Tenerife Solicitors

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[30 Jun 09] :: Spanish Wills - Commonly asked Questions
Q: I have been told that if I have assets in Spain, that I should make a Spanish Will. Is this correct?

A: Whilst an English, Scottish or Irish Will can technically administer your assets in Spain, it can be an administrative nightmare to follow this route, as you have to first apply for probate in your own country, then get the Probate Certificate and Will translated, notarised and apostiled and then brought to Tenerife to begin the whole process all over again to obtain Spanish Probate.

In the meantime, it can be impossible to re-insure the property, pay taxes, re-finance, sell or otherwise deal with the property. Given the likely cost, time and hassle of following this procedure, making a Spanish Will is a no-brainer.

Q: A friend tells me that if I die without leaving a Will in Spain or in the U.K., that Spanish law will automatically be applied to my estate. Is this true?

A: This is a common misconception among British ex-pats. Article 9 of the Spanish Civil Code expressly provides that for non-Spanish nationals, all matters involving family law, divorce, Wills or probate will be administered in accordance with their own national laws. This rule applies regardless of whether there is a valid Will in either country.

Q: I have heard that Spanish law attempts to apply an individual’s national law to the administration of their assets in Spain, whilst U.K. law conversely attempts to apply Spanish law to those assets. I’m confused, which will apply?

A: Once again, Article 9 of the Spanish Civil Code applies. When dealing with the assets located in Spain, the U.K. authorities obviously have no jurisdiction, so they automatically pass responsibility for administration of those assets to the Spanish authorities. As stated above, a British Will can be painstakingly converted for use in Tenerife, but the actual administration of the Spanish assets under that converted English Will (or indeed under a Spanish Will) can only physically take place in Spain. In essence, the British authorities wash their hands of dealing with the overseas assets.

So, we must then look at the Spanish rules, which state that although the Spanish assets are to be administered in Spain and any relevant taxes are to be paid here, the Spanish authorities will apply the ‘principles’ of British law to the administration of the Will and the distribution of the assets.

Bearing in mind that the British authorities have already washed their hands of the matter, this means that the executor or administrator of the Spanish assets will have to explain to the Spanish Probate Registrar the British legal principles that would apply if the assets were situated in the U.K. In most cases, the Spanish authorities are already aware of the relevant British legal principles, as they have dealt with numerous British nationals over the years. However, in certain cases, the Probate Registrar may not understand the application of Article 9 or have doubts as to the relevant British legal principles, in which case the executor may have to obtain a certificate of the relevant British law setting out the correct legal rules that should apply.
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[17 Feb 09] :: BUYING PROPERTY IN TENERIFE - WHY USE A SOLICITOR / LAWYER?
Tenerife Property Purchases – Why should I use a Solicitor?

All scenarios are printed with the consent of each client and details have been changed to protect anonymity.



The estate agent is insisting I don’t need to use a Solicitor

Whilst most reputable estate agents insist that clients instruct an independent solicitor, there sadly remains a minority who actively discourage buyers from using one. Whilst we could debate the reasons for this at length, it is perhaps more constructive to focus on the implications for the buyer. We shall now look at two different scenarios:

In many cases, the agent will draft the purchase contract. In most recent examples that we have seen, the Plus Valia (a tax imposed by the town hall) is stated to be payable by the buyer. However, this tax is calculated on Town Hall tables reflecting the perceived increase in the value of the land during the period of the seller’s ownership. Hence, it is a tax both morally and legally attributable to the seller. The reality however is that the taxman will seek to enforce payment of this tax against the buyer and the property, rather than try to track down and chase the seller, who may well have gone abroad.

Historically in Tenerife, market forces and local custom and practice meant that the buyer reluctantly accepted liability for this tax. However, the situation has changed and it is now common practice for the seller to pay this tax. The situation is always open to negotiation, but it is important that buyers understand the nature of the tax and properly consider whether or not they should be paying it. In one recent case, we saved a client over 3,000 euros by amending the contract before it was signed.

We recently encountered another interesting scenario. A client instructed us on the proposed purchase of a property comprising of a residential building situated on rustic land. After obtaining a copy of the Escritura (Title Deeds), we discovered that the actual build dimensions of the property did not match those on the title deeds. After further enquiries, it transpired that the building had been substantially refurbished and extended subsequent to the original registration.

We therefore asked the seller for a certificate confirming that all applicable regulations had been complied with when the property was extended. However, no such certificate was ever obtained by the builder. Our client therefore had no assurance that the building was compliant with the relevant building, electrical and plumbing regulations.

We then reviewed copies of the contracts for the water and electric supplies. Both described the property as an ‘Almacen’ (Warehouse) rather than the usual ‘Residencial’. This is a common scenario with older, rustic Canarian properties, where locals would often designate the building as an ‘Almacen’ in order to avoid the more stringent regulations applicable to a residential property. The price per unit for the supply of water and electricity to an Almacen is also lower than to a residential property.

Regardless of how the previous owner managed to obtain the false registration, the problem for our client was that when he went to transfer those utility contracts into his own name, it was likely that each company would send an official to inspect the property and discover the error. They would then invariably require our client to produce a full ‘proyecto’ (documents demonstrating that all residential building, electrical, plumbing etc regulations had been complied with) in support of his application for new ‘residential’ utilities contracts.

