Real Estate in Spain
Thousands of homes are sold every year in Spain, and nearly all of these sales involve the work of an estate agent.
The Spanish name for Estate Agent's office is 'Inmobiliaria'. In Spain they work just the same as in most countries (except that they are not so well controlled as in most of the EU), and that is to sell, sell, and sell to survive. Beware of high-pressure salesmanship. If you are selling, also beware of the commission they charge. The Spanish Real Estate Association recommends a commission of 3%, but most will try to get away with between 5% and 10%. Be prepared to walk away or do battle with them if they are overcharging. Most will adjust their commission if they think they are going to loose a sale.
If you are looking to purchase a property, you probably won't have a choice with which agent you have to deal with, because you will be more interested in the property you have found that suits your requirements, although you may find several agents offering the same property. There are not many 'sole agencies' except in small communities.
During the purchasing process, it is very important that the Abagado (Solicitor) you use, is one that you have faith in and who you are sure will deal with, and check, all the paperwork in considerable detail. It might be worth considering any recommendations. It might also be worth asking him about any possible abnormalities which the Estate Agent doesn't know or prefers not to mention. Check to see if there are any local or area charges or fees and about services such as rubbish collection, Internet connection - speed and contracts already in place. An Abagado's fees will normally be 1% of the value of the property, unless it's not a straight forward purchase. The Agent will probably suggest his preferred Abagado, but beware, that recommendation might be to the Agent's financial benefit and the Abagado may not be that good. If you can't speak enough Spanish, make sure the Abagado can speak enough English to explain everything clearly. Lots of mistakes can be made through misunderstandings, and you may be 'lumbered' with them for as long as you own the property. Consider hiring the services of an interpreter if necessary if you feel you can't cope. It will probably be well worth the cost.
Unlike in the UK and many other countries, a Spanish Abogado can work for both the seller and the buyer of the property (although this situation is gradually being frowned upon), so conflicts of interest can and do occur. Make sure the Abogado you choose is entirely independent, and is working only for you. Make a point of insisting that he does a good and proper search and that all the papers are in order and fully legal. Many properties in Spain are not entirely legal or do not have the necessary planning permission (even if they pay rates on the property), which is usually not the fault of the owner, but rather the many different authorities who often take a very casual attitude to the vast amount of paperwork they seem to generate, and often have differing standards when granting planning permission. It is not unusual for the local and regional authorities to have different standards when granting the original building permissions. There are new laws in place which put the onus on the seller to produce all the necessary paperwork to prove the property is fully legal, but currently, some Estate Agents seem to be working around this law. The onus is also on the seller to provide a 'energy crepitate' for the property, which shows how energy efficient the property is.
Have a very close look around the area of your proposed property. Will a nearby river flood. Will the rock face of a nearby mountain or supporting wall crumble. Will the property next to the sea be subject to abnormally high tides. These are the things that neither the seller or estate agent is obliged to tell you about.
The purchase of a property takes about 4 weeks in Spain, and initially the estate agent will ask you for a deposit of about 10% to 12%. This amount usually includes his and the Abogado's fee, but not always. Make sure that the agent puts your deposit in a 'locked' bank account that is only available on the day the purchase takes place. Many agents will use their own bank accounts and find that your deposit is no longer available should the purchase fall through.
The final stage in buying a property is for the buyer, seller and their Abagado's to attend a Notary's office, where the deeds of the property are read out to be sure everyone understands them. Many Spaniards, especially in rural areas cannot read and this process was originally done for their benefit, by still continues today, almost from habit. Naturally they will be read out in Spanish, so it is important to ask your Abagado to translate as the reading proceeds. If he cannot do this, you should employ an interpreter (more often nowadays, the deeds will be in dual language - Spanish and your own language, but you may have to ask this). When that task is complete, you have to agree to what you heard, and then you will be asked to hand over the balance of the purchase price (often in cash, unless otherwise agreed beforehand), and the property will be yours. Don't be afraid to question what you don't understand, or get things changed if necessary before you sign anything. Don't believe anything and check everything.
Next you need to ask the Abagado to arrange for you to be recognised as the new owner of the property with the local authority, electricity, water and telephone companies, and any other services that may be supplied to the property. You may also need to arrange for direct debits for these suppliers, and on receipt of your Spanish bank details, your Abagado will normally arrange this for you. If your property is in the countryside, you may have a Water Well as your source of water. To use this it may have to be licensed with the local authority in your name. Of course, you can do all this yourself, but it usually involves a lot of hassle, especially as all conversations and paperwork will be in Spanish. Along the coastal areas of Spain, some Spanish people may have a smattering of English, but the further you go inland, there's much less chance.
