Tag: Málaga

Return On Investment Spanish holiday lettings

THE “SUMMER HOLIDAY RENTALS” ISSUE

Written by Francisco Delgado Montilla on 10 July, 2013. Posted in Andalucia, english speaking solicitor, Headline, Income, lawyer, legal advice, Property law, rentals, solicitors Nerja, torrox. No Comments on THE “SUMMER HOLIDAY RENTALS” ISSUE

Spain, summer, holiday, rentals, tax, law — New rules Spanish holiday rentals tax

On the 5th of June 2013, Spanish Law 4/2013 dated 4th of June was published in the Spanish Official Gazette B.O.E. This recent Law states the procedures to relax and promote the rental housing market. By means of this Law, the Spanish Government tries to regulate summer holiday rentals, which are not controlled by the Spanish Tax Administration Office.

These regulations aim at two basic objectives: on the one hand, to change people’s habit in respect of meeting their housing needs—up to now, people were inclined to purchase their usual home and obtain a mortgage. Now, it is a question to be more inclined to live in a rental home. And on the other hand, these regulations aim at combating underground economy of summer holiday rentals.

Nevertheless, these regulations leave summer holiday rentals without legal protection, because they provide that “rentals intended for non-residential use” are not regulated by the Urban Rental Law (Spanish acronym LAU), but by the regulations of Regional Governments according to their own criteria.

Particularly, Andalusian legislation on this respect is very strict and tough if compared with other Spanish regions. For example, owners with less than three rental properties in the same building or residential complex are not included within Andalusian regulations. As a result of that conditioning, a high percentage of owners are prevented from renting their second homes. This is aimed at combating “encroachment” upon the tourist professional field and unfair competition for traditional tour operators.

Alternatively, the new Law imposes strict and controlling measures for this type of summer rentals—the Spanish Tax Administration Office obliges electric companies to submit annually a report including household consumption. This is intended to gather the necessary data to detect those housing rentals that are not declared.

The new Law literally provides the following: “… it is not included within the scope of this law: … the temporary assignment for use of the entire furnished and equipped home to be immediately occupied, marketed and promoted through tourist offer channels for economic purposes, when this property is subject to a specific regime as a result of its sectorial regulations.

Upon consideration of this statement, these regulations may be discussed and interpreted in respect of renting a home for holidays from a private landlord. We consider that this rental is possible, but it is necessary to tell the difference between two types of scenarios: on the one hand, the rental per days with a tourist purpose; and on the other hand, the seasonal rental.

In the former case, it implies a regular commercial use of the rental by a professional, offering other additional services apart from the accommodation. In fact, this kind of tourist apartment rentals was also excluded from Spanish Urban Rental Law (LAU) up to now. They were regulated by the legislation of the competent public bodies.

In the later scenario, we are not dealing with a tourist business activity, but a temporary assignment without additional obligation. Accordingly, this new Law does not seem to affect people under these conditions. In case it does, it may certainly imply a clear restriction of owners’ rights. They may be able to rent their homes per season, whether for a long term or a short term, including per days. In addition, these housing rentals are regulated under the protection of Spanish Urban Rental Law of 1994 (LAU).

Author: Francisco Delgado Montilla, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

NEW TAX LIABILITY FOR RESIDENT TAXPAYERS

Written by Francisco Delgado Montilla on 23 January, 2013. Posted in Income, lawyer, legal advice, malaga, resident, Tax Law, tax resident, taxes. No Comments on NEW TAX LIABILITY FOR RESIDENT TAXPAYERS

New tax liability for resident tax payer in Spain

The Spanish Government passed on the 15th of November 2012 a Royal Decree providing the liabilities to inform about assets and rights located abroad. This information is available at http://www.boe.es/boe/dias/2012/11/24/pdfs/BOE-A-2012-14452.pdf.

This liability only affects resident taxpayers; non-residents are not liable for submitting this tax return.

Any account in financial institutions and any kind of real property or real property rights of ownership shall be declared, as well as any securities, interests, insurances and incomes, which are deposited, managed or obtained abroad.

Taxpayers shall inform about these assets and rights which they own abroad as at 31st of December 2012.

This tax return shall include any kind of assets and rights provided that the individual value for each of them exceeds EUR 50,000. This includes the following:

– All accounts in financial institutions—account balances as at 31st of December and average balances for the last quarter.

– Real property, indicating the purchase date and acquisition value.

– Real property rights of ownership, indicating the opening or cancellation date.

