Property

On This Page you will find Buying property safely Costs of buying How to make payment The Notary Office The Community Taxes Running the Property Exploitation

I paid a builder 200,000 Euros for my villa. I've just found out that the bank auctioned and sold it to a new owner. I didn't know this was going on. The new owner has changed all the locks and moved in. What can I do? Probably nothing - you may well have lost it. You needed to make simple checks before you purchased, not after. Say the builder of your villa 'mortgaged' the land to finance a project - then the 'effective owner' of your villa was the lender, ie; the bank. If the builder subsequently defaulted on repayents and ignored warnings, the bank would exercise their right to embargo the villa, and obtain permission from the courts to sell 'their' villa and recover the builder's debt.

Buying a property the right way is exciting and painless

If you intend to buy a property, before you hand over any money to anyone, even a deposit, you should proceed with a few simple steps. The major points about buying are really simple - just don't skip them -

• Who 'Owns' the property - is the 'seller' entitled to sell it. (get a copy of the Escritura, or Deeds)
• Does the Escritura include everything - The building, the land, the garage etc.
• If there is more than one owner, who and where are they, you need to be in possession of their written permissions.
• Are there any Debts or 'charges' on the property - Get a Nota Simple (email me if you don't know how)
• Any Community fees owing, how much are the fees, how good is the Administrator - ask some owners
• Don't hand over any money unless it is recorded at the Notary office.
• If not new, has the previous owner made made Wealth Tax submissions, paid Rates, etc.
• You need to put aside about 10% of the purchase price to cover the costs of purchase (6% land tax etc)
• If the property is mortgaged, ensure you pay the outstanding balance to the Bank/Lender, not the seller
• It is the buyers responsibility to deposit 5% of the purchase price to the Hacienda - pay the Hacienda, not the seller.
• Vacant Possession - If tenant in occupancy, seller must give them first offer, they also have certain rights to stay on.

A typical purchase scenario.

• The Purchase Price in our example will be 100,000 Euros.
• The property was mortgaged by the seller and has an outstanding balance owed to the bank of 50,000 Euros.
• Some Community fees have not been paid. The outstanding balance to the Community is 2,000 Euros

You should allow 10% of the purchase price to cover the costs of buying the property, (this 10% figure includes the 6% of the purchase price that must be paid in Land taxes). In our example above, the costs will be 10,000 Euros (10% of the 100,000 Euros purchase price). This 10% is paid to the conveyancer once the deal commences. The conveyancer will arrange payment of the taxes, drawing up of a new Escritura, Notary fees, Translator's fees, etc. After the transaction is complete, he will return any outstanding balance. So, remember to allow this 10% of purchase price in your calculations, a property price of 100,000 Euros means the final cost of the pourchase will be around 110,000 Euros.

How payments are made.

The conveyancer will arrange payment by means of bank certified cheques, handed over at the notary office

• 1st Cheque 5,000 Euros is made out to the Hacienda (this is the 5% retention)
• 2nd Cheque 50,000 Euros is made out to the Bank. (this is the outstanding mortgage)
• 3rd Cheque 2,000 Euros is made out to the Community (the unpaid community fees)
• 4th Cheque 43,000 Euros is made out to the seller (minus any pre-paid deposit, of couse)

At the Notary Office.

1. The conveyancer will have arranged a recognised Translator to be present, to ensure that the details within the Escritura are read out in your own language. This is a rather nice requirement of Spanish Law. All foreigners must have Notary documents translated to them, to ensure they fully understand the contents of the documents being Notarised. NOTE - If a recognised translator is not available, the nearest person who speaks Spanish and your own language may be called, and you may be asked to sign a documented clause waiving your rights to a translator. I personally would never do this - postphone the signing until an approved translator is available, or better still - now you are aware of the requirement, get your Conveyancer to ensure the translator will be available before arranging the date and time with the various parties who may have to be present.

2. If you have arranged a mortgage (hipoteca) with a Spanish Bank, then there will also be an escritura for the mortgage. When the mortage escritura is translated, make sure the clauses are exactly as you understood them when first negotiating the mortgage with the bank. How much will it cost you if you want to 'settle' the mortage early, etc. The bank will normally wish to hold the Escritura for the property.

3. Your conveyancer will hand over the cheques to the seller and any other parties with an interest in the property, in exchange for the formal documents they furnish to relinquish their interests in the property, and signings are completed.

Its all really quite simple, we handle this for clients every day - just find out the facts on each point and you don't have a problem.

Running your property.

The Community/Administration
If you have bought an apartment which is part of a complex of other properties, then you and your property will be subject to the Laws of Horizontal Division. This means owners of the properties forming the complex are required to appoint a committee to represent the interests of the their community as a whole. Usually, the committee in turn appoint a commercial administrator to administer the day to day operation of the complex, and he is paid from the community fees collected from the owners. See how this works by going to the Community page.

Taxation and Rates
If you are a non-resident foreign property owner, you are required to appoint a Fiscal Representative and submit a Wealth Tax declaration. The Fiscal Representative must be a Resident, and is the person prepared to assume responsibility of being the local contact point for any enquiries the authorities may have in respect of your property. We strongly recommend that you do not use an individual, eg, 'friend' to do this for you - use and accountant or other professional. Be prepared to find that not all professionals are prepared to take on this responsibility.See the Taxes page

Management
If you are non-resident, you should really use a management company to handle your apartment. Details about management services can be found by contacting Tenerife Owners.

Exploitation and Letting
If you own on an exlpoited holiday complex, where the apartments are publicized and offered to the general public, you must use the licensed exploiter for your complex. If you do not wish to join the exploiter, but want to avoid problems with the new letting laws, then please contact us.