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We all wish we could own a holiday home or move to Spain permanently, especially the Costa del Sol, this region of Southern Spain has the most temperate climate in Spain with long hot summers and warm winters, a fantastic selection of beaches and restaurants in which to relax and enjoy yourself.
Whether you want to live and work or just relax with the family Spain’s property experts still predict that property on the Costa del Sol will rise at an accelerated rate for the foreseeable future.
This in turn means that there are still a great selection of properties to be purchased throughout Spain which in turn will give you many years of enjoyment and still offer a good investment for the future, whether it be permanent residence or a holiday home.
There is a fantastic selection of property for sale on the Costa del Sol ranging from coastal to inland, small fincas with land to large exclusive villas with pools, new builds and resale properties, whatever you are looking for, Spain has plenty to offer everyone whether it be in a small rural village or one of the many coastal towns in the region.
With mortgage rates steady you can get mortgage deals as low as 2.5% with the bank rate at 4.75%.
Now is the time to make that property purchase, this property guide will help explain many of the procedures and documents that are required in the property transaction processes.
Real Estate Agents
Let’s start at the beginning. Your first contact when you decide to buy property in Spain will almost certainly be the estate agent.
In many countries, an estate agent is a registered professional who can be held financially responsible if he intermediates in a sale and the terms later turn out to be falsely based.
In Spain there is no law regulating real estate agents. Anyone at all may act as intermediary in property sales. This means it is difficult to hold an estate agent responsible when a purchase goes wrong. Citizens of Scandinavian countries, or the UK, for example, where consumers are more carefully protected, even from their own mistakes, should be warier in Spain.
There are, however, two professional associations that require examinations and set standards for their members. One of these offers the title of Agente de Ia Propiedad Inmobiliaria, or API for short. The other is the GIPE, the Gestor Intermediario de Pro inociones y Edificaciones. You will do well to deal with an estate agent who holds one of these titles.
Even so, if your Spanish estate agent causes you to suffer loss, either through negligence or honest error, you will have a hard time obtaining any recompense. Ask your agent if he carries Professional Indemnity Insurance, and, if so, how much. You may again be surprised to find that most estate agents have either no insurance at all or a minimum amount required by the official Spanish agent’s association.
Also ask your agent if he operates a Bonded Client’s Account, into which any deposits will be placed, and which is untouchable except for the stated purpose of the deposit. Here is what can happen if you pay your deposit directly to the seller.
A British couple found a villa they liked on the Costa del Sol. They agreed a price of €180,000, and they transferred a deposit of €18,000, loper cent of the price, to reserve the villa from its German owners.
The British couple used a Spanish lawyer plus the advice of a British property agent working in Spain and they felt all was well. The couple sold their home in the UK, shipped their furniture to Spain, wound up their business, and came to Spain for the closing of the sale, when they would pay the rest of the price and sign the deed.
Just before the date with the Notary, their lawyer received a message from the German sellers, saying they could not make it that day and that they would be in touch later. This set off alarm bells with everybody involved. It turned out that the owners had in fact sold the property a month earlier for €210,000 to another buyer, had kept the €18,000 deposited with them, and had left Spain for parts unknown.
Of course the unfortunate British buyers have a clear case against the German sellers for breach of contract, with the right to recover their deposit, plus damages and loss, but how are they going to find them? In fact, they have the right to a sum twice the amount of the deposit if the seller backs out of the deal.
In many European countries, the buyers would also have a case against the estate agent and perhaps the lawyer as well for negligence in performing their services. In Spain they also have a case but where standards are less strict and where the lawyer and estate agent declare that they simply followed accepted practice and were just as dismayed as their clients, a Spanish court might well accept their arguments.
So, be sure to take care that any deposit you make goes into that escrow account, a blocked account, where neither party can get at it until the sale is closed.
In a few cases, unscrupulous estate agents have taken advantage of distressed or innocent sellers, telling them that they can obtain only a very low price for their property. This might be a widow, who has returned to her home country and wants to sell her Spanish property because she needs the money The agent tells her he can get only €90,000 for the property
She had the idea it must be worth €120,000 or more in today’s brisk market, but she lets herself be convinced. The agent also convinces her to sign an agreement which authorizes him to keep anything he can get over that price. The agent then sells the property for €125,000, just as he knew he could, making himself a “commission” of €35,000.
The buyer makes out the cheque to the estate agent, who puts €35,000 in his own account and €90,000 to the owner. All legal and in order. He never tells the seller what he sold it for, and since the buyer and seller never come into contact, the truth is never discovered. Even if it was, the agent has done nothing illegal. After all, the seller signed the agreement, didn’t she? This sort of sharp operating becomes a great temptation for agents where owners are often absentee and ignorant.
Even the final figure of the purchase price on the sales contract may be the under-declared amount of €90,000. Since the agent is acting with a power of attorney to sign the contract for the absentee seller, nothing could be done about it after the fact, in any case.
These cases and others like them make a powerful argument for using a Spanish lawyer when you buy property. I will say it again and again. You should use a Spanish lawyer when you buy property in Spain. You should use a lawyer in your own country when you buy property. Why should it be different in Spain?
Having stated this warning, we find that most Spanish estate agents, or foreigners selling property in Spain, are both registered and honest. They only want to make a fair commission by selling good property.
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