When you are buying Spanish Property you want to eliminate all risk. You should be making sure that everything is taken care of so that there are no debts on the property when sold of course but also that everything is up to date at the seller’s end regarding utility payments, community fees and a long etc…
Over the years we have had cases where everything seemed alright initially but there was a problem in the background. This could have been an old community bill, an old water or electric bill or any other little thing that can easily be hidden from sight and doesn’t show up in the conveyancing by a lawyer. So in this post we are looking at what the seller needs to bring to a signing to ensure that you have no future problems. Bear in mind though that sometimes utility companies are so useless that still something may come up.
The first thing is an obvious one and will be sorted by the notary. The notary gets a Nota Simple from the property registry showing that there are no debts on the property. If there are debts then they should be cleared by the seller there and then so the property is sold with free title and unencumbered. Oftentimes the most noticeable thing is an outstanding mortgage. In order to clear this a representative of the financial institution should be available to clear this debt and sign it off. The practicalities are that the amount needed to clear the debt is known beforehand and a bank draft is made out for the amount outstanding in the name of the bank holding the mortgage. This is taken from the price of the property and the remainder given to the owner. If there is a second charge on the property, also visible on the Nota Simple, then that should also be paid off at the time to give free title.
Next is another one that is partly responsibility of the notary and partly of the owner. You should demand the receipts for the last four years of IBI payments (and rubbish collection if that comes separately along with any other bills from the town hall) The notary will ask for the latest bill only by the way. This proves the property is up to date on payment from the local authorities. Why only four years? Because any bills from before that period that are unpaid are unenforceable by law, they are “Prescritos” and they do not need to be paid under Spanish law.
Newly introduced last year is the Energy Performance Certificate. All properties for sale or rent in Spain should have an EPC. The EPC needs to be produced in the Notary’s office or, in theory, the Notary will not sign the property over. We say in theory because in practice the Notary just needs to inform the buyer that there is no EPC available and if the buyer agrees then the Notary will sign over the property having done their legal duty to inform the buyer and the buyer having decided to go ahead anyway.
The next document is applicable if the property is part of a community or estate where there are costs associated with living there, eg maintenance of a building, social club or anything similar. A letter from the head of the community, or gestor that runs the community for the people living there, stating that the property is up to date on payments to the community is required. If not it needs to state the amount of debt there is and that money should be retained from the sale price and then paid to the community to cover th debt. This is especially important if buying a bank property as they are invariably the largest debtors to communities in Spain.
Next, and this is especially applicable to houses as opposed to flats, are copies of licenses and fines paid out for any extensions on the property. If an extra part of the house has been added then it should have had a license. In some cases it will have been built illegally and a fine was levied. Once that fine has been paid then the extension can normally be legalized. To legalize an extension a Declaración de Obra Nueva needs to be done to add it into the original deeds. If this hasn’t been done and there is a discrepancy between the size of the house on the deeds, in the property registry, in the catastro and in reality then the Obra Nueva certificate should be prepared before the signing by an architect and signed off. The Notary can then sign off the Obra Nueva and the new set of deeds with the new measurements is then included in the sale agreement.
Utility bills and contracts are the next thing needed. The last bill is often sufficient to show that payment is up to date because you would think that a utility company would shut off the service if bills have not been paid correctly. However we are finding now that the utility companies are particularly useless, especially the varying water companies.
Therefore we have started asking owners to get a signed document from the utility companies stating that payments have been made correctly, there is no outstanding amount to pay and that meters have been read recently. We also need a reading of the water meter on the day of the signing, or the day before, for water companies to accept the change in name. The electric companies will change over the bank account details and send out a new contract to change the name on it. They will not change the name on the contract until this new document is returned signed by the new owner of the property.
Sometimes, especially in the case of houses, water shares are included in the purchase of the property. If this is so then the water share certificates should be brought to the signing having being signed by the current owners and they are passed onto the new owners to sign and take to the water company to countersign and change the names over in their databases.
If there is a telephone and Internet connection then the contracts and latest bills or receipts should be produced and the same is true in the case of installed alarm systems that are monitored. All of these can be changed over to the new owner if required or ended if not needed.
Finally, after all of that, the owner should bring along ALL copies of the keys to the property. They should be exchanged for the bank draft to pay for the property and finally the sale is done.
Have you got all that? Be ready for an avalanche of paperwork at any signing for a property but most of all enjoy the process.