|
|
|
|
|
 |
|
|
|
 |
|
|
|
 |
|
|
|
 |
|
|
|
|
Legal Services -
Buying Property from a Private Seller |
|
|
|
Legal Services - Buying Property from
a Private Seller |
| Buying home in Spain from a private seller
puts both parties on an equal footing with regards to the
protection the laws contemplate. The transaction will be
mainly governed by the Spanish Civil provisions. Once the
buyer has chosen a home, it is recommendable he instructs
a lawyer to assist in all the conveyancing procedure. |
Normal Schedule of Events
In Spain, commonly the transaction is
divided in three documents:
Deposit document.
Private purchase contract document.
Completion by means of Public Deed of conveyance signed
before a
Notary Public document. |
Deposit Document
The nature of deposit or reservation sum contract has been
succinctly explained in the article "Buying from a
Developer". In short, most of these agreements are
to be construed as being true purchase sale-contracts, thus
granting the same legal remedies to buyer and seller as
for any purchase-sale agreement. Both parties are entitled
to sue for performance and claim damages, if any.
The deposit is normally left to the real estate agency,
which depending on what sort of agreement they have with
the vendor will legally bind the latter. Bargain Homes Abroad
will analyse in this section the relationship established
between the purchaser and the agency and the purchaser and
the seller. The legal relationship arising from the agency
and the seller is to be analysed on an article titled "Real
Estate Agencies: how they operate." This article will
enable purchaser and seller to understand the degree of
involvement of Real Estate Agencies in the transaction and
what their position is.
The reservation sum document should describe the identity
of the vendor, the home and price. If this is the case,
a purchase-sale contract is construed when offer and acceptance
by the required parties are met, not needing the parties
to draw up the so-called private purchase contract in order
to commit themselves. The commitment has taken place, and
therefore, being the offer of the buyer and the acceptance
of the seller put together, the law does not allow any of
the parties to withdraw unilaterally. However, the lawyers
of both parties will normally draw up a more extensive document,
either an option to purchase or an ¨arras¨ contract,
which have significant differences as to the effects and
remedies of the parties.
Another particularity of the reservation sum contract is
that it enables the buyer to make his offer according to
his needs and desires: for example, the buyer can insert
a clause "subject to sufficient mortgage granted",
or subject to "home sold together with furniture for
the offered price." If the vendor or the agency, as
the case may be, accepts the offer, the deal is struck.
Problems may arise where the vendor, either himself or by
a representative, accepts the offer and subsequently decides
to alter the conditions of this reservation sum on a further
document. On a normal case scenario, the buyer, in view
that the vendor wants to, for example, stipulate that the
buyer will bear all the costs arising from the deal, decides
to stick to the reservation sum document which will be governed
by what the parties have agreed and in the absence thereof,
by the Spanish Civil Code. The dispute arises and the vendor
decides to withdraw and refund the deposit or instructs
the agency to refund the deposit. The buyer seeks legal
advice and finds out the law entitles him to sue for performance,
putting the seller in a very difficult position.
Conversely, a buyer may lodge with the agency a significant
amount and sign a ´contract´. On the assurance
that he has bought a home, he sells his home in the U.K.,
closes bank accounts, transfers his monies, ships his furniture
and when visiting the home his has purchased, he finds out
that the vendor has not been informed of any deposit left
with the agency nor has the slightest intention of selling
the home for that ´agreed price´. He has signed
nothing but an instruction to sell slip, which is not and
express mandate to sell, thus the vendor being not the least
bound by the document The multiple problems which may arise
at this stage of the deal are sufficiently serious and are
by themselves a powerful argument for employing the services
of a lawyer. This applies as much to buyers and to sellers. |
Private purchase
contract document
If the parties decide to convene the signing of a further
document, where new terms and condition can be agreed,
against payment of a sum which is normally 10% of the
purchase price. Once this document is signed, the reservation
sum document ceases to be valid and enforceable.
This agreement may adopt the form of an option to purchase
contract, an `arras´ contract or a new private purchase
contract.
Briefly, the option to purchase imposes obligations only
on the vendor. Against a sum of money, the seller undertakes
to hold the home for the buyer until a given date and
obviously undertakes to complete when the balance is paid.
If the buyer withdraws, the seller keeps the money. If
he decides to go ahead, the vendor has to grant Public-deed
of conveyance. This contract is unilateral, in that the
vendor is the only party under any obligation. The buyer,
after signing, is not liable for defaulted payment of
the balance. Only the premium of the option is liable,
which is lost to the vendor. Conversely, the vendor is
liable and can not withdraw from the deal until it has
expired. Before this date, the buyer informs the vendor
he wants to exercise the right granted by the vendor,
and against payment of the balance, the Public Deed of
conveyance is signed.
The `arras` contract enables any of the parties to withdraw
from the proposed deal. The buyer loses the reservation
sum, and the vendor will have to refund twice that amount
if he withdraws. The Spanish Supreme Court has stated
that in order for this to be applicable, the document
has to specifically provide for this and mention without
a cast of doubt that it is intention of the parties.
