Schlagwort: legal advice

PURCHASE OF A HOME IN SPAIN AND HOME INSURANCE: WHAT YOU NEED TO KNOW

Geschrieben von Gustavo Calero Monereo am 30 Oktober, 2020. Veröffentlicht in AFO, andalusia, Andalusian, conveyancing, DAFO, english speaking solicitor, illegal building, malaga, nerja, Property law, purchase process, SAFO, solicitors Nerja, Unkategorisiert.

Home Insurance, purchase, property, Spain — Home insurance of your Spanish property

Buying a home in Spain entails a great financial investment and, therefore, you’ll want to do it with the lowest possible risk. This is why it’s very important to obtain legal advice and hire a specialised lawyer to help you throughout the purchase process, so that you can enjoy legal certainty and be aware of all the relevant information about the property.

However, there is another important thing to do before signing the Purchase Deed for the property. It is advisable to have home insurance ready to prevent any risk of financial loss due to potential damages, such as theft, water damage or fire. The importance of home insurance for the owner’s peace of mind and the investment made is self-evident.

This is why we’re posting this article, to clarify some concepts for foreign homeowners in Spain, so that they can understand this very important product well. In the event that you are buying with a mortgage, the bank will advise you and recommend that you obtain home insurance as, in the event of serious damage to the mortgaged property, the bank will want to secure repayment of the money borrowed.

At the end of the article, we cover home insurance for rural homes built in Andalusia, with or without DAFO/SAFO.

What are the building and the contents in home insurance?

A home insurance policy for an existing or new build property is based on two main concepts: the building and the contents.

1) The building (continente) is made up of the construction and structural elements of a home or building, whether these are walls, ceilings, floors or installations such as heating, water or electricity, among others.

2) The contents (contenido) are made up of the belongings of the people living in the home, such as furniture, electronic devices, personal effects, clothing, jewellery, art, etc.

What would be an appropriate value for the contents?

To properly assess the contents, we recommend that you think about how much it would cost you to buy the items you have in your home, going room by room until you cover everything in it. Jewellery or cash money have specific valuation in home insurance and may be insured up to a certain limit or under certain conditions. In other words, in this case, this information must be provided to the company so that it takes it into account in the policy.

And what is the right value for the building?

If the building becomes damaged, e.g. a fire, the company will provide compensation according to the cost of rebuilding the home, i.e. the potential cost of rebuilding the home must be calculated. The resulting value of this calculation is the one that should be included in home insurance as the value of the building.

A very common way to calculate said value is the use of average estimated building values published by the Colleges of Architects. For instance:

Mr Olle Johansson, a Swedish national, purchased a new home in the city of Malaga in 2020. It’s a flat measuring 120 sq. m.Well, taking into account the average estimated building values from the College of Architects of Malaga for 2020, the value per square metre built would be 809 euros. In other words, the value of the building for 120 square metres would be 97,080 euros. If there is an underground carpark and a store, these should also be appraised separately from the home, so that the policy covers them. Another example: Mr Jan Van Poppel, a Dutch national, will purchase a home in the countryside, in the Mijas area (rural land), which has: 200 built square metres plus 30 square metres for a pool. The value per square metre for an isolated home in the countryside is 984 euros and the value of the pool would be 445 euros per square metre. Therefore, the value of the building would be about 210,150 euros.

Valuing the building at the purchase price

When we buy a home and obtain home insurance, we often think about setting a value for home insurance as close as possible to the purchase price paid for the property. However, this reasoning is misleading as it should be taken into account that the land where the home is located is not covered by home insurance, as the land always remains intact. In the event of serious damage, if you already own the land, you only need to insure the cost of rebuilding the home. However, the value of this land is what makes up most of the purchase price of a home in most urban sales. For instance, buying a home in the golden mile in Marbella, in central Malaga or on the beachfront in Nerja entails a high cost due to the location (land) of the property, rather than for the value of the building itself.

Rebuilding is much cheaper than buying when you already own the land. Therefore, the most important thing is to insure the real reconstruction value in the event of serious damage. This is about assigning the actual value to the building of your property. You also need to take into account that, when you own a home in a block of flats, if there is serious damage affecting the building, the community insurance will cover part of the damages affecting only the common elements of the building. The façade, roof, terraces, etc., are elements that would be covered by the insurance of the Homeowner’s Association in the event of a fire. In other words, if you are buying a flat or apartment, you’ll need to insure the building. This is why, in these cases, you should calculate the reconstruction value of your building for insurance purposes. If you provide a value above the reconstruction value, this would lead to so-called over-insurance in your home insurance and, if you provide a lower value, it would lead to under-insurance.

What would happen in the case of over-insurance in the policy?