– Securities, interests, insurances and incomes which are deposited, managed or obtained abroad as at 31st of December of each year.

The submission of this informative tax return in successive years is only compulsory when the established limit have increased more than EUR 20,000.

The requirements of this tax liability shall be met between the 1st of January and the 31st of March in the following year to which this information refers.

This tax liability refers to both individual residents and bodies corporate which are liable for corporate tax in Spain. Tax form 720 shall be electronically submitted to fulfill the requirements of this tax return.

The recent approval of this tax liability to inform about assets located abroad represents a new control method for liable taxpayers in order to uncover informal economy, tax evasion and money laundering.

Fines are significant and they do not refer to the legal o illegal way of obtaining those assets, but to the fact that they are declared or not. The failure to submit the informative tax return will be considered a very serious infringement and the corresponding sanctions will be applied. This implies the payment of a EUR 5,000 set fine for each point of information which is not declared and the minimum fine amounts to EUR 10,000. The fine for individual taxpayers amounts to EUR 100 for each point of information and the minimum fine amounts to EUR 1,500, where the informative tax return had been submitted after the deadline without previous notification from the Spanish Tax Authority.

It is worth stressing the heavy fines, including for declaration of imprecise information. The above mentioned Royal Decree does not allow misunderstandings. A single mistake may result in a heavy fine. The declaration of incomplete or imprecise information entails the same sanctions. The fact that these assets are correctly declared in the country of origin will never be considered a ground for excluding the liability to pay the fine.

It is also determined that the tax liability to inform shall not be time-barred in respect to the date of origin of the assets and the application of this rule.

If this is your case, please do not wait any longer and prepare all the necessary information for submission to the Spanish Tax Authority in the following days. If you have any doubt or enquiry regarding this issue, please do not hesitate to contact us.

Author: Francisco Delgado Montilla, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

PROPERTIES ON NON-DEVELOPABLE LAND AFFECTED BY RECENT FIRE IN COSTA DEL SOL

Written by Gustavo Calero Monereo on 6 September, 2012. Posted in Andalucia, assimilated out of ordination, english speaking solicitor, Featured, lawyer, malaga, out of ordination, property law, undeveloped land. No Comments on PROPERTIES ON NON-DEVELOPABLE LAND AFFECTED BY RECENT FIRE IN COSTA DEL SOL

As a result of the terrible fire initiated last Thursday 30th in Coin, an estimate of 100 to 200 properties built on non-developable land within the municipal area of Coín, Mijas, Marbella, Ojén and Alhaurín el Grande were severely damaged and some of them completely ruined.

In this year 2012 the Decree 2/2012 for the regulation of buildings and scattered rural settlements on non-developable land in Andalusia was passed by the Andalusian Regional Government in January to put a stop to the problem of thousand of properties on non-developable land. However, this Decree does not currently apply nor does it mean the legalization of these properties, as it was already discussed on once of our previous article

According to the above mentioned Decree, most of these fire-affected properties are considered assimilated to out of ordination housing, as they were built without construction permits or infringing their condition and the municipal General Plan for Urban Planning PGOU. Therefore, no measures can be adopted to recover their legality, which has been disrupted over time and they cannot either be legalized. The only permission authorized by this Decree is “…works for the repair and maintenance which may require the strict maintenance of the security, occupation and health standards of the property” (Article 8.3 of the Decree).

In the event of some fire-affected properties considered out of ordination—properties built in accordance with the municipal PGOU, but considered “out of its ordination” after the PGOU modification, the permitted construction works shall be provided by the municipal PGOU, which is currently under development in most of the municipalities. The Andalusian Town Planning Act L.O.U.A. shall be also considered as it provides that “…only repair works for the strict maintenance of property occupation or usage…” as well as “…exceptionally partial and circumstantial works may be permitted for the property consolidation…”. It is worth mentioning that only a few of these properties may be under the “out of ordination” condition.

This restriction or limitation to alter or renovate properties on non-developable land is provided by the definition on the Decree for “scattered rural properties”, which are included within the “out or ordination” concept and its variant “assimilated”. In accordance with the case law, this concept has been defined as “constructions to disappear once their useful life possibilities finishes—the “out of ordination” condition aims the usage of property until it finishes over time, ends up as a ruin and naturally disappears. For this reason, the Andalusian regulation always provides the granting of permits for this type of constructions for the strict maintenance and under exceptional circumstances.

