What Your Valencia Property Lawyer Does

It has been an interesting week in Valencia Property land. Fallas is still ongoing as we speak and we are effectively off work for a couple more days. As this is me Graham writing this, I wrote it while well away from the mayhem of Fallas up in Asturias in Northern Spain. Why was this week interesting though? We sent people away empty handed a couple of weeks ago and we may be doing it again this week. One client made an offer on a place for 700k plus at just a few per cent below asking price and it was rejected! We had another client making their first visit to the place they had reserved after seeing it listed and, phew, they loved it on arrival. We also had three other offers accepted and are now in the process of putting together paperwork and deposit contracts. Busy.

Today though we are talking about lawyers. We have written before about choosing a lawyer for your Valencia Property purchase and you can read the article at the link. Within that article we talked about how to choose your lawyer and the whole process of doing that. What we didn't talk about is what they do and this is important because you don't get to see it. All the work is done in the background and the only communication you may have with the lawyer is them telling you "It's Ok to pay the deposit now" and "Final date for the notary can be set now" or in some cases simply a thumbs up to any questions you may have We maybe should have called this article "What your Valencia Property lawyer ACTUALLY does" but we thought that maybe that was a bit on the nose as most people's impression is contained in the picture below.

Now this post is inspired, as soooo many are, by misinformation on Facebook. Who knew? So in order to not embarrass the person who put up the post there is no screenshot this time unlike in one of our Facebook Facepalms last week and also it was a long post not fitting in one screenshot so I'm paraphrasing but...

"I recently bought a place in Valencia in the mountains to the North West and I didn't use a lawyer because the agent told me everything was OK with it as they had sold it a few years ago. Also I had asked people on here (Facebook) what I needed to ask and got a lot of great answers, thanks.

Well, things have moved on and I have a few questions. The property is on "rustic" land (Their parentheses not mine. GH) and 80m is declared on the deed I received but my house is much bigger than that. Our plot is 2000m2 more or less, the catastro and registry don't agree, and the pool doesn't appear on the deed either. I was told best not to mention it in the notary. Can I sort this out now? The owners weren't willing to do it because they were told it was going to cost around 4k to sort everything. That seems reasonable to me"

Now for me the post was just a whole bunch of red flags as opposed to a paragraph but if I had just a single reaction to it this would be it.

Let's get into the juice of it then we'll talk about lawyers and why you need them before you buy not after the fact.

  • Mountains to the North West. Probably the Sierra Calderona, a national park and protected land.
  • The agent told me everything would be ok...
  • I asked people on Facebook... OK, that's obviously the best thing to do without a doubt...
  • Rustic Land. In order to build on rustic land you need 10,000m2
  • 2000m2... see previous point.
  • Catastro and Registry don't agree. They often don't but on less than 10,000m2 of rustic land in a national park... ouch.
  • The pool doesn't appear. And it probably never will now
  • Don't mention it in the notary... Isn't this the biggest red flag of all?
  • Can I sort it out now? Probably not
  • Cost around 4k? No, it's going to be considerably more expensive and may involve semi demolition...

How many of these issues could have been avoided using a lawyer? Well, stupid is as stupid does but the lawyer would have said the following I suspect.

"You can buy it if you want but I need you to sign this document stating that I have told you that it is an illegal property, have informed you of that illegality and told you that it may need to be partially demolished at some stage in the future and that the pool is also illegal. You will also need to realise that when you come to sell you will have the same issues because you cannot sort them out for 4k, 40K or 400k"


What Does The Lawyer Actually Do Then?

Here's the thing, all lawyers should do the following, most do, many won't and some of the ones who do, don't do it well. Is that clear?


Check Title

Does the person who is selling you the house or apartment have the right to sell you it? Is it theirs and can they sign it over to you at the notary? This may seem easy enough but it can be complicated at times especially in the case of inheritances for example. In these cases there may be family issues, the previous owner may have died without a will and there could be challenges to the will even if there is one.


Compare Registry and Catastro

As in the case above there is often (Read always) a difference between the metres of the property and the land in the Catastro and the property registry. It's the registry that is the most important for making sure parts of the property exist, for example the pool and the extra metres but if they are on the Catastro but not the registry then oftentimes a new build declaration, or even an old build declaration can be done to make the two match. This should be the responsibility of the seller. However, often they don't want to do anything about it and make it part of the deal that they have no responsibility for it. Your lawyer needs to fight your corner on this.


Ask You Or Your Agent About the Property

This is important because the lawyer doesn't get to see the property of course. It's especially important when the property is a house as opposed to an apartment as it's quite difficult to add an extension or a pool onto an apartment but not so difficult to a house. Why should they ask you? Because you have seen it and if both the catastro and registry state that the house is 80m but it's really 400m then how is the lawyer supposed to know that without being told? It might not necessarily be a problem to get the two places to match but it can be.


Check in the Council For Any Charges or Issues

This can be the slowest part as many councils are very slow in answering the questions the lawyer may ask. The questions are about charges, legality, connections, habitability certificate or second occupation licence and infractions. Usually, and because of this, the Arras contract and payments may be dependent on the property getting a clean bill of health from the town hall but as that can take a long time to arrive payment can be made beforehand but it will be returned if there is a problem, not double just the whole arras amount. With an apartment in the city the process is quick and easy, with villages and towns not so much.