Imagine a home in a building measuring 100 square meters, with a building value of 300,000 euros because this was the price paid when it was bought. If there is a serious accident requiring the reconstruction of the home, the company will never pay more than the reconstruction value, which would in general be around 80,000 – 90,000 euros. In this case, the owner would be paying a very high premium every year for the insurance policy needlessly, as the company will only honour claims up to the reconstruction cost of the home. In extreme cases, the company could even interpret that there has been bad faith when obtaining the insurance policy and this could be a major issue, as it could declare the policy void and refuse to pay the amounts that should be paid in the event of damages.

What happens in case of under-insurance?

In the event that the building or content is valued below the actual value of the building or furniture, the company will not cover 100% of the damages, even if the amount of the claim is lower than the value of the insurance policy. For instance, if the actual value of reconstruction of the building is 100,000 euros and the policy contains a building value of 60,000 euros, the home would only be insured at 60%. Someone might think in this case that any damages equal to or lower than 60,000 euros would be covered by the policy but in reality that’s not the case. For instance, in the event of a small fire with damages valued at 10,000 euros, the company would interpret that 40% of the claim is not covered by the policy as only 60% of the building value of the home is insured. Therefore, it will only pay 6,000 euros as compensation, always applying the rule of proportionality to every claim.

Special insurance: luxury homes

If you own a luxury home or you are thinking about buying a luxury home, the estimated cost of reconstruction or replacement based on the coefficients of the colleges of architects would surely not be a valid calculation method for homes of this type. The key to insure the building in homes of this type is to calculate the reconstruction value of the property with objective parameters. I.e. if the home has very high quality finishes in terms of automation, insulation, aluminium or timber structures, flooring, taps, toilets, air conditioning, etc., this must be taken into account and, in this case, these values should be added to the building insurance. As mentioned, the value of the building must be as accurate an estimate as possible of what it would cost to rebuild the home to the same standards. In this case, it’s very important to inform the company of the “peculiarities” of this home so that it has as much information as possible and to accredit the reason behind the value of building insurance being above the average reconstruction values in the area. Keeping all purchase invoices and proof of purchase for high-value furniture is very important to prove the estimated cost.

What is the insurance compensation consortium?

All persons who have an insurance policy in Spain, whatever the type, pay a small part of the price to the consortium. The consortium is a public business entity that covers accidents such as flooding, terrorism, atypical cyclones, large fires or other risks set down in the “extraordinary risk insurance regulations”, which are not covered by insurance policies, with damages of this type being expressly excluded from insurance covers. When damages of this type occur, as the insurance company does not cover them, the consortium acts as guarantor to compensate policyholders and keep them protected in these situations.

Rural homes and the building value in home insurance

First of all, we should remember the legal premise that most existing rural homes (rustic / countryside) in Andalusia, which are used for residential purposes, are illegal and, therefore, in the event of the destruction and total loss of the home, such as due to fire, earthquakes, serious flooding, etc., they cannot be rebuilt. This is because the Urban Planning Law of Andalusia (LOUA) does not allow for issuing a building permit on rural land for a residential home. The existence and continuity of those thousands of illegal homes on rural land are based on their age. Therefore, in the case of destruction or total loss, there would no longer be an old home and it would not be possible to obtain a permit to build a new house or rebuild the one that was there.

The above explanation means that the value of the building in home insurance for these homes can be estimated, as mentioned above, at around 984 euros per square metre built in Malaga. As the value is based on what it would cost to rebuild the home and the rural home cannot be legally rebuilt in the event of total loss, what situation would we be in? In the event of total loss, if we have a country home with a surface area of 150 square metres and the building is valued at 150,000 euros, the company would pay that amount as compensation for the building, along with the amount corresponding to its contents. In this case, the owner would receive compensation for the home in addition to the value of land where nothing can be built. This is why the value of the land in a rural home is very low compared to the construction value, especially when compared to an urban home on land where it is legal to rebuild it.

Tips for a safe and well insured home

When obtaining home insurance and purchasing your property, think carefully about the value of the building and contents and don’t forget to include stores, parking spaces, pools, etc. If you have any doubts about the insurance value, talk to the insurance company itself. It’s important for the company to help you clear up any doubts when assessing your insurance value.

Author: Gustavo Calero Monereo, lawyer of C&D Solicitors (Torrox, Málaga Andalusia)

ARE YOU THINKING OF BUYING A HOME IN SPAIN?

Geschrieben von admin am 27 März, 2018. Veröffentlicht in Andalusian, english speaking solicitor.

When thinking about purchasing a property in a different country, there are many doubts and uncertainties that may arise.

We’ll try to give you the basic information you must take into account as well as a few tips.

WHAT ARE THE EXPENSES WHEN BUYING A HOME IN SPAIN?

The legal costs of a sale are usually around 10-12% of the purchase price for a secondhand home or 13-14% for a new home.

The highest cost is the tax on the purchase of properties: The property-transfer tax for secondhand homes –8% in Andalusia– or VAT at 10% plus document duties at 1.5% when purchasing a new home. Other costs to be taken into account are notarial fees and the Property Register.