The Decree does not provide the legalization of these properties. In fact, part of the status for these “assimilated to out of ordination” properties considered as illegal, makes them to be given a definition and their use limited, since no measures can be taken to protect their legality, so that they are “attacked”, as too much time has elapsed since the were built.

In the event of a disaster as fire, flood, earthquake, landslides, etc…, in which a property is in ruins or very damaged and cannot be used again for the purposes to be occupied as a residence, if we abide by the current regulations on these events, it would be very complicated to grant a construction o repair permit for these properties, since it is against the concept of “out of ordination” and “assimilated to out of ordination” provided by the Decree.

The problem lies in a Decree which does not give any solution to the current legal condition of these properties, which have been tolerated by the Andalusian Regional Government and Town Councils for many years. During all these years, nobody has done anything at all on this matter and for that reason no legal measures can be legally adopted to restore their legality.

According to the first political reactions read on the papers about the burned properties, it seems that each particular case may be studied. In some cases, a forced and exceptional interpretation out of the legal framework would be adopted, so that those families with just one house would be allowed to rebuild and live on their non-developable lands as they did before the fire. The problem of this “shortcuts” to implement what the legal regulations do not provide is that a precedent is set, so that in the future event that any of the owners of the more than 100,000 properties built in non-developable land in Andalusia had a disaster of this kind, aren’t they also entitled to receive a similar treatment from the Public Administration? For this reason, the problem lies in a Decree for appearance’s sake, which does not solve the problem and is currently open to doubt in this type of situations.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

TAX EXEMPTION WHEN BUYING A PROPERTY BEFORE 31/12/2012

Written by Gustavo Calero Monereo on 6 June, 2012. Posted in Capital Gains, discount, english speaking solicitor, Featured, Headline, Income, legal advice, malaga, NON RESIDENT, property law, resident, solicitor, taxes. No Comments on TAX EXEMPTION WHEN BUYING A PROPERTY BEFORE 31/12/2012

Regarding the current financial situation, which is reflected in the drop of property sales in Spain every three months, the Spanish Government has passed a new tax exemption. This exemption tries to promote the sale of properties and may become very interesting for both individuals and bodies corporate considering buying a real estate property in Spain in the short term, whether they purchase commercial premises, homes, offices, garages, plots, storage rooms, etc.

On the 12th of May 2012, the Central Government passed the Spanish Royal Decree-Law 18/2012 of 11th of May on the restructuring and sale of the property assets of the financial sector. This regulation included in its First, Second and Third Final Provisions the tax exemption for bodies corporate and individuals, whether resident or non-resident in Spain. This reform law allows all those buying a property from the 12th of May 2012 till the 31st of December 2012 to pay taxes only on the 50% of the capital gains tax when selling the property subsequently, whether in 1, 5, 10…etc years, while the remaining 50% is free of charges.

This exemption may save an important amount of money, because if a property is currently sold in Spain, capital gains are taxed at 21% for non-residents (19% from 2014), at 27% for resident taxpayers in Spain (21% from 2014) and at 30% for bodies corporate.

Here we present an example: imagine you are thinking about buying a property in Spain considering the current market opportunities; the price for this property may be EUR 200,000; the following eventual scenarios may occur according to the date of purchase when selling this property, for example, in 2017 for a sale price of EUR 270,000:

1) Non-resident taxpayers: EUR 70,000 of capital gains at 19% makes a total payment of EUR 13,000; if the purchase is performed before the 31/12/2012, the total payment would be EUR 6,650.

2) Resident taxpayers: EUR 70,000 of capital gains at 21% makes a total payment of EUR 14,700. If the purchase is performed before the 31/12/2012, the total payment would be EUR 7,350.

3) Corporate: EUR 70,000 of capital gains at 30% makes a total payment of EUR 21,000. If the purchase is performed before the 31/12/2012, the total payment would be EUR 10,500.

Obviously, this tax saving is not definitive in order to decide whether to buy a property or not in Spain, as it is not possible to know whether prices may go down much more nor the gains resulting from the eventual property sale. However, this fact may be a helpful factor to take a decision for those considering buying a property, especially for those non-speculative potential buyers whose main purpose is to enjoy this property for many years; thus, the longer they own the property, the greater the capital gains may be when selling it. Look at the figures and draw your own conclusions.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

TAX EXEMPTION WHEN SELLING YOUR PROPERTY IN SPAIN

Written by Francisco Delgado Montilla on 12 April, 2012. Posted in conveyancing, Featured, Headline, Income, lawyer, legal advice, NON RESIDENT, PREVENTION, property law, Property law, solicitor, taxes, torrox. No Comments on TAX EXEMPTION WHEN SELLING YOUR PROPERTY IN SPAIN

The Spanish Constitution and the regulations (tax and social) developed thereof, regarding the protection of the elderly, guarantee that the elderly will receive a comprehensive system of care and protection that promotes and enhances the wellbeing of this section of the population, within which this article highlights the area of economic protection.

