What steps do I carry out to buy a Property in Spain?
- Reservation Contract
This contract is commonly used by Spanish owners and property developers. The contract usually requires the purchaser to make a payment of 3000 to 5000 EUR to reserve the property.
It is very important to check this contract with your Spanish lawyer, because there are many important clauses which can be of disadvantage to the purchaser in the following steps.
- Private Contract
This is one of the most important documents as it establishes the most relevant points such as, the schedule of payments, the date of the completion of the dwelling, the amounts of money which must be deposited before signing the title deed, etc. It is essential to be well advised in these points.
- Bank Guarantees
The aim of this document is to safeguard the interest of the purchaser. The Bank Guarantee, provided by the seller or developer must cover the amount to be transferred by the purchaser. In many cases, the developers do not provide this document automatically.
- Negotiating the conditions of the mortgage
Negotiating good conditions is essential, as it will allow you to minimize the tax burden and obtain a better interest rate with the bank that approves the mortgage deed.
- Title Deed
The private contract previously mentioned, must be signed before a Public Notary. In the majority of cases, is carried out prior to the signing of the mortgage deed.
- Land Register
Once signed, the title deed and the mortgage deed must be submitted to the Land Registry. The property will now be officially yours and your rights can be enforced before anybody.
How can I start a business in Spain?
First of all, we must consider that as European citizens, British people will have the same rights to start up a business than Spanish people. For this, it is necessary to obtain the N.I.E. number which is simply an identification for foreigners and is mainly for tax purposes. To obtain it you will have to submit your passport and complete a simple form.
Once you have obtained the N.I.E, you will have to choose the name of the company. It is an important point because you must verify if the name has been registered by other companies. You will be able to verify it in Companies Register.
The next step is choosing a legal business structure according to the activity of the company is going to be developed. Fortunately, Spanish legal system offers several legal business structures that offer you tax benefits, depending on your activity. This is the main reason why you will need a Spanish expert advisor in these kind of issues. The most common legal business structures used for the most companies in Spain are Limited Liability Company (Sociedad de Responsabilidad Limitada) and Public Limited Company ( Sociedad Anonima).
In the third step, the partners of the company will deposit a sum of money which will consequently create the Capital Stock, and with this each partner of the company will have obtained share.
Once you have decided what is to be the structure of the company and the capital stock has been contributed, you have to formalize it before a Notary Public because it is obligatory to register in the Commercial Register and for that moment the company will obtain the N.I.F., this number is necessary for operating and developing the activity.
Obviously, this kind of company must pay tax contributions. Generally the main tax for companies is the corporation tax, for which basically the company must pay the thirty five percent of the profits of the company.
I have tried to provide a general idea about the best way to start up a business according to Spanish legal system although you should take advise with a Spanish expert advisor in these issues.
Do I need a will if I die in Spain?
If you are a British citizen and you die in Spain, according to Spanish legal system, it would not be obligatory to having made a will. This is because every issue relating to assets of the Testator must be regulated according to the English legal system. Therefore everything would depend on whether the Testator had made a will in United Kingdom or not.
The main problem takes place, when the British citizen has assets in Spain and has made a will or the laws of intestacy according to English legal system. I am not saying that don´t rely on the English system, but from my point of view, it could propound two different situations.
The first situation, where the testator had not made a Will in England, “Laws of intestacy”, all assets will be distributed in a different way than you would have had liked.
The second situation, having made a Will, and having assets in Spain, you would find there would be increased bureaucracy and administration costs in dealing with the estate as the relevant documents will need to be translated and notarized.
In my opinion and my best advice, it would be to have two separate wills, one in Spain for your Spanish assets and another in England for your English assets, because you will save your successor a lot of time and a lot of money. In any case the procedure in Spain for making a will is simple, you only have to discuss your wishes and your choices with a Spanish lawyer, whereafter he will prepare a draft and finally you will sign the will before the Notary. After that one copy will send to the central register in Madrid and you will be given a copy and that I suggest you should inform your testators and Lawyers in England about the Will that has been registered
In these kinds of situations, you must seek the more practical and more beneficial solution.
Consequences if I have a credit against the company which has Bankruptcy Proceedings.
In basis, bankruptcy, is a legal procedure, its function is collecting debts on behalf of creditors of a business or individual. It is the most efficient legal procedure for the purchasers of properties, to recover the sum of money, which had been deposited in order to obtain the future property.
It is important to obtain advice from a Spanish lawyer because the procedure is somewhat complex, in particular, the periods for submission of the application forms are very strict.
The Law, which regulates this procedure is “Ley 22/2003, de 9 de Julio, Concursal”.