The fees of the property agency are usually paid by the seller and included in the purchase price.

I ALREADY FOUND THE PROPERTY I WANT TO BUY. WHAT NOW?

Once you have selected a property, the agency will ask you to pay a deposit, usually around 5,000 euros, to remove the property from the market and provide enough time to sign a private sales contract where the seller will be paid 10% of the purchase price.

This holding document is usually a simple document that must include: the details of the sellers and buyers, the purchase price, the payment terms, the date of signing the private contract and the deed of sale.

For more information about the entire purchase process, click here or have a look at this video:

HIRING A LAWYER

If you’re thinking about spending a significant part of your savings on buying a home, it seems logical to hire a lawyer to advise you and make the sales process less stressful.

Beware of people who advise against hiring a lawyer to save costs or those who seek to provide legal advice and are not lawyers. If what you’re looking for is a lawyer, you can ask for a certificate accrediting his recognition and/or a professional liability insurance policy.

You should take into account that the average cost of a lawyer is around 1% of the purchase price plus VAT. Is it really worth saving 1% considering all the money you’ll be spending?

The lawyer you find should be independent and be very familiar with property law, being able to demonstrate some experience in this sector is always important. It may be helpful to review the public information available on the lawyer’s website as well as customers‘ reviews.

WHICH DOCUMENTS SHOULD I HAVE IN MY POSSESSION?

The most important ones are:

“Nota Simple”, this is a short information of the property from the Property Register
Copy of the IBI or property tax for the home
Utility bills

If they also provide a copy of the licence or deed of the property, even better.

REGISTRATION IN THE PROPERTY REGISTER AND CADASTRE

The short information from the register – nota simple- and the cadastral reference appearing on the property tax bill can be used to verify that the property is duly registered in the property register and the cadastre, as well as that the persons selling it are its owners.

STRUCTURAL SURVEY?

It doesn’t seem unreasonable to have an architect visit the property and carry out certain checks, such as measuring the built area –this way you’ll know that the register and cadastre are accurate– and you’ll also get a professional opinion about the state of repair of the property.

Obviously, the architect will only be able to see defects that are apparent but at least you’ll be able to rule out certain flaws within the property.

URBAN PLANNING INFORMATION

If you’re going to buy a home on urban land, it is important that you ask the council if it has a licence for construction and first occupation licence. The licence of first occupation is requested from the council once construction work on the home is completed.

It is important to keep in mind that older homes –built before 1977– did not have a first occupation licence as this did not exist. It is also true that some recently built properties do not have that licence either for different reasons. Even though, in theory, the property cannot be occupied and used without that licence, this is actually possible and this is not necessarily an obstacle to buying the property.

Verify that the development where the home is located is free of debts towards the council and has been completed, in order to avoid paying additional costs in the future.

COUNTRYSIDE HOMES

If you’re going to buy a home on rural land, in this case the urban-planning situation is very different from the one explained for properties on urban land. The most important thing is to get information about when construction ended, whether the land has any type of special protection or if the council has started proceedings to re-establish lawfulness. In Andalusia, a regularization process has been created.

CHECK FOR POTENTIAL DEBTS WHEN BUYING A HOME IN SPAIN

With the information from the Property Register, the one received from the Council and the community of owners, you can see whether there is a debt on the property that could affect you as its new owner. This refers to debts such as a mortgage, liens, property taxes, community fees, etc.

If there are any debts, the best thing to do is to have the seller pay them before signing the Deed of Sale or withhold the amount of the debt from the seller so that you can pay it yourself.

DEED OF SALE AND YOU’RE THE NEW OWNER

For you to become the new owner of the property, you’ll have to sign a Public Deed of Sale before a Notary and pay the seller the rest of the price agreed, receiving the keys to the property.

Once you sign the deed, you need to start the process to record the home in your name in the register and cadastre, as well as pay all taxes.

After this, we hope you enjoy your new home.

Author: Gustavo Calero Monereo, lawyer at C&D Solicitors Torrox (Málaga, Andalusia)

VONNIS: Bank verantwoordelijk bij ontbreken bankgarantie ontwikkelaar

JUDGEMENT: Bank responsible for bank guarantee developer

Geschrieben von admin am 16 Februar, 2016. Veröffentlicht in costa del sol, english speaking solicitor.

Bank responsible for guarantee developer

In September 2013 I published an article where I mentioned a judgment rendered by a Court in Albacete on the 8th of June 2012 and that was confirmed by the Provincial Court in the same year. In these proceedings forty-six homebuyers who purchased off-plan houses that were never built -but for which they had made several payments on account- sued the developer and the bank jointly, despite not having bank guarantees for the amounts paid.