The purpose of this type of protection is to formulate a system of regulations that provide the elderly with the necessary economic resources, which will contribute towards their independence and improve their quality of life.

As principle provisions or benefits within this economic protection of the elderly, we can highlight, among other things: retirement pensions (contributory and non-contributory), supplementary economic provisions, various subsidies and aid, which is granted within the scope of Social Services, as well as certain tax benefits.

In relation to this matter, this article will focus on the exemption from capital gains tax, which, for those over 65, occurs at the time that their habitual residence is sold.

Gains derived from the transfer of immovable property are taxed, for non-residents, at a fixed rate of 19%. For residents, the first €6,000 is taxed at 19% and the rest is taxed at 21%.

Moreover, in the case of the transfer of property by a non-resident, the purchaser shall be obliged to withhold and pay 3% of the sale price as payment on account of taxes which should meet the requirements of capital gains for non-residents and that should be paid directly to the Tax Authorities. Said retention from the sale price is not incurred if the seller has the right to tax reduction for the transfer of property that is their habitual residence, for those over the age of 65.

Article 31.4 b) of Law 40/1998, which regulates personal income tax, establishes that those over the age of 65 shall be exempt from capital gains in the event that the property transferred is their habitual residence.

The only two requirements for eligibility for this tax exemption are the following:

The taxpayer must be over 65 at the time that the transfer takes place.
The transferred property must be their habitual residence. In order that the property be considered a place of habitual residence for the purpose of this tax, two temporal limits are established: 1) it must be effectively occupied by the taxpayer within a period of 12 months from the date of acquisition or from the termination of any building work; 2) it must constitute their place of habitual residence for an on-going period of at least three years prior to the date of sale.

Author: Francisco Delgado Montilla, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

Differences between the Golden Visa and the non-lucrative visa

LEGAL COUNSELING: “IF YOU BUY CHEAPLY, YOU PAY DEARLY”

Written by Gustavo Calero Monereo on 5 November, 2011. Posted in agent’s services, discount, Featured, fees, Headline, Inmobiliario, lawyer, legal advice, malaga, PREVENTION, property law. No Comments on LEGAL COUNSELING: “IF YOU BUY CHEAPLY, YOU PAY DEARLY”

Some months ago, a foreign prospect client, who we have come to know as “Mr. X”, came in our offices. He requested some information regarding sale procedures, legal work and our professional fees.

After the first free appointment, in all honesty he commented to us that he had contacted a professional offering a 40% cheaper fee than ours. However, he would be interested in contracting our services provided that we could offer him a discount.

At that moment, we considered which option to adopt; naturally, we wanted to win this client, but we also knew that the rural property, which he wanted to buy, required a quite complex searching process.

At the end, Mr. X was offered a “courtesy” discount in our fees, which was not close to the low price offered by the former professional. Finally, Mr. X decided to contract the other professional’s cheaper services.

Regarding the current market and low circulation of clients, some solicitors offer great discounts to stand out from competitors and then win a client. Then, considering the aforesaid, why our legal firm did not offer a higher discount to win Mr. X as a client?

The answer is obvious; because such low fees proposed by Mr. X could not pay for the time of commitment for the searching process to buy the above mentioned property in a rural land and then providing full legal certainty to the client.

Within our professional environment of legal services, you may and shall be flexible and capable for adapting to win a client, considering the current situation of financial difficulties and increase of competitors in our sector. However, you should NEVER compete with lower fees, because if the fees for your services are reduced so much, then the quality of your services becomes also poorer.

Furthermore, if we are realistic, no professional may work with the same intensity neither commit the same time when their fees are so low, because production costs and ideal profits would require much more cases which may not be properly and professionally handled, and as a result, a poorer quality counseling service may be provided.

