New Comprehensive Advisory Service for Property Owners

Owning a real estate property is a big responsibility. To protect your rights as an owner, your property must meet all current legal and technical requirements. To give you the peace of mind that your real estate property does meet these requirements and is fully protected legally — both now and in the event of any change in the law — Tarraco Iuris law firm would like to offer you its comprehensive advisory service for property owners.

Based in Tarragona, our specialist team of lawyers and technical experts are ready to handle all your properly-related legal and administrative needs, including the handling of any mediation process and other procedures and the drafting and lodging of documents for the Spanish authorities (local councils, provincial and regional governments, the cadastral register, the Land Registry, notaries public, the courts, etc.) or any third parties (adjoining property owners, neighbour associations, the community of owners, entities involved in expropriation processes, etc.).

To legally protect your property in Spain, we offer a complete range of technical and legal services that includes:

1. Helping you obtain a NIE (foreigner ID number required for tax purposes in Spain)
2. Drafting all property-related contracts, including preliminary, option-to-buy, purchase and sale, and lease agreements
3. Verifying property charges with the Land Registry
4. Verifying property zoning with the local council
5. Verifying any debts owed by the seller to the Community of Owners
6. Verifying that all tax due on a property has been paid (municipal property tax, tax on income from real estate property, etc.) and drafting and presenting any corresponding tax declarations
7. Providing an estimate of taxes and expenses so you can budget for the cost of transferring a real estate property
8. Verifying the applicable marital or inheritance law and advising you on the legal conditions for purchasing or transferring a property
9. Drafting title deeds for executing property transactions
10. Accompanying you to sign title deeds and any other notarial instruments, acting as advisers and/or translators
11. Assisting your negotiations with the bank for using the property as loan security
12. Registering title deeds with the Land Registry
13. Informing the local council of a change of ownership for the purposes of local taxes and fees
14. For sales by non-residents, preparing and presenting declarations on tax withheld for Spanish income tax and handling the collection of any refund
15. Preparing/lodging applications for:

a. Certificate of occupancy and energy efficiency certificate
b. Building technical assessment report
c. Certificate of structural soundness and certification of construction age

16. Plans and topographical surveys
17. Undertaking boundary demarcation and mediating in conflicts with neighbours
18. Undertaking historical investigations on properties and updating the cadastral record for divided or joined plots
19. Advising you on:

a. Utility connection and the possible use of wells and springs
b. New construction, reform or landscaping projects
c. Business projects
d. Road and path refurbishment
e. Land and building assessment

Are you sure your property is fully protected legally?

Do not hesitate to contact us for further information. Please contact us for any service you require that is not listed

Tarraco Iuris global management

Read this article in Russian
Read this article in German

The time has come to buy again real estate in Spain

After several years of continued declines in prices and sales volume, statistics finally start reporting positive results. Very small, but that break the downtrend. The international situation could perhaps encourage investment decisions in real estate in Spain.

A significant reduction in the number of Russian tourists is expected this year on the Spanish coast. The reasons for that are instability due to the crisis between Russia and Ukraine and especially the collapse of the ruble. But also the euro is undergoing a gradual devaluation, and it seems that this trend will continue in the future. However this news, apparently negative, may have another reading: every time it came to the devaluation of a currency, conscious citizens sought to invest their savings in goods, a kind of “safe haven”, and throughout history, the most common safe haven for money savings has always been investing in real estate.

In addition, the mentality of the Spaniards in this area is rather conservative and therefore the opinion prevails that every ordinary citizen should be owner of his living room in his life. This approach has a significant impact on the real estate market, as this has always led to a higher demand than expected at every economic stage. And, moreover, hundreds of thousands of foreigners dream of a quiet retirement or at the Spanish coast or a summer residence to come to it every year, and they do not hesitate to purchase a property where safely enjoy Spain in their own home. All of these factors bring us back to the beginning: it has always been assumed that investing in real estate in Spain is a reliable investment.

Despite the severe crisis of recent years, we must not forget that real estate has always been the best and safest way to invest our savings in Spain. And just because of the crisis, prices at back at a rational level and , according to the monthly statistics, gradually begin to rise.

Carlos Prieto Cid – Lawyer

Read this article in Russian
Read this article in German

Risks of buying real estate from banks

In these times of severe economic crisis, thousands of properties are sold at auction every month in Spain because their owners can no longer pay their debts. In most cases, the creditor is a bank and if no bidders participated in the auction, the creditor himself receives ultimately the contract.