As I mentioned in that article this judgment (a first at the time) ordered the bank to refund all the amounts paid by the buyers. It thereby established joint and several liability with the developer of the homes through an interpretation of articles 1 and 2 of Law 57/1968, of 27 July 1968 on the collection of advance payments in the construction and sale of homes.

This however was just an isolated judgment, which did not set precedent. In fact, in the two years since, there have been judgments both in favour and against banks.

These different interpretations have come to an end as, on 21 December 2015, due to the many contradictory judgments the Supreme Court rendered an appeal judgment on this matter. This judgment of the Spanish High Court unifies the criteria to prevent different interpretations by other courts. The Supreme Court is certain about the interpretation of these regulations and ruled in favour of individual homebuyers.

The High Court understands that the credit institutions where homebuyers deposit advance payments to purchase a home under construction, must respond to homebuyers. This refers to cases where the homes are not completed by the developer and the latter has no money or is insolvent, making it impossible for homebuyers to recover any money paid.

In the Fifth Legal Grounds, the last paragraph of the judgment, the Court states that the credit institution has the legal responsibility of a special duty of oversight over the developer to which it issues a loan for the construction of those homes, so that the deposits of homebuyers, especially individuals, are transferred to the special account that developers must open and the bank must require the developer to guarantee all the amounts it collects.

Credit institutions that grant loans to developers to build homes, have the legal obligation of opening a special and separate account, duly guaranteed, so that the amounts that buyers pay for the homes are deposited in that account. If the credit institution does not guarantee that buyers‘ money is deposited in a special account, it will be held liable for the total amounts deposited by buyers in any type of account held by the developer at the entity.

In other words, if the bank has not ensured the protection of the buyers‘ money, with this Judgment, there is no longer any legal doubt that the bank will be sentenced to refund, from its own “pocket”, the money paid by homebuyers in cases where the developer does not complete homes and it has no money or becomes insolvent.

In my humble opinion, it seems logical and consistent for the Supreme Court to have settled this matter in favour of homebuyers.

In banking practice, most developers building homes off-plan create a company aimed exclusively at building that development, with these companies usually being devoid of any assets.

From now own, I believe that these loans issued to developers will only be granted after reviewing the solvency and guarantees of the developers thoroughly and that branks will monitor the money that buyers pay for their homes.

In these situations, with this judgment by the Spanish High Court, buyers of homes that are not completed will have the necessary legal certainty to get, through a Judgment, banks to be ordered to refund their money, thereby having more options available to recover the money they lost.

It is very likely that, if this situation arises, now, with this judgment, the bank will choose to avoid legal proceedings and reach a settlement with buyers.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Nerja/Andalucia)

SPANISH INCOME TAX RETURN FOR NON TAX RESIDENTS FILING BEFORE THE 31st OF DECEMBER

Geschrieben von admin am 22 November, 2015. Veröffentlicht in lawyer.

If you are a non-resident in Spain and own a property there, you are liable to Spanish Income Tax for Non-Residents payment (Spanish IRNR). This issue was already considered in former articles on our website in November 2010 and October 2013:

When a property is owned by a married couple or several persons, each of them becomes an independent taxpayer, so that they should file tax returns separately according to the ownership interest they have on this property.

Depending on the property final use, the income subject to tax payment may be distinguished between:

1.- INCOME FROM LEASED PROPERTY: when the property is leased, the income to be declared will be the whole amount received, excluding Spanish VAT.

2.- TAXABLE INCOME OF URBAN REAL PROPERTY FOR PERSONAL USE: as this is the most common case, it will be deeply analyzed below:

The income to be declared is the amount resulting from the application of the following percentages to the property cadastral value:

Generally, 2 per 100.
In the event of property with a revised or modified cadastral value, 1.1 per 100 from the 1st of January 1994.

Once these percentages are applied, the final payable amount should be calculated for each of the owners pursuant to how long they have been owners of the property during the year.

Tax form 210 is used to pay this tax and it can be downloaded from the official web of the Spanish Tax Authority (A.E.A.T.), including the steps in English to fill it in. It is worthy mentioning that it is not easy to understand them.

Our office is currently dealing with the IRNR season 2012. The deadline to file this tax return expires on the 31st of December of this year. Although if you want to place the payment as a direct debit in your bank account the form must be filled before the 22nd of December. Thus, if you have owned a property in 2012, you should contact your tax advisor to fulfill this tax liability as soon as possible.

If you need our advice, we will be pleased to help you.

Author: Francisco Delgado Montilla, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

OWNING A BED & BREAKFAST (B&B) IN ANDALUSIA: DREAM OR REALITY?

Geschrieben von admin am 15 September, 2015. Veröffentlicht in Andalusian, costa del sol, english speaking solicitor, lawyer.

