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New Properties
In the case of a new property, you want to make sure that the property has been declared to Hacienda for IBI, as you can incur more fines for not registering it.
Make sure that your developer has made a deciaracion de obra nueva, a declaration of new building, and has paid the small tax associated with this, as well. Make sure that your escritura mentions the house you have purchased as well as the plot of land on which it stands. Sometimes the deed only refers to the land.
This makes you the owner of anything standing on the land, of course, but you may find yourself subject to taxes and fines relating to an undeclared building. Even worse, you may have bought an illegally constructed house that can never be registered because of zoning regulations. Check this at your Town Halls Urhanismo department.
Sometimes, the purchase of an undeclared building can even work in your favour, but you will need expert advice to make sure you stay within the law. Once you are sure that the building can in fact be registered, you make a contract to purchase only the land from the seller. That’s all he has title to, anyway.
The price for the land alone is much lower than the price for the land and house together, for a considerable saving on the property transfer tax of 6 per cent. You purchase the house separately by a private contract.
Then the new buyer makes the declaracion de obra nueva, just as if he himself has built the house. Building permits and other papers are necessary for this, but it can all be arranged, and the buyer will pay only one half of one per cent, compared to the transfer tax of 6 per cent.
It has been done but sound legal advice should be taken because the plan will not work in all areas and situations.
Town and Urban planning
It is also important to have a look at the Town Planning maps of the area around you.
A newly prosperous Spain is improving the road system all around the country What if one of those highways is planned for the bottom of your garden?
You can find out from the town’s urban plan. This plan is called the Plan General de Ordenacion Urbana, the PGOU for short. If you yourself cannot read plans, and few of us can, have your lawyer do it.
Before signing anything
Before you sign anything in Spain, even a small reservation deposit agreement, there are some pieces of paper you should see. These include:
- · The seller’s own title, known as the escriturapublica, and a report from the Property Registry called a nota simple.
- · The paid-up receipt for his annual property tax, the IBI.
- · The Catastral Certificate giving the exact boundaries and square metres of area.
- · Paid-up receipts for the annual fees of the Community of Property Owners, the Statutes of the Community, and the minutes of the last AGM.
- · Paid-up receipts for all utility bills.
Escritura Publica
The Escritura Publica is the registered title deed of the property It is inscribed in the Registro de Ia Propiedad, the Property Registry, and it is the only ironclad guarantee of title in Spain. If your seller cannot produce an escritura pablica, something is wrong. In this title deed you will find a description of the property, the details of the owner. If any mortgages or court embargoes exist against the property, they will be registered here as marginal notes. You want to see the seller’s title deed, if only to make sure that he really is the owner of the property being sold to you.
Your lawyer can obtain a riota simple from the Registry, containing the pertinent details and notes of any mortgages against the property As of 2002, you can obtain a nota simple very rapidly on the Internet if you are entered in the Registry program. However, it would be best if you could see a copy of the complete deed.
Strange things can happen with deeds. In one recent case, a widow was selling her property in Spain. However, living in another country, it had never occurred to her to declare the death of her husband in Spain, and his name was still entered on the title deed as half owner of the property. This was done in perfect innocence, because she simply considered herself the full owner of the property when her husband died.
By Spanish law a property held jointly in two names cannot be sold without the signatures of both parties. Because no one had seen the full escritura before the scheduled closing and final payment, the fact did not come to light until both parties were ready to sign at the Spanish Notary.
The signing had to be postponed for months until the widow could declare her husband’s death, which had happened 10 years before, prove that she was the heir, formally accept the inheritance, re-register the property in her own name, and finally sign to sell it.
One fortunate consequence of her error was that she did not have to pay any Spanish inheritance tax, because the demand for the tax lapses after five years. Some people do this deliberately, but her lack of action was inadvertent.
All this inheritance settlement could have taken place early in the negotiations if the title deed had been available for examination. You will do well to insist on seeing the complete escritura. It’s a good idea to know that the seller is really the owner of the property, after all.
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