Although the government related institutions in recent months insist on pointing out that the economic situation of Spain is improving, the reality is that the seizure of property and evictions due to debtors’ failure to pay their own liabilities have no end. The banks are the biggest creditors nationwide. In the judicial auction they usually get the property, without being able to recover the outstanding loans, because of the lack of interest of potential buyers for the seized property. After the bank has become the owner of the property, it passes it to a real estate agency, which is often established only for the purpose of selling this type of property. For the same reasons that the property could not be sold at auction, it often takes months or even years before the agency finds a buyer on the almost at a virtual standstill housing market.

During this period, the attitude of the banks is far from what is expected of a correct owner. For example, in the case of apartments or houses in settlements with community facilities, the banks often do not pay the contributions to the community of owners required for maintenance, swimming pools, gardens, etc., until a buyer is found, thus bringing the condos in financial difficulties, as these depend on the contributions to cover the general expenses for cleaning and maintenance of the common areas. Furthermore, neither the agencies nor the banks take a minimum care about the conditions of the building and so, leaks, pigeon nests or all sorts of other problems that affect the neighbours remain unresolved.

These risks should be considered when investing in Spain. Investors are normally interested in such kind of real estate because they believe that their price might be below the average price. However, it should not be forgotten that the banks have more than enough capacity to hold on as long as necessary until its real estate stock is sold (after all, they were helped for that with a lot of public money). Investors must convince themselves that the banks won’t reduce the price more than other owners who might need the money urgently.

Carlos Prieto Cid – Lawyer

Read this article in Russian
Read this article in German

Under the new Entrepreneurs’ Law, a residence permit can be obtained by purchasing a property in Spain

In enabling this, the Spanish government is attempting to reinvigorate the property market by attracting foreigners from outside the European Union with the granting of a residence permit for investing in Spain, which brings the added benefit of being able to move virtually freely around various member states under the Schengen Agreement.  

Here, too, there is a danger that an investor will view the purchase of a property as an opportunity to do business in Europe.  This can mean that they fail to check sufficiently thoroughly as to whether the purchase of the property is safe and reputable, as they want to take advantage of the opportunity to gain legal residency in Spain.  The risk is the same as for the tourist who wants to enjoy their holiday rather than attending meetings with lawyers.  In this case, too, the investment is a means, not an end, for just as the tourist sees the acquisition of a property as a means that secures them their holiday in Spain, the entrepreneur sees their opportunity to obtain a residence permit by purchasing a property, which then enables them to move freely around the Schengen area.  Both view getting adequate protection for their purchase as unnecessary.  If any problems subsequently arise, they find themselves compelled to find a lawyer to solve the problems arising from their failure to seek independent, professional advice.  However, by then it is often too late, and if there is a solution, it will involve much higher costs than if they had sought advice at the right time.  Well-advised investors can avoid making such mistakes.

Carlos Prieto Cid – Lawyer

Read this article in Russian
Read this article in German

Further increase in the final costs of the transfer of property in Spain

The costs associated with the transfer of ownership may affect the decisions of both parties, buyer and seller, as the net price that the seller receives after deducting expenses and taxes may be much less than expected in the beginning, and the final price to the buyer by adding costs and taxes may be much higher than previously thought.

The parties of a contract for the transfer of property (usually a purchase contract) can decide freely about these matters. However, we are going to analyze now what the laws say when the parties do not achieve an agreement among themselves:

  • The municipality tax on the added value of the property sold, in the case of urban land, is one of the costs to be paid by the sellers. This is a percentage of the difference between the declared value at the time of purchase and the estimated value of the property at the time of acquiring it by the seller.
  • The income tax on the increase in value is also an expense of sellers. If the seller is non-resident, the buyer must submit a deposit (3% of the price) as an insurance tax directly to the tax office. For this reason, this amount is usually subtracted from the purchase price. Subsequently, we have to calculate the payable tax, which also consists of a percentage of the difference between the declared value at the time of acquisition and declared value of the property at the time of sale.
  • The tax on the transfer of property is the buyer’s responsibility. The tax has been raised again in Catalonia and other regions of Spain, and now the buyer has to pay 10 % of the selling price for this concept.
  • The account of the notary (exclusively for the purchase contract) is according to the law at the expense of buyers, unless the parties agree otherwise. The role of the notary in Spain (unlike other countries) is only a formalization, converting the final contract in a public document. This contract has been issued in advance by the parties with the assistance of a lawyer. The notarization of the contract of sale in accordance with Spanish law is not absolutely necessary, but it is very appropriate, because a contract that is not contained in a public document cannot be registered in the registry of property. And such recordation of the change in ownership is not only a guarantee for the buyer, but also a prerequisite when the buyer has to finance the price with a mortgage.
  • What we have just commented justifies as well that the cost of recording the change in ownership in the registry of property has to be paid by the buyer.
  • The costs of preparing the documents to be submitted along with the case, is to be paid by the seller (these documents are normally processed or checked by lawyers). The cost of a lawyer could be common to both parties, as well as the lawyer provides the following services:
    • To provide consulting and legal assistance during the whole process of transfer of ownership.
    • To translate the will of the parties to the legal and technical language.
    • To make a final agreement of sale and prepare it to be notarized by a notary.
    • To foresee the tax consequences of the transaction for both parties and to prepare and submit formally and in time the tax returns in the most convenient manner.