Bed & Breakfast B&B Andalusia — Owning a Bed & Breakfast (B&B) in Andalusia

Starting a new life with your own B&B in Spain

In recent years, during the course of our work, we have met many foreign customers interested in living in Andalusia Spain, preferably in coastal areas and having their own rural hotel, hostel or Bed & Breakfast (B&B). Many of these customers consider this option due to their attraction to Andalusian climate and culture, with the dream of changing their lives and enjoying life in an extremely charming country.

Taking over a business or starting up yourself?

The main option that customers interested in opening a B&B in Andalusia contemplate is to buy a business already in operation, with fewer people seeking to buy property to build the business from the ground up.

If you look on the Internet, there are quite a few ads for the sale of rural hotels and B&B´s. Many of these ads offer the method of transferring a business that is already operating, along with the rental or sale of the property where the activity takes place.

During the transfer of the business, its assets, such as customer portfolio, fixed assets, provisions, etc. are valued. This serves the purpose of establishing a transfer price for the business, which must be paid by the new owner interested in continuing the operations.

What is a reasonable ´traspaso´ price for buying an existing B&B?

The valuation of the business (traspaso) is usually based on its income during recent years and on net profit, as well as the value of its fixed assets, i.e., all remodelling, improvements and provisions acquired for said business. Obviously, licences and legal permits required for engaging in such an activity are a key part of the transfer value.

In the transfer method, the rental of the property is usually established, most often with a lease option, or the property may be sold directly to the new owner. It seems more reasonable to choose rental with a lease option for the property during the first years of the business as if, for any reason, the business is not what was expected and the profits or workload are not worth the effort, we would lose the amount paid for the transfer but would not have to remain the owners of a property we acquired for a business we no longer wish to operate.

As you may infer, the operational cost of a B&B may be high enough to justify carrying out, prior to its purchase, a due diligence process about it for the purpose of determining whether the asking price (traspaso) is reasonable. I consider three lines of action very important in this regard:

VALUE OF THE BUSINESS.

You should hire an economist, expert, or tax consultant to study the accounting of the business during recent years, including all tax documentation, as well as the accounts submitted at the Commercial Register. With this report, an objective professional, knowledgeable on the matter, will take a snapshot of the financial situation of the business.

BUSINESS LICENCES.

In order to check whether the B&B you are seeking to purchase has all the necessary business licences, it is important for an architect to visit city hall and check whether the business is in order and complies with all the legal requirements for its operation. The architect will visit the property to verify that the infrastructure and installations are those legally required for this business and will issue a report of his or her findings.

PURCHASE OF THE BUSINESS.

Once you have decided to acquire the business, when preparing all the documentation for the transfer and rental/purchase of the property, it is important for an attorney to intervene so as to guarantee all the obligations of the parties, establish the payment method and protect the buyer from potential problems during its execution. If the property where the business will operate is located in a rural area, as is the case for many of these hotels, the intervention of an attorney is even more important, as these areas are subject to a series of legal limitations that must be reviewed.

Professional advice for your investment will pay back

It is obvious that this complete due diligence process for the B&B makes buying the business more expensive as you may spend a significant amount of money on these professionals and you may end up not buying the business. However, you must consider that spending thousands and thousands of euros, often from your savings or a bank loan, on something, before verifying its value, can lead to a very difficult financial and personal situation.

It is also a good idea to get informed about tourism in that area and expectations for the future. There are statistical data about the occupancy rates for rural accommodation that may help you. For instance, the Institute of National Statistics (INE) periodically publishes detailed occupancy surveys for rural tourism and any other type of accommodation and all this information, in detail and broken down by regions, can be accessed from its website.

New business changes after recession in Andalusia

For instance, on the 1 September, www.escapadarural.com published that rural tourism in Andalusia reached an occupancy rate of 36% in July and August. At the provincial level, 49% of businesses in Malaga were fully booked.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

HOME BUYERS ACTING IN GOOD FAITH, MORE PROTECTION IN THE CRIMINAL FIELD

Geschrieben von admin am 26 März, 2015. Veröffentlicht in Andalusian, costa del sol, lawyer.

Spanish home buyers acting in good faith

Yesterday Thursday 26 March, the Lower House of the Spanish Parliament ratified the amendment to article 319 of the Spanish Penal Code, approved by the Senate last 12 March. A paragraph has been added to section 3, which reads: “In any event, the Judges or Courts of Law may issue a reasoned order to demolish the works and restore the physical reality altered at the expense of the principal thereof, without prejudice to the compensations due to third parties in good faith, and, assessing the circumstances and after hearing the competent government body, shall temporarily subject the demolition to the constitution of guarantees that ensure their payment. In any case, the seizure of the earnings from the offence shall be available, regardless of the transformations that these may have undergone”.

This new regulation will be into force next 1^st July.