Not only would this incur substantial costs, but there was a real risk that a property that had been extended without proper planning permission, documentation or correct utilities registrations might also fall foul of the building, plumbing and electrical regulations. To put such installations right to the extent that a Proyecto could be issued, could run into many thousands of euros. In the meantime, there was a real danger that the utilities might be disconnected, leaving our client living in the dark ages.

Of even greater concern was that the seller’s agent insisted to our client that this was a perfectly common and normal situation and that ‘everything would come out in the wash’. Interestingly however, they were unwilling to put this in writing or to offer to indemnify our client if indeed any such problem did arise.

Had our client followed this particular agent’s advice and not instructed us as his independent solicitors, he would almost certainly have been railroaded into buying the property whilst ignorant of the risks and implications. Fortunately for our client, we continued to negotiate with the seller’s agent until we achieved an outcome satisfactory to our client.
[22 Oct 08] :: Questions and Answers - Property Law
Q) I recently exchanged contracts on a property, at which point I paid a deposit of 10% of the purchase price. I have subsequently obtained a valuation, in which my Property has been valued at 22% less than the agreed sale price, although not because of any apparent fault in the property. Am I bound to pay the agreed purchase price, or can I get my deposit back if I decide not to go ahead?
A). In Tenerife, it is fairly rare for purchasers to independently instruct a valuer/surveyor unless there is some obvious need to do so (e.g. a finca on rustic land etc). There is certainly no legal obligation to obtain one. However, when taking out a mortgage, nearly all lenders will obtain their own valuation (at your expense) to ensure that there is sufficient value in the property in the event that there is a default on the loan and they need to repossess the property.

The typical ‘contract for sale’ drawn up by the estate agent or seller’s lawyer will only make provision for the refund of the deposit if the seller pulls out of the transaction, where typically the buyer is then entitled to a refund of double the amount of the deposit paid. However, there is rarely any clause allowing the buyer a refund of the deposit under any other circumstances.

If the purchase is dependent on raising a large percentage of the purchase price by way of finance from a lender, it may be sensible to negotiate a clause in the contract specifying that the buyer may pull out of the purchase if a subsequent independent valuation prior to completion demonstrates that the property is not worth a certain minimum amount against which the bank will lend the requisite finance. Otherwise, if you are unable to secure adequate finance, you may a) try your luck at renegotiating a lower purchase price; b) try to raise finance from another source at possibly a far less-competitive interest rate; or c) pull out of the purchase and lose your deposit.

If the seller or their adviser is unwilling to agree to such a clause, there is always the option of obtaining an early survey/valuation prior to signing a standard contract. Waiting until a valuation has been obtained also has the added advantage of confirming to the buyer whether they are paying over the odds. In the current depressed property market, the buyer would then be in a very strong position to negotiate a reduction in the purchase price.

In any event, this situation highlights the need to obtain advice from a solicitor before paying a substantial deposit or signing any contract.

Tenerife Solicitors are currently offering fixed fee conveyancing (property purchase or sale) of 1,300€ Euros. This is a comprehensive service covering all aspects of a transaction, from negotiating a price and signing a contract, though to signing at the Notary and subsequently registering for taxes and utilities. Call now on 922 71 78 45 (0871 218 0063 from the U.K. ) or email to: info@tenerifesolicitors.com
[18 Sep 08] :: Buying Off-Plan Property - Avoiding the pitfalls
Many British looking to invest in Spanish Property are attracted to the potentially lucrative ‘off-plan’ market. Buying a new-build property can have many advantages. Properties under construction are typically cheaper than the finished article, plus the property can often be finished to your own specifications. There is also something fascinating about watching your new property taking shape out of blocks and mortar. However, there are far greater potential pitfalls in buying an off-plan property than with a re-sale.

Newly built properties require various legal documents and certification before the new owner can be granted full legal title and protection, including Certificación Fin de Obra (Certificate of Finished Works), Seguro Decenal (similar to the 10 year NHBC scheme in England) and Licencia de Primera Ocupación (Licence of First Occupation). Once the developer has obtained the above documentation, it can apply for the Cedula de Habitabilidad (Licence for Habitation).

Problems can also arise if the developer runs into financial difficulty and has not arranged a Bank Guarantee to protect the purchaser. Perhaps the developer has failed to complete the property within the timescale agreed in the contract. Or perhaps the developer has completed the property on time, but the specification or views are not what were agreed in the contract.

Time and time again, clients will sign contracts, pay substantial sums of money or even complete on the purchase of a property without first protecting their position in respect of one or more of the above issues. The result can be that the client ends up with an unsatisfactory property, or keys to a property with incorrect paperwork and title, or worse still, no property and a loss of life-savings.

Before investing in an off-plan property, it is essential to take independent legal advice from a qualified solicitor who can investigate the above matters and protect your investment.

Tenerife Solicitors provide advice and assistance with all aspects of property sale and purchase. Call us now on 922 717845 (or 0871 218 0063 from the U.K.) for a no-obligation quotation or to discuss your requirements. Alternatively you can email us at info@tenerifesolicitors.com
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