Later on, we knew that Mr. X hired an agent’s services for the legal counseling instead of a solicitor’s. We do not know how his case finished or whether he received a good counseling service. Similarly, if I do not feel physically well or fell pain, I would contact a doctor for a diagnosis and the prescription of a solution, instead of contacting a person who is not a doctor and claims to know a lot about medicine. As a qualified general practitioner, the doctor is better trained and has a legal responsibility. As a result, the patient-client receives more security and reliability, although he or she may pay more for these services.

In all honesty, an agent will never provide the same legal service as a solicitor will, because a solicitor has been exclusively trained by and for law. Solicitors’ training is eminently juridical; this full time commitment and the responsibility of the practice of law—because of the rules and the professional ethics code and good practice; shall always result in a higher quality legal counseling and greater commitment to the client. But I do not go against agents, as I personally know some of them and I am aware of their worth. However, they are not solicitors.

In short, although we were really looking forward to winning Mr. X as a client, we could not afford to reduce our fees so much in order to avoid a poorer quality service. The fact of highlighting our professionalism and tailor-made customer service in our law firm implies a commitment of time and this commitment implies some costs that the client should pay.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

MAKING A WILL IN SPAIN IS ESSENTIAL

Written by Gustavo Calero Monereo on 13 April, 2011. Posted in Featured, Headline, Herencias, Inheritance Tax, malaga, PROBATE LAW, taxes, wills. No Comments on MAKING A WILL IN SPAIN IS ESSENTIAL

Importance Spanish will for heirs of both residents and non-residents

According to our legal and professional experience, there are many reasons for advising our clients to sign a Will before a Notary Public in Spain with regard to their property in Spain.

You cannot imagine how complex it may be for the heirs of a deceased to formally take the assets situated in Spain (properties, current account deposits, insurances, company shares or stakes … etc). when the only Will available is the one made by the deceased in his/her country of origin, or even worse, when the deceased did not make a Will in his/her country of origin.

In order for the heirs to take the said assets when the Will has been granted in the decesased´s country of origin, the heirs must have a number of documents legalised in the said country. For example, if the decesased is British, documents such as the probate and the grant of probate, among others, are required in order to distribute and formally take the property of the deceased in Spain between the heirs, in accordance with the Will made in the deceased´s country of origin.

However, if the deceased had not even made a Will in his country of origin, the procedure turns out to be more complex, as the rules of intestacy in Spain would be the ones applicable. According to which, only the deceased´s descendants and his/her widow/er would have inheritance rights, and the consent of all the interested parties would be required.

Therefore, the importance of making a Will in Spain is based on:

1) Economic reasons: if you make a Will in Spain, the inheritance proceedings will be more economic for you heirs, as they will not have to apply for any documents in your country of origin.

2) Time saving: If you have not made a Will in Spain, it will take longer to obtain all the necessary documents; on the same line, in the absence of a Will on the deceased´s country of origin, the intestacy procedure in Spain will take several months.

3) Family reasons: Easier legal procedures make everything more agile and less stressing for the heirs.

To finish with, I must remind you that inheritance in Spain is subject to Inheritance Tax. Different regulations apply in each region. In Andalusia, there are a number of benefits and exemptions for a resident who dies in Andalusia, provided certain requirements are met. Therefore, residing in Andalusia (which differs from fiscal residency or from obtaining the residency card) can save a lot of money tax wise. I can assure you that I know of many people who have been living in Andalusia for a long time, and whose heirs will not be able to receive such Inheritance Tax benefits and exemptions for not having seeked professional advice.

In conclusion, if you have any assets in Spain, always make a Will and get professional advice. A professional will study your personal and family circumstances properly in order to draft a Will that suits your interests, minimising at the same time the tax implications for your heirs.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)

NEW STANCE ON DWELLINGS BUILT ON RUSTIC LAND IN LA AXARQUÍA

Written by Gustavo Calero Monereo on 16 March, 2011. Posted in fuera de ordenacion, Headline, Property law, undeveloped land, urban plan. No Comments on NEW STANCE ON DWELLINGS BUILT ON RUSTIC LAND IN LA AXARQUÍA

Legalizing process of rustic land Axarquía Málaga (houses without building license or with invalid building license)

In la Axarquía, as well as in many municipalities in Málaga and Andalucía, there are at present thousands of properties which are built on land not designated for construction. These properties have been built without any building permit whatsoever and no responsibility may be claimed as the criminal or administrative actions that would have applied, have lapsed. We refer to thousands of dwellings which will remain built for many years, and their use and enjoy will never change.