Until now, in proceedings regarding an Offence against Town and Country Planning, the judgment ordered the demolition of what had been built illegally and compensation was set by way of civil liability for the developer, in favour of buyers acting in good faith. The problem is that, in most of these cases, collecting said compensation was very complicated since the developer was either insolvent or had disappeared. However, enforcement of the demolition was not stopped, for which reason we could find ourselves before an unfortunate scenario where a buyer acting in good faith and recognised in a judgment could have his home demolished without being effectively compensated.

From now on, in criminal proceedings for Offences against Town and Country Planning, the judge may stop the demolition of the home until due compensation to the third-party acting in good faith is guaranteed.

From the literal wording of the amendment introduced, it seems that the judge will be the one who, after assessing the specific situation in each case, will stop said demolition, for which reason I understand that it will be an essential requirement to prove that the buyer is really a third party acting in good faith.

Likewise, it seems interesting that, in assessing whether to stop the demolition, it is required for the competent Government Body, which I take to be the City Hall, to be heard in the proceedings. I suppose that, in these cases, the City Hall can provide relevant details leading to stopping the demolition. Also, since the City Hall is the one responsible for executing the demolition, it may argue on the suitability of stopping it until it can ensure compensation for the third party acting in good faith.

Lastly, this amendment refers to stopping the demolition temporarily, i.e., a specific period of time is not established but, in any case, it should not perpetuate over time. However, the concept of “temporarily” is very wide and it may be interpreted as sufficient time to guarantee compensation to buyers acting in good faith.

I can say, with full knowledge, that this amendment of the Penal Code has been possible mainly thanks to the work of two associations in Andalusia that have been working on protecting buyers acting in good faith for several years: SOHA and AUAN, especially noting the great work done by Gerardo Vázquez, a colleague of mine, attorney and legal adviser at AUAN. The efforts of these organisations and their mobilisation have made this amendment possible.

The aforementioned organisations, along with many others that have been created, are justified by the great problem faced in Andalusia, which has 300,000 homes built in non-developable land (NDL). On the Andalusian coast, due to foreign residential tourism, many buyers are foreigners and this has led these owners, facing the legal problems with these homes, to move to defend their interests, to strengthen and to tell authorities about the existing situation.

The main problem, at least in Andalusia, has been the complete inactivity and inefficiency of Urban Planning in Andalusia, which has led to a failure in regulating non-developable land in Andalusia and to the existence of many homes built on non-developable land.

Regulations with very fixed and strict criteria governing construction on non-developable land were approved. However, Autonomic and Local Governments have completely neglected to provide the necessary oversight to enforce these regulations.

From the beginning of the years of the housing bubble, the competent government bodies have shown no predisposition to initiate and solve disciplinary procedures against offenders, with all the legal consequences that this entails, such as demolishing what has been illegally built. The governing party in City Hall should have assumed the “feared” political price that these unpopular measures may have entailed.

Most of these buildings have everything: registered deed, pay IBI (Property Tax), are registered in the Property Register, have electricity and water, and have paid autonomic taxes such as ITP (Tax on Asset Transfer) and AJD (Stamp Duty).

Many of the properties have changed owners, meaning that the person responsible for construction is no longer the owner of the home. When these properties enter legal proceedings, third parties acting in good faith appear, affected by this situation that the Local and Autonomic Governments, with full knowledge, have allowed due to their complete inaction in the field of Urban Planning.

The regulations provided in the Urban Planning Law of Andalusia (LOUA) to govern the very strict use of non-developable land were based on environmental protection and on maintaining the rural value of a large portion of the Andalusian territory so as to preserve this environment and its values.

However, its lack of application due to a lack of real and effective control of what was being done on non-developable land has given rise to the failure of regulations on the use of non-developable land provided in the LOUA.

In reality, this has resulted in large rural areas becoming full of unregulated buildings, achieving the opposite effect, as the lack of protection of the rural environment is clear in these cases.

In practice, a total lack of protection of rural land has occurred in some areas under greater urban pressure, where, without controls or any type of criteria regarding what was being built at the architectural level, construction has been allowed, of palaces, warehouses, terraced houses, one-storey homes, towers and everything in between. There has also been no control of the necessary infrastructure or facilities for these homes to be used: discharge of sewage, illegal wells to obtain water, etc. Furthermore, many of these homes did not pay local building taxes, as the majority were not eligible to obtain a licence under the LOUA.

However, as we explained in a previous post, it should be noted that, in some cases, the licenses for segregation, building and initial occupancy were indeed granted for some of these homes. The fact that the Government is responsible in these cases is more than obvious and the damages suffered by owners, who purchased the homes in good faith, are completely reprehensible.

This situation of deregulation of non-developable land has an undesirable effect on citizens, as there is a feeling that there are citizens who ignore the law and go unpunished and that there are others who are required to comply with it.

If the urban planning disciplinary proceedings had been started quickly and efficiently at the beginning of that frenzied period of real estate development on non-developable land, the message that citizens would have received would have been very clear and many buildings would not have been built. There would still be homes on non-developable land but the magnitude of the problem would be quite different.

