Human nature being what it is, very often it is difficult to admit you have made a mistake. On top of this, pride often enters into the equation and makes it even harder to ask for help, even if you know where to go!
What are we rabbiting on about? Although 1000’s of sales of Spanish property go through with no problems each year, every now and then something goes wrong.
Here are a few pointers as to what could happen. Though they rarely do, this is no consolation to the individual concerned.
- Exchange Rates
- Lack of guarantees
- Change in circumstances
- Misunderstandings about what is being bought
- Power of attorney
These can make a big difference in the amount of money you need to make available for your purchase. Be careful that you are not talking at cross purposes. Make sure you know whether the final purchase price is in sterling or euros and make sure this is made subject to a written purchase contract. It is worth mentioning here that the friendly bank around the corner may well not offer the best exchange rate. Get advice and you may find you get 3-4% more by using a currency house. That’s what we do for our clients. No-one likes to pay more than they need for goods and this is certainly true when buying money!
Lack of Guarantees:
Under Spanish law you are legally due to be given a guarantee when buying in stage payments, which can be literally off-plan i.e. without even a brick in place! If you didn’t get one, all is not lost!! We have helped people who have had this problem and thought they had lost their money, by either getting them a guarantee or getting their money back……with interest!! In general this is not something a UK lawyer can undertake for you unless they are experts in Spanish Property Law and can speak and read Spanish.
Change in circumstances:
This can happen to anyone. Someone may lose their job, a death may occur or divorce may be involved. Any of these things can mean that you no longer want or can afford to keep your property. In a previous blog we said “Don’t walk away”, you can’t just ignore mortgage payments or community fees and hope they will go away. Abandoning your property will not make the problem go away. Spanish banks will repossess properties, sell them for whatever they can. This may be far less than you paid so you will still be liable for the difference and/or arrears. The fact you are in the UK, for instance, does not mean they won’t pursue the matter and generally this will be in the end through the UK courts.
Misunderstanding about your purchase:
Language could be a problem here and you may have misunderstood what was on offer. This is less likely to occur with new builds being sold through an agent or developer. Information will usually be available in English and there often will be a Show House. Take care about “extras” e.g what is meant by a fitted kitchen? Does it include appliances not just the cabinets?
If you have a choice of internal and external finishes make sure they are in the agreed final price, not extras. It is easy to get carried away without realising you are in fact adding to the final bill.
Problems can arise when buying privately. You need to know what is included in the deeds of the property. This is especially true if land is included in the sale. Fincas often have no physical boundaries e.g fences, so make sure you know by law where your land starts and ends. Sometimes older houses come with an “understanding” about land ownership. It may be assumed that the land goes with the building so this needs clarification. If the property comes with “open” land, this will be an extra cost if you do want to enclose your plot.
There are taxes which come on top of the purchase price and add 10%+ to it. These taxes will vary as per different regions and also whether it is a new property or a re-sale. Make sure the price you think you are going to pay includes these. Don’t put a deposit down before you know the final price including taxes you will need to pay.
As with most countries, there are then periodic and annual taxes – not complicated, but different, and just a matter of getting the right advice and thereby the right knowledge.
Power of Attorney:
Unless you are able to go to and from Spain as and when papers or payments concerning the property need to be signed or paid, you will need to find an attorney in the area whom you trust to do it for you. Do not believe anyone who tells you you don’t need one!! You wouldn’t buy a property in the UK without one and Spain is no different.
No, you don’t have to have a Spanish will, but wow it can make things a lot easier should the worst happen. The Laws of Succession in Spain are very different from those, for instance, in UK. We have done a lot of work for family members who have suffered the effects of a Spanish Will not having been done, so again it is all a matter of knowing what to do.
And finally…….it all sounds a lot, but most of the above is actually looked after by good agents and good Spanish lawyers – which leaves you to have the fun and enjoyment you wanted in the first place.