The common characteristics of the procedure are as follows:
The bankruptcy proceeding must be announced by the Judge “Juez de lo Mercantil”, and it can be applied for by the debtors or the creditors.
Subsequently, once the Bankruptcy proceeding has been announced, it will enter the Bankruptcy Administrator, which is composed of a lawyer, auditor and a creditor.
If the bankruptcy proceeding has been announced as Voluntary, the debtor will maintain their authority of the management and the disposition of the assets, although their authority will be examined by the Administrator. On the other hand, if the procedure has been announced as a necessary one, the authority of the debtor will be suspended and therefore the administrator will manage all operations of the debtor.
The order of bankruptcy proceeding referenced previously, will contact all creditors individually (Purchasers of dwellings), in order to communicate their credits to the administrator within one month. The communication of the credits, is considered vital, because a complex draft is prepared justifying that you have a credit against the debtor, because if you submit the right qualification of the credit, you will be able to obtain more benefits.
Thereafter, the administrator will proceed to recognise the credits, and he will produce a list of credits. This list of credits will distinguish between privileges, ordinaries and subordinates. These matters are quite relevant and it is necessary to take advice on the same.
In conclusion, it is clear that a number of purchasers are suffering from this situation and it is essential to be well advised relating to this matters, If you do not submit an application form in the right period, then the consequences can be extremely negative for the creditors. For further information, you can liaise with me through my email or by phone.
Debt collection of small amounts according to the Spanish legal system
The “Proceso Monitorio” is a procedure recognised in the Spanish legal system which functions for claims of 30,000.00 Euros or less, but according to the latest reform, this amount has increased to 250,000.00 Euros. It is considered a simple, flexible and efficient procedure. The procedure was brought in by the Spanish legal system because it had been successful in other European countries.
Presently, due to the financial crisis, many Spanish companies and creditors have made use of this procedure, due to the increasing number of debtors.
Basically, in order to start the procedure, the creditor has to submit to a Spanish court all the relevant documentation (contracts, invoices, delivery notes) it is necessary that these documents have been signed by the debtor. When the judge has received the documentation, he / she can produce one of two consequences, firstly the Judge can object to the action and start another procedure. But, if the debtor does not to reply to the objection within 20 days or he does not pay the debt, the creditor will be able to obtain an enforceable title and will therefore be able to collect the debt.
On 28 December2008, a communitarian regulation was created. According to this regulation any communitarian creditor can initiate the aforementioned procedure in any Member State of the European Union, there are two differences in respect to Spanish law, the first difference is the period to reply to the objection in this case would be 30 days and the other main difference is that the creditor can initiate the procedure regardless of the amount applied.
Compensations for delays in commencement of the building works.
Recently Spanish court, gave a judgment against Spanish insurance company to pay purchasers of dwelling back for the delay in commencing the building works. The amounts obtained for the purchasers were high. The purchasers only contributed the insurance policy and a document which showed that it has produced a delay in commencing the building works. Some British citizens bought, several dwellings on the Costa del Sol around for years ago, and after that it produced a delay for two months, because the contract which had been signed by the purchasers, established that the building works should have started in the spring of 2007, and subsequently it was delayed by 12 Months.
During the growth period “Property Boom”, it was common for the purchasers to claim the delay for the completion of the dwelling, but the crisis has provoked the claim previously mentioned, although it was contemplated in the Spanish legal system, however it had not yet been analysed by the experts.
Once having analysed the facts and circumstances succeeded, I am going to explain according to Spanish legal system what possibilities a purchaser would have in this situation in order to recover his deposits.
According to the Spanish Law “57/1968 27th of December”, every developer that wants to develop dwellings for which they intend to obtain sums of money from the future purchasers, must complete some conditions. Firstly, the developer must guarantee the refund of the money which it has received from the purchaser through an insurance contract signed between the Insurance Company and the developer, or the other option for the Developer, would be to hand a bank guarantee to the purchaser This bank guarantee must be drawn by the official bank and also must be registered in the Bank Register. In this case, this sum of money must be deposited in an independent bank account, and only the developer can use them to construct the dwelling.
The next article of the mentioned law, states that the period to commence the building works has expired, the purchaser will have two options. In the first option, the purchaser will be able to rescind the contract and also to claim back the sums of money which had been handed to the purchaser previously, and in addition 6 per cent of the annual interest. In the other option, the purchaser will be able to concede an extension to the developer to complete its obligations.
In conclusion, you will be able to appreciate that this a new practise to defend the investor who bought properties, because they only need to prove that the building works suffered a delay and also to contribute a policy insure or guaranteed Bank.