Important checks before you buy

So…after much searching, you have decided on the Spanish property you want to buy. What now? Well, before signing anything there are some massively important checks that that you and your lawyer should have a look at.

The Escritura Publica is the registered title deed of the property. It is entered in the Registro de la Propiedad or Property Registry and is the only guarantee of title in Spain. It contains a description of the property, the details of the owner and any mortgages or legal claims that exist against the property. This document is important because it tells you if the seller is the legal owner of the property being sold.

The nota simple contains further details of any mortgages or other encumbrances or charges against the property and is also available from the Registry. The owner’s names on the Nota Simple should match those on the Escritura. It shows the latest recorded details of any charges - in Spain debts, charges or court orders may be registered against the property rather than the person: these include hipotecas (mortgages), censos (ground rent or leasehold payments), usufructos (interests in the property), limitaciones (restrictions on use), multas (fines), cláusulas resolutorias (determinations, i.e. decisions about the future of the property), or embargos (court orders for distraint or seizure).

It may be that there are some unpaid taxes not yet recorded at the Registro, so your lawyer should also check with the relevant authorities, including Hacienda (Ministry of Finance), the Ayuntamiento (Town Hall), and the Recaudación Provincial (Provincial Rates Office), that these have been paid.

The notary must obtain a new nota simple on the day that the sale documents are signed (when the contract is effected) in order to confirm that the ownership and charge details have not changed since the last enquiry.

Every property sale must also quote the Referencia Catastral of the property in question. The Catastro concentrates on the location, physical description and boundaries of the property. While the Property Registry focuses almost exclusively on ownership and title, the Catastro is concerned with property valuation.

These systems do not have any connection with one another, which is an irritation with the Spanish system. In fact, it is common to find that the catastral description of a property differs greatly from the one in the Property Registry. You need to request the actual certificate from the Catastro with a full description of the property. The certificate is in two parts, one being a description of the property and the other being either a plan or an aerial photograph. These details will give you a better understanding of the boundaries of the property and size and description of the property.

For instance, when a house is completed on the land, the Catastro or Council Tax authority should be informed. There are areas in Spain (for example Andalucía and Murcia) in which the notary sends the deeds to the Catastro to inform them about the modification, but this does not happen countrywide. This means that often the catastral records are out of date and inaccurate. When you realise that the Catastral system is used to work out the taxable level on each property you will understand why this is sometimes not updated. Tax avoidance is considered something of a national past-time in Spain and many property owners avoid updating their Catastral details for fear of having to pay more tax. Because the updating of the Catastro was always on a voluntary basis in the greater part of the country this is an ongoing problem.

My advice? Use a good lawyer and make sure that this is all in agreement and correct before even thinking of signing anything. There may well come a day that Spain falls into line with the rest of the EU in terms of property regulations and the last thing you need is a problem further down the line.

The other thing to do before purchasing a resale Spanish property is to check out the lmpuesto sobre Bienes lnmuebles or lBI, which is the municipal property tax. Ideally, you should be able to see the IBI receipts for the last five years. Further back doesn’t really concern you as that is the limit of liablity for unpaid back taxes attached to the property. A new property bought from a developer will not have an IBI receipt – it is then your responsibility to register the property for this tax.

I know, I know – it all sounds very difficult…actually, if you are in the hands of a really good lawyer who understands Spanish property law – and English incidentally – it will all fly by. The problems in Spain have arisen because people have failed to take legal advice – please don’t be one of them!

Kim Brown
http://www.SpainBuyingGuide.com