Faced with this situation, the legal response to solve this problem should be consistent with the reality that exists and that has been tolerated by the Government itself for so many years. This is why the necessary legislative reforms in this area must be tackled rigorously and without propaganda messages, avoiding a focus on the debate on “amnesty for everyone” or “offenders must pay” because the situation is much more complex.

In the administrative field, the majority of these homes should be regularised as, in many cases, penalties for using land illegally would have expired and many of the developers-builders are not the current owners.

In the future, there should be a debate regarding the effectiveness and efficiency of Urban Planning under current regulations, as well as regarding whether the regulation of non-developable land in the LOUA is adequate for the purpose it intends to fulfil.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyer)

Torrox-Costa (Malaga/Costa del Sol/Andalucia)

INHERITANCE TAX IN SPAIN: WE ARE ALREADY EUROPEAN!

Geschrieben von admin am 11 Februar, 2015. Veröffentlicht in Andalusian, Inheritance Tax, malaga, wills.

In our post of last March on Inheritance and Donation Tax, we discussed about the fact that European non-resident citizens in Spain were experiencing discrimination against resident citizens, because, under the same circumstances, they had to pay more taxes than resident taxpayers.

This unequal treatment happened when the deceased or beneficiaries were non-resident in Spain and they paid taxes in conformance with a State regulation which was more detrimental than the regional one, which was only applied to resident citizens.

This discrimination was confirmed by the European Court of Justice ruling dated 03rd of September 2014, which resolved this issue and established that Spain was infringing the free movement of capital within the EU, because of this separate treatment between resident and non-resident citizens.

On the 1st of January 2015, in order to comply with the aforementioned judgment, the amendment of the State Inheritance Tax regulation has entered into force in Spain. A special scheme has been introduced in regards of the Inheritance Tax, so that non-resident citizens in Spain who are European residents may apply the regional regulation as residents already do, equating their situation.

This new regulation establishes that in the event that the deceased is a European non-resident in Spain, the European non-resident beneficiaries may apply the regional regulation where the most valuable assets are located in Spain. If the beneficiaries are resident in Spain, the regional regulations where they reside shall be applicable.

If the deceased has been a resident in a Spanish region and the beneficiaries are non-resident in Spain, the non-resident beneficiaries shall pay inheritance tax in conformance with the regional regulations where the deceased resided.

At this point, it is worth mentioning that the collection of the Inheritance and Donation Tax in Spain is assigned to regional governments, so that they are free to set forth their own regulations.

The effect of this assignment is that the amount to be paid for this tax by Spanish residents may significantly vary depending on the region where they live. In fact, a fiscal “war” has arisen between regional governments as regards of this tax, because some people have decided to establish their residence in regions with a more favourable tax scheme in order to pay fewer taxes for inheritance and donations, particularly those with more valuable estates.

The most recent and famous case in Andalusia was that of the late Duchess of Alba, who was sentimentally related to Andalusia but not fiscally, because her residence for tax purposes was in Madrid. The main benefit of this fact is that her beneficiaries have had a tax saving of more than 90 million Euros in the Inheritance Tax.

Since non-resident citizens will also enjoy the same Inheritance Tax regulation than resident citizens and considering that the regulation to be applied is that of the region where the most valuable assets are located, this unequal treatment between regions will also affect them.

However, imagine that you are a non-resident in Spain, do not have any property, but you have some money in a bank entity in Spain. In this case, which regulation shall be applicable for your beneficiaries? It seems that the applicable regulation shall be that of the region where the bank registered office is located. Thus, it is not the same a bank entity with registered office in Madrid, Barcelona or Seville, for instance. It has been said “it seems” above, because a definitive answer has not been obtained when contacting the Tax Administration Office in respect of this issue.

In short, these are good news for European foreign citizens and their beneficiaries, and welcome to the regional regulatory “chaos” in respect of Inheritance and Donation Tax.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyer)

Torrox-Costa (Malaga/Costa del Sol/Andalucia)

SPANISH GOLDEN VISA FOR NON-EUROPEAN RESIDENTS

Geschrieben von admin am 19 Mai, 2014. Veröffentlicht in lawyer, malaga.

During our stay at the Second Home fair in Utrecht this March we received several questions about the new Spanish ´Golden Visa´ (or ´Investor Visa´) from professionals with wealthy clients in China and Africa. With the rapidly growing middle and upper-class in these new economies, these questions are rather interesting for us as a law firm specialized in property law / conveyance.

With this new investor visa law the Spanish government tries to attract foreign investors in order to stimulate the national economy, to give an impulse to the real estate market and to create more jobs. Politicians up to now are rather enthusiastic, as up to the 14^th of April already 661 Golden Visa were granted to investors from China, Singapore, Japan, the United States, South America, the Middle East and Russia. With this article we´d like to inform you about the details of this Spanish law that became active on the 27^th of September 2013.