The private purchase contract as such binds both parties,
enabling the non-defaulting party to sue for performance
and/or claim damages. Where the contracts previously described
fall short of the requirements to qualify as such, then
deal will be regarded as a plain private purchase contract.
However, it has to be said that these types of contract
are not water-tight compartments. Parties can draw up
tailor-made contracts to suit their interests, inserting
clauses of the most varied nature.
These are valid and enforceable
so long as:
1. They are not deemed unlawful
2. They are easily interpreted. Otherwise, an ambiguous
or confusing clause will be interpreted by a Court of
law to the detriment of the party who created the ambiguity
or confusion.
What the buyer should check before handing over any monies:
Who holds the monies? The deposit should be left
with either a reputable and financially sound agency or
directly with the seller. The most secure bank account
for lodging these monies is the client’s account
of the lawyer of the vendor. Although not technically
an escrow account, it is bonded inasmuch as lawyers have
very restrictive rules as to monies given to them for
custody. It is recommendable to use this procedure where
the owner of the home is an offshore company or when the
buyer’s lawyer advises accordingly.
Property: It is vital to make sure the description
of the dwelling corresponds to the one you are buying.
Read carefully the details, location, number of floor,
inside division etc. The land registry certificate might
be as clear as the air; the owner may offer you discounts
and also a bank guarantee in exchange for the monies you
are lodging with him to secure the home and indeed, many
more facilities. But in spite of all these assurances,
he might be selling the buyer another home of his own,
not the one the buyer wants. What happens then? The seller
is not really defrauding, unless the purchaser can prove
it. And all the evidence supports his innocence: private
purchase contract, correspondence exchanged, completion
at the Notary Public, all these agree on the same home
details. The buyer has an unencumbered home which is,
quite simply, not the one he wanted but a cheaper one
the seller wanted to get rid of.
Mortgages, liens, encumbrances or any charge registered
against the home:
A mortgage on the home is something normal and a buyer
should not be surprised to find one: all contracts include
a clause stating that the seller sells free from any charge,
including mortgages. But beware, since although a mortgage
can be easily cancelled, charges or liens might be registered
against the home due to court order arising from a previous
procedure where the buyer is not party. A lawyer will
make sure the home is clear in this respect.
Date of completion: If the buyer is raising funds,
he should agree a completion date far enough in time to
enable the balance of the purchase to be in place. It
is normal for buyers to exceed this date due to banking
delays in swift transfers and clearance of drafts. Although
not recommendable, not meeting the date of completion
does not automatically amount to loss of deposits. The
seller who wishes to discharge the deal will have to prove
that the buyer has deliberately delayed and avoided payment.
Costs: The most favourable (for the buyer) wording
of the clause regarding costs is the one which states
that the costs arising from the transaction will be borne
by the parties according to the provisions of the law.
Agreeing this, the buyer saves some money. However, it
is normal for the vendor to impose on the buyer payment
of all costs. These costs include Notary fees, Land Registry
fees and the Plusvalía Tax. (Increase in the value
of the land over the years.). It is matter to negotiate
between the parties.
Inventory: If the price includes furniture or
other items, run through the inventory list to make sure
it is correct according to what has been agreed.
|
Signing of Public Deed
of Conveyance before a Public Notary
This is the moment where the buyer becomes
officially the owner of the new home. A private purchase
contract is enough to buy a home and live in it. However,
with this legal status, ill-intentioned vendors are in
a position to create the most devastating type of fraud.
Double sale of a home. He takes the monies of the first
buyer on a private purchase contract and shortly afterwards
sells on a Public Deed to a new buyer whilst the first
buyer was away. It has happened. The first buyer has lost
his home and his money if he cannot find the vendor. And
the latter will never be found, since he is a professional
fraudster. This type of fraud is possible, although fortunately
quite improbable.
By becoming public and subsequently registering the deed
in the Land Registry the buyer avails himself of the full
protection the law offers. In addition to this, lodging
all monies with the vendor’s lawyer will render
the transaction totally safe. The Public Deed also transmits
possession from vendor to buyer, unless otherwise agreed.
Occasionally, the buyer allows the vendor to stay in the
home after signing. This can create more than one headache
to the new proprietor if the vendor refuses to leave the
home, because he is simply not entitled to kick him out
by using the force. After all the latter reverted possession
on the vendor?
The only recommendation to be made here is to withhold
from the purchase price an amount equivalent to the legal
costs of the eviction procedure, since more often than
not the vendor will have nothing to sequestrate in order
to cover those costs. There are many more issues surrounding
the functioning and effects of the intervention of a Notary
Public and Land Registry in a purchase sale transaction.
These are however too extensive to be addressed on a single
article.
Always employ a lawyer for purchasing real estate. For
a reasonable fee you protect yourself of what is at times
a real minefield and could turn out to be the worst of
nightmares.
|
This page has been reproduced
with the permission of Antonio Flores Vila of Marbella
lawyers.
Disclaimer:
Bargain homes abroad does not accept any liability
for the accuracy of the above legal articles and are intended
as general guidance, it does not constitute legal advice,
nor should it be relied upon, you should always consult
a lawyer to discuss your own personal situation. |
|
 |
|