case of a residential property.
- Latest utility bills.
- If the property is subject to a horizontal property regime, documentation relating to the Community of Owners and the obligations that derive from this for the property.
- Any private or public document that may directly or indirectly affect the property (for example, a mortgage).
But do the possible conflicts that foreigners may have when buying and selling property in Spain tend to be different? "Foreigners have the same rights as nationals to acquire property in Spain, so the main legal conflicts are usually very similar in both cases and tend to appear mainly when carrying out the relevant 'due diligence'," adds the lawyer.
When buying a property in Spain, many factors need to be considered. Uri Geigle highlights the following:
- Obtaining the Foreigner Identification Number (NIE). The tax identification number is required for any financial transaction in Spain, including purchasing a property.
- Contractual formalities. "Although sales with transfer of the domain and property ownership are not concluded until the notarial deed is granted, in Spain, it is very common for prior contractual preparation to take place, normally in the form of an advance payment. In the deposit, if the work has been done correctly, we usually already find all the conditions and scenarios by which the future sale will be regulated, so it is no less important than the notarial deed," he explains.
- Financing. Foreigners should be aware of the conditions established by financial institutions in Spain, as they may differ substantially from one country to another. Likewise, the conditions may vary according to non-resident foreign individuals, residents or legal entities.
- Taxes. Another crucial point is the taxation of property purchases in Spain. Investors must be aware of the possible tax obligations involved in a property purchase and ensure that they comply with the corresponding payments.