Non-European residents can apply for the Golden Visa under several conditions. The ‘cheapest way’ for them is to buy a Spanish property with a purchase price of over € 500.000. But there are more options for the lucky few that can financially afford to immigrate to Spain. Investing in Spanish companies with shares of € 1.000.000, or having a Spanish bank deposit in Spanish financial entities of the same amount of money, will also do.

There is another option for obtaining a Golden Visa, which is buying Spanish bonds / public debt titles with a worth of € 2.000.000 or more (minimal duration 5 years). In addition, it´s also possible to obtain the Golden Visa by starting a business activity in Spain with a significant worth to the national economy, such as job creation, socioeconomic improvement or scientific/technology innovation. Of course, this officially needs to be approved by the Spanish administration (Economical and Commercial Office). The last option concerns high qualified professionals or transactions within the same company (issued by the Big Companies and Strategic Group Unit). The condition, of course, is that these professionals can´t be found on the Spanish employee market.

The rights of the residence permit apply to the permit holder and his spouse, children up to 18 years and also -due to health reasons- dependent parents or children over 18 years.

The Golden Via is granted for one year (a normal tourist’s visa only lasts for 90 days) and is renewable for two years, after which another two more years can follow (as long as the investment maintains). After these 5 years you would be entitled to apply for a long-term residency, but this permit will not be granted automatically. The requirement here for is that the applier has lived in Spain legally and effectively for five years, which means that within these 5 years he hasn´t lived abroad for more than 6 months consecutively and for not more than 10 months in total.

Of course, along with the permission comes a set of demands, of which the following are the most important. The person may not have stayed illegally in Spain before, can´t have a criminal record in Spain (o due to the Spanish legal system in the last 5 years) and he needs to have sufficient economic recourses for his (and his family´s) stay in Spain. It´s not obligated to have a tax residency within Spain, though, which makes the Golden Visa even more attractive for foreign investors.

Author: Francisco Delgado Montilla, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

SUCCESSFUL DUTCH REAL ESTATE FAIR FOR C&D

Geschrieben von admin am 10 April, 2014. Veröffentlicht in Andalusian, english speaking solicitor, lawyer.

As we already informed you in our previous news letter, C&D has been present at the Dutch Second Home fair in Utrecht last month. Being the only Spanish law firm on the fair, our daily seminars about the Spanish purchase process turned out to be the best attended during these three days, which proves that Spain is still a very attractive country for the Dutch to invest in. Also more than half of all exhibitors (mainly real estate agencies and developers) were focussed on Spain, which according to the organisation already has been the case for many years now.

In our stand we were able to speak to a lot of people with serious plans on buying a property in Spain, in most cases on the Costa del Sol or even particularly the Axarquia. The main issue in our conversations was to explain the important role of the lawyer during the purchase of a property in Spain. This situation is different from the Netherlands as in this country the lawyer´s work is completely done by the notary. We also got a lot of questions regarding wills and tax issues, for example on the subject of renting out a new bought property.

Author: Gustavo Calero Monereo, C&D Solicitors (Lawyers) Torrox-Málaga

Stand of C&D Solicitors on Dutch Second Home Fair in Utrecht

Our daily seminar we held in both Dutch and English and we explained the different phases of the buying process with the various legal documents there are to sign (reservation contract, private purchase contract and the title deeds). Besides of this we gave some background information on the official investigation of the lawyer, by which the future owner can make sure he´ll buy his property with all possible guarantees and free of any risks. (The extended Dutch text of our seminar you can find on the home).

Looking back we can say that this fair exceeded our expectations and has been really successful for us. Not only in the perspective of attracting new clients but also as a learning experience of presenting our company on the Dutch market. Despite of the good weather this Second Home edition in Utrecht attracted around 5.000 visitors.

Author: Francisco Delgado Montilla, C&D Solicitors (lawyers)
Torrox-Costa (Málaga/Costa del Sol/Andalucia)

C&D AT SECOND HOME FAIR IN UTRECHT

Geschrieben von admin am 21 März, 2014. Veröffentlicht in english speaking solicitor, lawyer.

erfrecht spanje — Dutch Second Home Fair

C&D Solicitors likes to inform you about the fact that we will be present at the Second Home Fair in Utrecht (the Netherlands) from the 28th until the 30th of March.

As the only Spanish law firm on this fair we´ll provide Dutch visitors with legal and fiscal information concerning the Spanish purchase process. We also have been invited to -together with our Dutch commercial assistant- give a daily seminar, which will start at 14:45 hrs. (seminar 1). After this seminar exists the possibility to ask us specific questions in the fair´s wine bar that will have a special theme on Spanish wines.

If you happen to be able to visit the fair, you can download free tickets through this link and we look forward to welcome you in our stand!

Author: Francisco Delgado Montilla, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)