But it is always better for the parties to agree in advance (even in an oral form) the main terms and conditions of the contract, so that the lawyer is able to represent the interests of both parties without any kind of conflict, simply because he develops the sales agreement already adopted by the parties.

Carlos Prieto Cid – Lawyer

Read this article in Russian
Read this article in German

Building Energy Efficiency Certificate: a new requirement for the sale of real estate

The Spanish Royal Decree 235/2013, of 5 April, has just come into force. It approves the basic procedure for the certification of energy efficiency of buildings. Under this new regulation, from June 1st 2013 on, you cannot validly formalize contracts for the sale or lease of property without the submission of such certification.

Real estate selling management has become a very difficult task in the last years, but not only because of the crisis: the continued imposition of new legal requirements has also hindered this sale management, with the excuse to increase the guarantees for the buyer. For example: recently, we have found that it has become impossible to record a property purchase contract in the Registry of Deeds if the transfer of ownership has not been previously communicated to the municipality concerned, so that the tax popularly known as “plusvalia” could be calculated and paid. Previously we had also found that, in the case of sale of dwelling, it has become necessary to prove its habitability by filing a document that, in many cases, costs a lot to get (or at least, a long time). And in most cases, in which such statements only come to ratify the existing factual situation, its demand has only served to slow processes and increase the costs and the bureaucracy around the sale of a property, which are already excessive.

The last obstacle to be overcome by sellers of property is the obligation to provide buyers or tenants the BEEC energy certificate confirming the energy efficiency of the house. This document will describe how the house effectively consumes electricity and will include objective information on the minimum energy requirements so that future owners or tenants of the building (or a part of it) have the opportunity to compare and evaluate its performance with other similar proposals.

The purpose of this regulation, allowing consumers to compare the energy efficiency of buildings, is to promote energy saving investments and also more energy efficient buildings in the housing market. In addition, this guideline helps to report information about carbon dioxide (CO2) emissions from the residential sector, which will facilitate the adoption of measures to reduce emissions and improve the energy rating of buildings. Laudable goal, of course, but in a very long term, if there is something new to be built in this country. Nowadays, what we have is a huge offer of buildings that do not find a buyer and selling them has become with the new directive even more difficult.

Carlos Prieto Cid – Lawyer

Read this article in Russian
Read this article in German

Incoherent land information systems in Spain

In Spain, it is often the case that entries recorded in the cadastre and the land register (register of deeds) are not identical and the two registries can often contradict the actual plots on the ground.

The reason for this is that the sources of the information differ: in the land register, only information contained in official documents is recorded (e.g. notary certified contracts or judicial decisions); however, the information in the cadastre is submitted and recorded by municipality officials or the tax office.

The function of the information also varies: in the land register, a private individual enters the information which he wishes to defend with the guarantee of the official register; in the cadastre, the administration prepares the information necessary for the calculation of taxes and the enforcement of its own demands.

This potential contradiction is not the only difference between the Spanish and other foreign land registers: another and very important difference in the Spanish land register is the mandatory recording of a building’s description, including details of the construction areas, with a notary certificate, while in other foreign land registers (like in Germany, for example), only the explicit size of the plot (without any description of the buildings) is recorded.  Significantly, this means that if alterations are made to the building, its altered condition must also be updated in the land register with a retrospective notary “New Works Declaration”. However, this is often not done, either through ignorance, a reluctance to pay the notary, tax and registry costs, or more usually because (new) building has not been granted.

