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Selling Up or Releasing Equity ? - First Get Your House In Order
With an excess of properties for sale on the market and the all-important buyer becoming increasingly scarce, the need to have your property’s affairs in order has never been greater. The same also applies if you are considering releasing equity from your property.
Most owners tend to feel that having already gone through the buying process, they are sufficiently aware of what is involved and do not need to address the issue. Many estate agents will tell you that the seller does not need a lawyer – unfortunately sometimes with the agent’s own interests at heart. The most often quoted reason for not using a lawyer is that ‘The Spanish never use lawyers whether buying or selling’. This is (a) totally untrue, and (b) skips over the fact that a Spanish person generally has a great deal more knowledge and understanding of the issues involved that the average British person. It is true that the risk is placed on the buyer, and the rule ‘let the buyer beware’ applies in Spain as it does in the UK. Nevertheless the sale (or remortgage in the case of equity release) may not progress much beyond the first hurdle if the owner cannot produce the necessary documents. With this in mind I have listed the main points to consider below:
Documents – It may sound daft but knowing the whereabouts of your Escritura is essential. It is basically the property’s Title Deed although it is not conclusive proof of ownership. Once located you will need to ensure that it reflects the current position (ie that the owners stated are alive and willing to sell, and that the dimensions of the property are correct). It is quite common for the Escritura to be out of date as a result of a property being extended or altered. If this is the case an ‘Escritura de Obra Nueva’ (Escritura of new work) will need to be signed before a Notary and then lodged at the relevant Land Registry. This document effectively brings the Escritura up to date and will avoid a lot of unnecessary wrangling between the parties once a buyer is found. Certain steps such as engaging an architect will need to be taken before the new Escritura can be signed. Other documents to locate include the Cédula de habitabilidad (a certificate to certify that a property can be lived in), IBI receipt (showing payment of local taxes), Utilities receipts for water, electricity etc., and a letter showing payment of the Community of Owners’ fees (if relevant).
Choice of Agent – If your property is currently for sale with an agent who has not asked to see any of the above documents you could be forgiven for wondering whether you have made a wise choice. Whilst most agents in Spain are reputable, they are not required to be licensed or registered and the only regulatory bodies are ‘Agentes de la Propriedad Inmobiliaria’ and ‘Gestores Intermedarios de Promociones y Edificaciones’. Do not be afraid to ask for a copy of the agent’s registration certificate. Finally, the most important issue to consider will be the agent’s sale commission and it is a good idea to ask an independent lawyer to review any agreement prior to signing.
Black Money or Underdeclarations – The exposure last year in the media of Spain’s biggest ever suspected money laundering operation has left many people a little nervous, and not before time. In property transactions it is usually the seller wishing to reduce his capital gains tax burden who raises the issue, often making unrealistic demands. Whilst this was traditionally common practice in the past, the tax authorities have become more alert and will charge BOTH parties for unpaid taxes if they believe the purchase price stated in the Escritura to be too low.
Selling your property has been ranked in third place below only death and divorce in the list of life’s most stressful events. It is well worth putting the time in now to ensure that your property sale does not bring about either of the first two.
With an excess of properties for sale on the market and the all-important buyer becoming increasingly scarce, the need to have your property’s affairs in order has never been greater. The same also applies if you are considering releasing equity from your property.
Most owners tend to feel that having already gone through the buying process, they are sufficiently aware of what is involved and do not need to address the issue. Many estate agents will tell you that the seller does not need a lawyer – unfortunately sometimes with the agent’s own interests at heart. The most often quoted reason for not using a lawyer is that ‘The Spanish never use lawyers whether buying or selling’. This is (a) totally untrue, and (b) skips over the fact that a Spanish person generally has a great deal more knowledge and understanding of the issues involved that the average British person. It is true that the risk is placed on the buyer, and the rule ‘let the buyer beware’ applies in Spain as it does in the UK. Nevertheless the sale (or remortgage in the case of equity release) may not progress much beyond the first hurdle if the owner cannot produce the necessary documents. With this in mind I have listed the main points to consider below:
Documents – It may sound daft but knowing the whereabouts of your Escritura is essential. It is basically the property’s Title Deed although it is not conclusive proof of ownership. Once located you will need to ensure that it reflects the current position (ie that the owners stated are alive and willing to sell, and that the dimensions of the property are correct). It is quite common for the Escritura to be out of date as a result of a property being extended or altered. If this is the case an ‘Escritura de Obra Nueva’ (Escritura of new work) will need to be signed before a Notary and then lodged at the relevant Land Registry. This document effectively brings the Escritura up to date and will avoid a lot of unnecessary wrangling between the parties once a buyer is found. Certain steps such as engaging an architect will need to be taken before the new Escritura can be signed. Other documents to locate include the Cédula de habitabilidad (a certificate to certify that a property can be lived in), IBI receipt (showing payment of local taxes), Utilities receipts for water, electricity etc., and a letter showing payment of the Community of Owners’ fees (if relevant).
Choice of Agent – If your property is currently for sale with an agent who has not asked to see any of the above documents you could be forgiven for wondering whether you have made a wise choice. Whilst most agents in Spain are reputable, they are not required to be licensed or registered and the only regulatory bodies are ‘Agentes de la Propriedad Inmobiliaria’ and ‘Gestores Intermedarios de Promociones y Edificaciones’. Do not be afraid to ask for a copy of the agent’s registration certificate. Finally, the most important issue to consider will be the agent’s sale commission and it is a good idea to ask an independent lawyer to review any agreement prior to signing.
Black Money or Underdeclarations – The exposure last year in the media of Spain’s biggest ever suspected money laundering operation has left many people a little nervous, and not before time. In property transactions it is usually the seller wishing to reduce his capital gains tax burden who raises the issue, often making unrealistic demands. Whilst this was traditionally common practice in the past, the tax authorities have become more alert and will charge BOTH parties for unpaid taxes if they believe the purchase price stated in the Escritura to be too low.
Selling your property has been ranked in third place below only death and divorce in the list of life’s most stressful events. It is well worth putting the time in now to ensure that your property sale does not bring about either of the first two.
© Sleepwell Marketing S.L.. 2005 – All rights reserved.
Information courtesy of Marc
White LL.B. (English Solicitor) - Visit homepage
If you have any questions about selling your property and releasing equity, then please email us: info@spanishadvertiser.info
using your spanish advertiser email address and we will endeavour
to return your query as soon as possible.
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