Having moved into your newly acquired property, any external alteration or extensions you plan on building, must have planning permission from the local authority (and sometimes regional authority) before you start. Failure to do this may result in such work (and sometimes even the whole building) being demolished at your expense. Spanish people, especially in the countryside, usually build their own properties without any permission being sought (because that is what they always did in the past), but the authorities are cracking down on this and are very slowly catching up with offenders. Many Spanish people (especially in the countryside) still dismiss any ideas of getting planning permission as if it doesn't matter, but it does, and it could be to your considerable cost if you don't stick to the law. Another reason why you should be sure the deeds of the property clearly state that the property is fully legal. Because the current owner of the property you are going to buy, has a good position within the local community, doesn't mean his or her property will be fully legal. Recently there was a case of a policeman building his house without permission, no submitted plans, no taxes or rates having been paid and this one case is by no means an exception. The new owner is obliged to pay for planning permission, architects fees, outstanding bills, taxes and rates, extra solicitors fees, etc., all of which increased to the cost of the property by a very large amount, and with the potential possibility of planning permission being refused and the property being demolished. It should also be pointed out that Spanish authorities have a habit of changing laws and the status of your property. One day your house can be fully legal and the next day it is illegal for one or more reasons which seem to be completely illogical.
A typical example would be to request to make a change to your property in some way or another, to be told by your local authority that it is not possible because the property or land is in a protected area. This may the first you have heard of this situation. Even all the professionals you have been dealing with and advising you, may be unaware of it. It's just that the local authority changed the status without advising you or anyone else. You could apply to a higher authority in your Region (or Province) and be told that there are no protected areas in your area, but it doesn't mean the local authority will take any notice of them. Usually local and regional politics comes into this. There is very little you can do to find a solution in these situations other than perhaps go the the European Justice court, and all the time and costs involved. Basically in Spain there are four layers of authority, many of which do not accept the rulings of another.
Even if you don't want to make any changes to your property (or land) and having found your perfect residence, which is fully legal, you may still have the problem of local or regional authorities changing or making new laws, which you obviously can't plan for in advance. A recent example was the Junta (council) of Andalucia (together with the local river authority), who out of the blue, decided that all buildings built within 100 meters of a river must be demolished (at the owners expense and with no compensation). This was to involve over 40,000 homes where occupants would be put out of their living accommodation. In many cases the property was their life times savings. This particular problem is still in the process of being considered, and will almost definitely be abandoned, in typical Spanish style. Another case is suddenly making a second floor of a property illegal and must be removed because it is on a flood plain or near a river. There are many examples and new situations crop up almost monthly. BE PREPARED. Spanish people and authorities are bad at planning for the future - in fact they are bad at planning for anything.
To add to that, the government in Madrid has recently ordered a tightening (or in some areas, creating) a Land Registry for each area. This involves local and regional authorities checking every property on their patch. Although not complete yet, the latest figures indicate that approximately between 300,000 and 400,000 properties and houses nationally may have been illegally built with no planning permission. In areas where this situation is particularly bad, letters are being sent to the owners of any property in the countryside, whatever size - from a permanent tool shed through to a large hotel - giving notice that action will be taken, ranging from regular monthly fines through to bulldozing as a last resort if the law is not adhered to. Some of these properties may be 'regularised', which basically means no paperwork can be updated regarding the property, which puts restrictions especially when trying to sell at a later stage. The others may be demolished. Be aware when you purchase, that your property is fully legal in all respects as far as possible. These problems do not occur so much in built-up area such as towns which have been standing for many years, but it's still worth checking.
It should be also be pointed out that politicians, like the Spanish people in general, often make snap decisions without giving real though to the consequences and have to change their minds at a later stage. Spanish people are not good at planning ahead, and this applies to politicians as well as the general public - an example being that they might walk across a road without considering if there is any traffic approaching.
One Spanish legal adviser even suggested buying a property in another country might be a safer option as the property market in Spain is currently a nightmare. Another said he was ashamed to be associated with the legal system here in Spain. He said that everyone knows something needs doing about the over administration which is ineffective and conflicting, but no one seems to know how to start the change.