Legal Article November 2008 - by AF Consulting

STARTING OUT

Buying a property or land in Spain is not easy.  Even Spaniards now recognise the necessity to instruct a lawyer right at the beginning of their purchase or sale, this is something that was totally unheard of in the past. 

The motive is evident: apart from the abundance of laws that rule the property sector in conveyancing, there is also the added problem that every country adopts a different procedure for acquiring a property.
The first job the lawyer has to undertake is the carrying out of a judicial inspection of the paperwork which accompanies the desired property.  This inspection avoids problems for the client after the purchase. The job consists essentially in determining whether the property complies with the requirements laid down by Spanish law.

THE REGISTRATION OF PROPERTY
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In Spanish law the Land Registry plays a fundamental role.  This role is essential, it is the PUBLICATION of property assets and in publishing the property assets the information becomes PUBLIC for anyone, at any time, to view who is the owner of which property.

When embarking on a purchase of a property, we must be clear on three essential points. The First is that the only purchases that can be registered in the Land Registry are those which have a public deed, that is to say, that deeds have been drawn up and then signed in front of a Notary.  That is why a private contract between buyer and seller can’t be registered in the Land Registry.
In second place, registering at the Land Registry is NOT OBLIGATORY; to become a home owner a person doesn’t have to have his deeds registered in the Land Registry. You can often find a case where a property has been bought and the deeds signed in front of the Notary and then the owner has never registered the property in the Land Registry. This then brings us to the third point a mortgage/bank loan CANNOT be obtained on a property which has not been previously registered in the Land Registry.

 What consequences can the non registration of a property in the Land Registry have?  To give an unpleasant example, the property which has not been registered can be sold with a private contract to as many people as the owner desires.
The real problem then is who, out of all of these unfortunate buyers, is the real owner?
It is a Judge who determines which one of them is really the owner and also to determine the corresponding compensation.  For the poor buyer he will suffer all the consequences that are generated from going to court, both psychological and economical.

The next step is to the Land Registry to apply for a ‘NOTA SIMPLE’.  This is a document which shows (i) who is the owner (ii) a description of the property (iii) if the property has any embargoes or loans against it. This last point possibly being the most important one of all.

PROPERTIES WITHOUT DEEDS

THE LACK OF DEEDS is without a doubt, one of the situations which we are finding more and more frequently.  This situation has various consequences which are important and relevant for the buyer.
If we do a historic analysis there were many honourable verbal agreements between buyer and seller. More commonly, property sales and purchases were done by signing a private sale/purchase contract between the two parties with various witnesses who confirmed the signatures.  This would stand up in any court of law where proof of ownership had to be identified.
Times have changed; due to the insecurity of today’s society it is recommended that deeds be done to avoid future problems.

In our legal system, property cannot be registered in the purchaser’s name in the Land Registry without first having Deeds in their name.

To deal with these situations the Spanish Legal System has established various ways of enabling the first deeds of a property to be done.  Without a doubt the most commonly used method in the legal profession is the procedure established under the Hipotecaria Law Article 205 (the judicial law that regulates the access to the Land Registry).

Firstly, the property must be correctly presented in the legal system of the ‘Catastro’ i.e. Land Registry. Searches have to be done so as to ascertain the situation of the property in the Land Registry.  The rates bill which in Spanish is called ‘Recibo del Impuesto de Bienes Inmuebles’ must be obtained this rates bill gives us two vital pieces of information: firstly the correct name of the owner of the property (it is quite normal to find that the name on the rates bill is the name of a previous owner, Secondly make sure that the description of the property that the rates office has on file, corresponds with the property as it stands today. In many cases it is necessary to apply for a ‘Certificate of Literal Description and Graphic Plan’ to the Town Hall or to the Director of the Rates department that corresponds to the area that the property is in.

If everything is in order then we can do what is commonly known as the ‘First Deed’. If all is not correct then it is necessary to solve all the problems in the legal system and then proceed with the ‘First Deed’.

If the present owner inherited the property then the deed will be one of ‘Adjudicación de Herencia’ (Allocation of Inheritance). If it is a normal sale, the deed is a Public Deed of Sale and if the deed is a contribution into the family assets it is a Public Deed of Joint Assets
However, although the above step is sufficient to create the First Deed, it is not sufficient to guarantee entry in the Land Registry, in order to obtain the correct entry in the Land Registry we must do a Second Deed. Once the two Deeds are produced having been correctly processed (i.e. the corresponding Taxes are paid and the Land Registry is satisfied with the paperwork) we apply to the Land Registry to register both Deeds the First and the Second. Having carried out the above procedure, the said property is registered in the Land Registry but it is noted in the registry that the property is not protected for the following two years by the ‘FÉ PUBLICA REGISTRAL’, this means that if there was a reclamation against the property in the two years that followed the purchase, it would be the Courts and not the Registry who would decide who was the legal owner.  It is for this reason that the majority of banks will not give a mortgage on a property that has no Deeds.

WILLS

There is very little to be said about doing a Will.  Everyone knows they should have one but few people believe they need one because they think they will never die! 
Our advice is don’t think about it just do it.  Doing a Will, is easy and quick to do, you will only have to give up an hour of your time to avoid a great deal of trouble for the loved ones left behind. A Will is essential do keep putting it off.

We are more than happy to give advice and help with any problems you may have, we don’t complicate situations we make them easier for you to understand.

Francisco Ortega Moreno
AF Consulting Lawyers
Motril  Granada

Telephone 0034 646168400