Property for Investment

Legal terminology for Spanish Property Investment

It's a dream of many to be able to find a place in the sun, and for many Europeans, Spain is a great destination. With excellent temperatures year-round, very little rainfall and great food, the Mediterranean lifestyle is one that appeals to many ' indeed, many northern Europeans retire in Spain, and there is a healthy ex-patriot community in almost every location within Spain's mainland and islands.

However, coupled with the excitement of moving home; or even just the purchase of a property as a holiday home, comes a whole new ball game which can prove a stumbling block to many ' the legalities. Each investor will likely have bought or sold ' or both ' a property in their home country and possibly even another, but there are no hard and fast rules when it comes to this, and each country may employ different tactics and measures to ensure a smooth sale goes ahead.

Depending on how you acquire your new property can influence the legal process. All transferring of ownership of a property must be performed by law under the guidance of a notary or 'notario' in Spanish. If the property is new 'obra nueva' or transferring from a previous owner, then both types of property must be free of any debts, outstanding arrears or taxes - this is known as 'libre de cargas'- The only outstanding amount permitted on the day of purchase - known as a 'compra-venta' - is a home loan or mortgage, which is usually cancelled on the same day the deeds or 'escrituras' are handed over to the new owner.

What's often asked for first time buyers or even foreign investors is some kind of guarantee that repayments can be made on any home loan that may need to be financed on a property. This may mean a hefty deposit coupled with a second property which has no outstanding payments, or little to that effect ' often younger siblings are expected to use their parent's property as a guarantee - known in Spain as an 'aval bancario'. These guarantees are not necessarily over a property, and can be used over a lump sum which is rendered untouchable for the duration of the home loan.

If an estate agent has been involved in the process, then a representative from the agency may well be present throughout proceedings at the exchange of deeds, which often happens in the notary's offices, but can equally take place in the branch of the financial entity granting a home loan on the property, for example.