From a logical point of view, and why not mention it, from an ecological one, the most coherent thing to do, in these cases, would be to try to legalise them. This would imply setting minimum requirements for them to follow, and providing the dwellings with infrastructures, such as sewage systems, that would avoid damaging their surroundings, since regardless of whether they are legalised or not, they will remain occupied.

Regarding dwellings built on land not designated for construction, but where a building permit has been granted (those permits may be challenged and declared null at any time), we do not see the point in bringing hundreds of administrative and contentious actions to declare them void. As proceedings will take endless time to be settled, and whereas eventually a few orders may be enforced, some demolition orders will never be put into effect. In addition, it will affect many homeowners who will claim pecuniary liability to the Local Council, and also, in my view, to the Junta de Andalucía (Andalusian Regional Government).

However, given the current situation of insolvency of the government institutions and their tendency to delay proceedings, it will be very difficult for the homeowners to obtain compensation.

As we stated in our October article “Málaga, Axarquía and Urban Problems”, this situation has been reached due to a total lack of interest on the part of the Local Councils and the Junta de Andalucía, in the exercise of their duties in the last years, even when they were totally aware of the said irregularities.

And apart from all these consequences, it should also be added, the damage that starting hundreds of legal proceedings, with subsequent demolitions, and owners claiming compensation, etc, can do on residential tourism, mainly foreign, creating, thus, a situation of complete legal uncertainty. This kind of tourism and the economy of the area would be affected and probably driven to the wall.

Therefore, the decision of the Junta to approve a Decree in the next six months to legalise this situation of urban chaos, considering the starting point of the situation, is the most logical and coherent stance to adopt. And we think the cost “can be assumed” by the homeowners affected, as, at the end of the day, it will be to their own benefit, to the benefit of the government institutions involved, and on the ecological interest of the area where they are situated, it will also lead to the economic progress of this area.

We will follow this issue with expectation over the coming months. In any case, considering the circumstances, this change of stance of the Junta de Andalucía is a good piece of news.

Anyway, as everyone knows, when elections approach anything can happen.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)

OCEAN VIEW PROPERTY, PROBABLY ANOTHER CASE OF PROPERTY FRAUD IN MALAGA

Written by Gustavo Calero Monereo on 16 December, 2010. Posted in developer, Featured, fraud, legal advice, malaga, property law. No Comments on OCEAN VIEW PROPERTY, PROBABLY ANOTHER CASE OF PROPERTY FRAUD IN MALAGA

Last Monday, the 13th of December, I read an article in the newspaper EL MUNDO in which they inform that about a hundred people from Northern Ireland were victims of a property fraud through the Ocean View Properties agency. It was supposed that the development company would build a housing estate in a plot located in Estepona (Malaga). Apparently fraud people made important payments on account of the purchase price in 2005 and 2006 for their future homes in Spain.

Concerning these off-plan property sales, directly from the developer (new property), apart from confirming whether the developer that sells is the owner of the buildable plot, and the relevant Town Hall has approved the urbanization project of this land, the buyer should request the immediate handing of the bank guarantee along with the interim payments that the buyer are going to carry, guaranteeing every payment for the building process until the granting of the purchase title deed. In this way, if the urbanization project may not be completed because of an administrative cause, because of the insolvency of the developer or any other cause non attributable to the buyer, then he can get back every payment made by enforcing this bank guarantee.

In this case, it is obvious that buyers and their solicitors did not require these bank guarantees to the developer. Now, the buyers should associate each other to force in the judicial proceedings, relying on a competent legal team that may advice them properly. It is essential to bring a lawsuit against them (civil action) or criminal charges (criminal action depending on whether it is considered a fraud or not) expeditiously so to call for the preventive seizure of all the goods that the developer may have, and all the administrators’ goods in any country, to study if the administrators have other companies opened so to attack all these goods.

When trying to get back money, the judicial proceedings is very long, so fraudsters or possible insolvents can hide or squander their patrimony and the trail of the money would be lost. The result of it may not guarantee the success.

Conclusion, if you are going to buy off-plan directly from the developer, make sure of who is the owner of the plot, of the urbanization project, and, specially, do not pay anything without receiving the corresponding bank guarantees for these interim payment until the granting of the purchase title deed. If you have signed a purchase private contract with a developer and you have not still the bank guarantees, it is time to require them, because the financial situation of the developer is complicated and, in short, you never know. Our advice is, if in doubt, you consult a solicitor in order him to analyze your situation.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)