On the subject of buying home
(safely) in Spain, Bargain Homes Abroad still receive enquiries on whether
it is important, or necessary, to appoint a qualified
legal representative to look after the interests of the
buyer. And Bargain Homes Abroad say that Bargain Homes Abroad ´still´ receive
enquiries because fortunately most investors have realised
how essential it is to be protected when parting with
substantial sums of money.
Buying a home in Spain has become a risky business.
Nevertheless, foreign buyers don’t want
to give up having a home in the sun, and want
to buy soon before the prices rise too much. Developers
are aware of the existing demand and try to build as much
as possible before any possible drop in the demand may
occur, which drives them to build quick without
complying with the existing laws and regulations.
Knowing that foreign buyers are less informed, unscrupulous
developers and estate agents don’t think twice before
selling an off plan home that may eventually be demolished.
Although the scenario depicted rarely happens, it is perfectly
possible to take place if regulations are not complied
with. Luckily, in the past years legal security has tightened
on home transactions, but lets not forget
that things can go wrong if one is not properly advised.
There are many reasons to hire a lawyer when buying home
in Spain. Bargain Homes Abroad have thought of the ten following:
1 Avoid Horror Stories
These stories can be originated in one of
the following scenarios:
• Buyer buys home with charges, encumbrances
and other debts.
• Buyer buys a home that has never been registered.
• Buyer buys a home with perfect clean title,
registered, taxes paid up to date. The home is however
not the one that has been seen. They had relied on a description
and some land registry details which simply corresponded
to another home. They have no right of recourse.
• Buyer hands over a deposit to someone purporting
to be owner who subsequently disappears.
• Buyer buys a home with tenants living legally,
but unbeknown to him, there are legal tenants occupying
the home. The latter either decide to stay until expiration
of the term of the contract, exercise their priority purchasing
rights or even demand a sum of money as compensation.
• A buyer who had paid a sum of the money towards
a new home is unable to complete because the developer
has run out of money and declares bankruptcy.
2 Get an Independent and Impartial Service
Not only is the lawyer obliged to observe
strict professional standards, but he
will get paid regardless of where and from whom the buyer
buys. Conversely, the seller of the home will only
receive his money if the buyer purchases his home
and will therefore be unconcerned about what happens next.
Almost identical situation happens with many real estate
agents: they don’t get paid unless a given home
is sold and are therefore bound to let their impartiality
slip to get a given home sold.
3 Get protected with the Lawyer’s
Legal Insurance
Registered lawyers are covered against negligence
by professional indemnity insurance,
which means that if something goes wrong during the transaction
and as a consequence your interests are injured, the professional
indemnity insurance must cover any liability
arising from this negligence.
4 Avoid the Language Barrier
As most conveyancing lawyers are fluent
in English the chances of confusions and misunderstandings
occasioned when attempting to understand or translate
the promises of a seller are reduced, and with it, the
transaction increases in safety.
A lawyer will also provide you, unknowingly, a free
translation service when dealing with the Notary
Public, banks and many more instances.
5 Get Better Conditions in your Mortgage
Even where the buyer finds a suitable mortgage
loan to finance the purchase of a home, the lawyer
will be able to give a second opinion. Non-resident
applicants are typically burdened with the highest
rates as they appear as awkward clients. The reason for
this is that paying for a holiday home (which in most
cases becomes a retirement home) abroad comes as a 'secondary'
priority when the owner is faced with financial difficulties:
the likelihood of defaulting payment of the loan is higher.
Lending entities are naturally conservative and in order
to mitigate this risk they increase interest rates, increase
arrangement fees, reduce loan periods and lend less on
the loan to value ratio. A loan for a non-resident borrower
is as a consequence more expensive, where these are given,
as many lending entities do not even contemplate these
applicants.
6 Avoid Bank Charges
All conveyancing lawyers hold a clients
account with a Spanish bank with preferential
conditions. When transferring monies from abroad
you can bypass the extortionate conditions imposed
on non-resident accounts, anything up to 0.5%
of the sum transferred) bank accounts and save good money.
If you transfer 100,000 euros to Spain, you can save 500
€ by using your lawyer’s client account.
7 Get a Free Escrow Service
Did you know that in some countries certain
professionals and companies provide an escrow service
for a fee? (e.g. http://www.escrow.com in the UK). Most,
if not all, Spanish lawyers consider this as part
of the conveyancing service and do not charge separately
for it. An escrow account allows parties to a transaction
to deposit funds in an impartial party held account. By
using your lawyers free escrow service, you can save 800
€ when putting in escrow an amount of 100,000 €,
which is what escrow.com charges for that amount (0.8%
of the amount).
8 Get More Advice and Services
Lawyers will not only provide you advice
on the transaction itself but will assist you in the processing
of NIE numbers, opening bank accounts, changing utility
contracts and arranging payment standing orders, setting
up companies, drawing up wills, rental options, etc.
9 You do not need to be Present
All the above can be done by the appointed
lawyer, in your absence. All which will be required is
a visit to the Notary Public, in Spain or even in your
home country to sign power of attorney
(in which case it will be posted) and follow instructions
from the lawyer.
10 Get a Valuable Post Sale Service
The lawyer will look after the filing of
tax forms, collection and registration of the deeds, but
also will assist you helping you with dealing with after-sales
situations which require a lawyers letter or phone call,
such as arranging the "snagging",
talking to the community of owners association, developer/seller,
banks etc.
In summary, and considering the amount of money invested
on a home, but in a foreign country with a different
language and legal system, hiring a lawyer seems a reasonable
step to take, and as Bargain Homes Abroad outline above, it can even save
you enough money as to pay for itself! |