Nearly all contracts of sale for property are dependent on the funding of the buyer.  This funding is usually granted by a bank, but always with the guarantee that it is recorded in the land register as a mortgage on the purchased property.  It is therefore very important that the information recorded in the land register does not conflict with reality because any information missing from the land register can mean that the financing bank will not cover the purchase price agreed for the property (this price is agreed irrespective of what is actually stated in the land register). Therefore, if you are intending to put a property on the market as a seller, it is advisable to find out all entries in the land register and cadastre and compare them with the actual plots.

Providing that the correct measurements are recorded in the cadastre, it is relatively simple to amend the land register.  With existing (or older) valid building permission and construction final approval documented by the municipality, things can move forward quickly.  It becomes difficult however when a building or part of a building exists which has not been recorded and for which there is no official approval.  Then only the lengthy and expensive route of gaining planning and building permission through an architect remains.

The situation is different when not only the factual information, but also the legal information recorded is incorrect: this often occurs in the case of inheritances which have not been formalised or when the buyer has not notarized the signed contract of sale.  Because only information contained in official documentation can be recorded in the land register, private contracts of sale cannot be registered.

Carlos Prieto Cid – Lawyer

Read this article in Russian
Read this article in German

If I rent my holiday house in Spain, what kind of taxes should I pay?

Most tourists who visit Spain choose for their accommodation a holiday flat or a holiday home. If we own a property in Spain and we want to rent it during the touristic season to others, we must know what taxes we are required to pay to the Spanish public finances.

The most common situation is that we rent a holiday home for a period of time not longer than three months. In this case, the income from the leasing of this property will always be considered property income and must be included in the annual declaration of our income tax. The expenses necessary to maintain the holiday home and for its promotion in the touristic market will be deductible from this declared revenues, but only if these expenses are billed in the time period in which the holiday house or apartment is leased to a third party. Nevertheless, we must not forget that even in periods when the holiday homes are not rented, they generate anyway revenues that must be declared according to the income tax regulations. That is because the Spanish tax laws regard as property income the mere possession of a property that is not used as regular residence, also when it is not leased. This fictitious revenue is the amount that results from applying a small percentage to the cadaster value of the property, a target value that established by public finance authorities under certain valuation rules. During these periods of time when the property is not rented, no deduction of expenses allowed.

Presenting an annual statement of the income tax of individuals to the Spanish Tax Office is mandatory for all owners of property in Spain, if this dwelling is not officially considered the regular residence. This means that all owners of a holiday home in Spain, whether resident or non-resident, whether or not renting it, are anyway required to file annually with this statement. Many foreign owners are not aware of this obligation. They think everything is solved, when paying the community tax (called IBI) and they oft forget to pay this compulsory income tax.
Despite all this, holiday house renting could be considered an economic activity and would have to be declared as such according to the income tax regulations when entered into under the following circumstances:

  •   There is at least one room dedicated exclusively for the management of the activity.
  •   There is at one full-time person hired to work in the development of the activity.

Everything we have said refers to income tax of individuals. With regard to the added value tax, the general rule is that renting of holiday home is considered tax-exempt as long as the landlord is not required to provide any of the services of the hotel industry, such as cleaning the dwelling and changing the bed linen and towels at least once a week. However, we must clarify that although we rent the house only for one week, the law does not consider as complementary services of the hotel industry both cleaning the inside of the apartment and changing its bed linen and towels at the time of the check-in and the check-out of the period hired by each tenant, as well as cleaning the common areas of the building and the technical assistance services for repairs and maintenance of plumbing, electrical, glass, blinds, locks and appliances.

Carlos Prieto Cid, Lawyer

Read this article in German
Read this article in Russian

New legal requirements for holiday homes

Our costs welcome millions of visitors during each season. Not all of them are owners of an apartment or a property or stay in a hotel. The majority of them decide to rent a holiday home during the stay. A new legislation fights against the black market on this sector and wants to guarantee the maintenance of our touristic brand.

The new legislation addresses to the touristic sector not (like in the past and without any great success) to the housing sector itself. This law considers a “vivienda de uso vacacional” those properties that are conceded by the owner, directly or indirectly, to other persons in exchange of a consideration. Because of this, every accommodation must have a “cédula de habitabilidad” and ensure that there is enough furniture and equipment according to the number of offered places for visitors. The “cédula de habitabilidad“ is a proof of flat’s habitability which is prepared by the architect and has to be proposed at local housing authority.

