As Spain emerges as a tourist, investor and holiday-home-buyer magnet again, it is worth reminding ourselves of a few things to watch out for.
Spanish Property Location
A key thing to consider is the location of the property, whether within a city or its position on the coast. Close transport and infrastructure links existing and planned, can alter the value of the property significantly. So a new high speed rail link, as is coming on some parts of the Costas, will enhance the value of a property.
And buying on the Costas may mean checking whether the property is subject to the Ley de Costas (Coastal Act), a law designed to protect the coast and it is important to also ensure all the correct permits and licences are in place.
Type of property in Spain
An issue for purchasers of Spanish property in the past has been buying on a large complex of lots of similar properties, which have become difficult to sell or rent out in a falling market. So the type of property is also important, it is not just a question of location.
Legitimate and legal Spanish holiday home
Many ‘illegal’ builds in Andalusia have been as a result of the failure of regional government town planning processes, or corruption, in the way land has been classified or reclassified.
But with any of these initiatives it is always worth bearing in mind, a good local lawyer, with no conflict of interest, should be able to verify the validity of documentation, if there are any gaps, whether everything is up-to-date, the detail of an individual contract and generally act on a buyer’s behalf.
Be particularly careful of buying properties on reclassified, non-urban land and check all the necessary permissions have been obtained.
Ley de costas (Coastal Law) was designed to protect the Spanish coast from over-building, by creating special, coastal, zones. Its introduction in 1988 wrested control of the coast from private owners in favour of the central government, by the imposition of leases on properties on the coast. It has been modified to allow refurbishments of seafront homes and has allowed for extended leases, up to 75 years.
The changes to the law have been enshrined in statute, but five autonomous regional governments, such as Andalusia, are challenging this as a threat to their independence over municipal town planning. So it is a moving feast at the moment, which makes it difficult for the tens of thousands of homeowners affected.
Spain’s Buying process
The Spanish buying process is a notarised one, there is an initial Reservation Agreement or preliminary Private Purchase Contract, which should stipulate the basic terms of the purchase, i.e. the price, details of the vendor and buyer, details of the property, when the Final Private Purchase Contract should be signed.
Then the signing of the Final Private Purchase Contract and Title Deed, usually happens 20-30 days later, which allows time for legal due diligence to be carried out. This is witnessed by the Notary Public, a public official, who plays a neutral role in preparing and witnessing the formal signing of property transfer in Spain. Their role is to ensure that both parties to an agreement are clear on the terms of the contract, that the terms of the contract comply with the law and that relevant taxes are paid.
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Tags: holiday home, Infrastructure improvements, investment property, legal, Overseas Buying process