Team Frank and Diane

Lawyer

The lawyer is your most important team member. It is sensible to ensure that they are on your side and have no nancial connection with the estate agent or developer. This can be easier said than done in the excited ush of making an offer on a home. What will you do when the agent tells you about the brilliant lawyer they always work with? Many agents will indeed be able to recommend a good, fair and reasonably priced lawyer who specialises in property, so why not use them? If you do, however, do ask for more than one recommendation and ask to see quali cations and references.

moneyOne way around the issue is to engage the lawyer in advance. Fees vary depending on the services provided, but are unlikely to be less than 1–1.5% of the property value, plus VAT. You normally only start paying when they start working for you, perhaps on getting your identity number (NIE) and opening a bank account (which should also be done before nding a property). You would typically pay up to €1,000 at this point; the rest by stages.

Frank and Diane can nd specialist Spanish property lawyers in any of the magazines, books and websites they visit.

With a British-based lawyer they should rst check that they are quali ed, reliable and have experience operating in Spain. Most important is that they are conscientious, as they will be taking the buyer’s place in the negotiations and “due diligence”. Can they be trusted to ask all the questions Frank and Diane don’t know to ask? Frank checks that the UK-based lawyers are registered with the appropriate Law Society in the UK – even though the work in Spain won’t be regulated by them – and that they are quali ed as lawyers, “abogados”, in Spain. They should also be specialists in international transactions.

Getting a mortgage

Many buyers will finance their house purchase with a mortgage. The mortgage provider will normally require the following documentation:
• Income tax declaration for the past two years
• Bank statements from the past year.
• Payroll or other proof of income for the past six months.
• A list of mortgage loans already held.
• A statement of your assets and liabilities, confirmed by an accountant.
• A copy of your passport.

When looking for a mortgage loan, consider:
• The bank will insist that the property be registered in your name. The contract of sale, receipt of funds and constitution of the mortgage will happen simultaneously, so an agent from the bank will be present at the signing of the deeds and will forward the money to the seller.
• Mortgages are generally “adhesion” (take it or leave it) contracts which include general conditions. Your lawyer should ensure that your mortgage takes into account consumer protection legislation.
• The property may already have a mortgage on it signed by the seller or developer. If so, the buyer must ensure that he or she will not be subrogated to this mortgage loan (i.e. become responsible for it).

If the buyer does subrogate himself to the loan received by the seller or developer:
• He should require the seller to show a certificate issued by the creditor bank, stating the outstanding balance due.
• He can ask the creditor bank for a more favourable interest rate and term for payment, and if they refuse to do so, may request another bank or entity to improve such conditions. Then the new entity pays the current holder of the mortgage the outstanding sum and moves into its place as a creditor. Such operations are virtually free, being tax exempt, with notary, registry and bank fees strictly limited by law.

A good place to start when looking for a lawyer is the AIPP website or the RICS website. There you will nd listed several Spanish-specialist property lawyers as members – based both in the UK and Spain.

Currency (“FX”) specialist

When transferring large or regular amounts of money abroad the best method is via a specialist currency broker. They will give you a better rate of exchange than using one of the more obvious such as your debit card, high street bank or airport currency shop.

How much? Around 3 or 4% on the exchange rate and usually with no transfer fees. On a £100,000 property an FX rm should save you several thousand pounds.

money-2Frank and Diane nd the process is quite simple: they go to the website of one of the currency brokers (they are regulated by the FCA and as safe as a bank) and are invited to set up a trading account. Then they decide whether to make a “forward contract”, which sets the price of the euros no matter when they are actually transferring the funds. The advantage of this is in determining exactly what they will pay for their property. Exchange rates change every second, and without a forward contract they would never know exactly what it would cost until the day of purchase. Frank and Diane have set a budget of £100,000 and agree to buy euros at €1.38, which they know they can afford. If they purchase for €138,000 but by the time they complete the pound has dropped to €1.36, then to nd €138,000 would have cost them an extra £1,470, perhaps taking the property out of their reach. Buying in advance has saved them that risk.

On the other hand, if the pound strengthens to €1.40 by completion then the house would have only cost £98,570 had they bought the euros at the last moment, and they have lost out. Frank, being more of a risk taker, was rather looking forward to tracking the exchange rate as the process moved on, but Diane convinces him to play safe. Buying a forward contract means they know exactly what it will cost.

And the good thing is, they didn’t need to pay the money when setting the rate, only when actually completing on the purchase.

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BUYING TIP

Gestor

This role goes back to the days when many people were illiterate, and needed a representative to deal with bureaucracy. Now they are helpful not only in dealing with bureaucratic aspects of life, like avoiding endless queuing, but also in, for example, organising the connection of utilities when you have bought the property. A lawyer could also assist with this.

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Disclaimer: This guide was brought to you by AIPP / RICS / RDE




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