How to convert a house or an apartment into a „vivienda de uso vacacional“? The law simplifies this procedure by using the so-called „régimen de comunicación previa“. Hereby it is only necessary to display the intention to rent the flat at the local administration and without any delay it could be started with renting. In this display the owner declares the responsibility to ensure the necessary amount of above-named equipment. He also needs, besides the identity card, the „cédula de habitabilidad“, a confirmation of energy supply and an insurance contract with an adequate coverage.

In this point the municipality is getting involved. This means that it is possible that the community charges a certain fee which could be established in the financial regulation. It would be desirable that administration wouldn’t take advantage of this to generate new revenue. The law intends to secure the quality of the offered holiday homes and it doesn’t want to increase costs which could have the opposite effect namely a promotion of shadow economy. The success of this law depends on an easy handling without further costs as well as on a resolute control.

A holiday homes status as a “vivienda de uso vacacional” means that it could not be turned into a main or secondary residence. The owner has to register guests’ personal data and, in accordance to local security service, send them to the central administration of the police. The stay in a holiday home with this status could not last longer than three months.

Another question that should be answered is that it is not allowed to split the holiday homes. Some owners of larger estates usually rent single rooms to different persons. Or in some cases there are different segregated fully furnished apartments. In these case the law states that rent is only possible if there is an own „cédula de habitabilidad“ for each lodging. If there is none, the „régimen de apartamentos turisticos“ is applicable. For this it is necessary to show a reception with at least 10 square meters. Furthermore the minimum standards for hotels like weakly cleaning are to be maintained.

Carlos Prieto Cid, Lawyer

This article in German

Legalization of buildings outside the law

Traditionally it has been possible in our country to legalize buildings outside the law through the mere passage of time. However, the Law 8/2011 has added new requirements when recording new buildings in the register of deeds, giving more legal security to the system.

When selling a property, the buyer usually requires financing. To obtain financing is not only very difficult nowadays, due to the current banking situation, but also virtually impossible if the buyer can not offer a mortgage to the bank that lends him the money. To make it possible for the bank to register the necessary property mortgage, the real value of the estate to be charged should be reflected in the register of deeds. This is only achieved when the elements that provide greater value to the property, that is, the existing buildings on it, are properly registered. To register these edifications, a notarial declaration of the new building is always been necessary and this document must be submitted to the register in order to be recorded, accompanied by many documents to control its urbanistic legality.

Despite this, there was always a back door to buildings that violated the law, which could end up sneaking in urban registration of the property, with the economic and financial consequences discussed above. The mere passage of time with no reaction of the relevant planning authorities, the municipalities, leads to the possibility of regularization of these illegal edifications. As the deadlines for the sanctioning procedures passed and the planning authorities could no longer prosecute these buildings, they could end regularized, if certain conditions were met. But in the present days, the last reform of the Land Act we mentioned above, has added a key requirement, prior to the possibility of recording the irregular building in the register of deeds: we should show a municipal certification defining the content of the situation outside the law of the building we intend to record.

Article 20.4 of the Act indicates that
“4 …. in the case of constructions, buildings and facilities for which no appropriate measures to restore legality involving urban demolition can be taken, because the relevant limitation period has passed, the registration record of the completion of the work shall be controlled by the following procedure:

  • a) the notary deeds with the statement of a new building can be recorded in the Land Registry if they are accompanied by a certificate issued by the City Council or by a competent technician, or a descriptive notarized certification of the property or a cadastral descriptive and graphic certification of the property, when these documents confirm the completion of the work in a specified date and the description coincides with the title. For this purpose, the Registrar shall verify if there is a notation in the Register of Deeds because of the initiation of an urban discipline procedure for the property subject of the construction, building and installation in question and that the site is non demanial or affected by easements for public use.
  • b) The registration entry will record the outside-the-law position of all or part of the construction, building and installation, in accordance with applicable urban management. It will be necessary to provide the administrative act by which the situation is declared outside management, with the proper delimitation of its contents.
  • c) The Registrar shall report to the City the respective entries in the cases included in previous issues, and such notification will be recorded in the inscription”

This new regulation, in force throughout the state, which requires prior to registration the provision of a municipal certificate on the content of urban illegality is coherent with the goal to be reached with the law of passing “registration measures designed to ensure and strengthen certainty in the real estate contracts and business, through the Land Registry” and “emphasizing on register protection measures which aim to prevent and prosecute in the future situations that occur today and that are impacting very negatively on investment in real estate, both domestically and internationally“.

Let us hope that eventually these legal measures have the desired effect and strengthen the security image as necessary to encourage property investment, especially by foreigners.

Carlos Prieto Cid, Lawyer

This article in German