Tell You About Tax Obligations

Sometimes you may buy a property where the tax obligations are not what you expect. This might be because you have an absolute bargain where the owner is only asking you for 150k for the property but it's huge and there is something called the "Reference Value" for tax purposes which is a rather arbitrary figure of value placed on the property by the property registry. If the reference value is considerably higher than the price you are paying then your tax on purchase will be a percentage of this reference value not the cost price.

Is this fair? Maybe, maybe not. We tend to think not but this system exists to stop pèople underdeclaring the value of their purchase to pay less tax and paying a part of the purchase in cash. Spain used to be a cash society, not so much these days. However, many owners will ask for some money in B and don't realise that the World has moved on a bit from there.


Check for IBI Payments

The lawyer checks that the last four yearly council tax payments have been made, the IBI payments. This is because even if ten years of payments haven't been made for whatever reason the owner is only responsible for the last four years but if you buy the property without this having been checked you become responsible for those four years of payments, not the previous ones.


Check for Mortgages

The lawyer checks to see that there is no mortgage on the property. Sometimes there is of course and on the day of purchase the mortgage is paid off and the seller gets their cheque for the excess amount. However even when a mortgage has been previously paid off there may still be a charge outstanding which is the registry cancellation of that charge. As an example one I bought last week had no mortgage on it but it was still inscribed in the registry so the lawyer and the notary estimated the cost of lifting this charge in the property registry and retained that money from the seller to pay off the charge. This is known as a retention.


Check for Other Debts

Apart from mortgages there may be other debts, second charges guaranteed by the property or any type of personal debt where a charge has been levied against the property. Just like the mortgage this is not an issue if known about and a retention is applied when a charge appears. If that isn't done then the charge will still appear against the property and you cannot buy it free from charges or encumbrances.


Check Community

Is there a community? (HOA for our American friends) If there is then is the owner up to date on payments, is the property liable to have any upcoming costs associated to it, is the building safe, and a host of other questions arise. The community needs to supply a piece of paper stating that the seller is in good standing and what the situation of the property is. If the owner is behind on payments to the community then there are two ways to solve it, a retention or they pay before final signing.


Put Together the Arras Contract

The arras contract is the deposit contract for purchasing the property. We went through it step by step in this post. It should include all aspects of the purchase including anything that the lawyer has found in the searches that may be relevant, whether furniture and fixtures and fittings are included where relevant and the length of the contract, the financial obligations and details of when the final signing will take place. The lawyer puts this together after consultation with both parties and the agents.


Inform You of the Costs of Purchase

The lawyer needs to tell you how much money you will need in your account on the day of the purchase to complete the deal. This includes not only the money left to pay the owner but the taxes, notary, registry and gestor costs and of course the money to pay your agent. You need to communicate this to your bank if you haven't given a Power of Attorney to the lawyer, see below, so that they can prepare bank drafts and/or transfers. These dfrafts need to be picked up on the morning of the sale or beforehand. Sometimes the bank will send a gestor with the drafts and or to make the transfers directly from the notary's office.


Coordinate Everything With the Notary

The lawyer makes sure that the correct paperwork is available at the notary's office and that the notary knows the terms and conditions. They make sure that everyone is aware of the date of the signing and the time to be there. The notary will still appear before the actual signing for the read through of the deed to make sure there is nothing there not agreed to by the two parties before leaving the room while the final deed is put together then returning when it is ready to be signed by all parties.


Turn Up at the Purchase

Just in case something goes wrong and to mediate on any sticky situation that may arise the lawyer should turn up at the purchase (Sometimes the lawyer's secretary will do this) This is important to tick off the registry and catastral details along with the correct address and more on the deed. Believe it or not many lawyers don't do this especially if you have contracted a lawyer from a different part of the country. If they do come down from Barcelona or Madrid for example, then bear in mind you are also paying for their journey, time and services for a whole day.


Solve Problems and Answer Questions as They Come Up

During the process of the purchase which can be anything from a week up to 90 days or even more in special cases, the lawyer should be available to answer questions and solve issues that may come up with the purchase, and things do come up. If your lawyer is standoffish and demands mails which they then take their own sweet time in answering or don't answer at all then they aren't very suitable for the job... and yes we know lawyers like that and when someone uses those lawyers we facepalm and expect the worst. If you want to know who we avoid before contracting a lawyer feel free to ask.


Power of Attorney (Optional)

For clients from abroad especially those from across the Atlantic we suggest giving your lawyer a full power of attorney to be able to sign everything on your behalf. It's expensive to arrange a flight over at short notice to sort something out that could easily be done by your lawyer with a POA. Equally the date of signing may not be suitable for you either so having someone with a POA is important in these cases. Some people are worried about giving a lawyer a full POA and we wrote about this in the post below to put your mind at rest.


Immigration and Residency Expertise

For our clients there is more to know than just the ins and outs of the property purchase. There are many real estate lawyers who know nothing about the visa, residency and immigration issues and they should be avoided at all costs because they could throw a spanner in the works of your move. We only work with lawyers who can do everything required for our clients in their own language normally, ie the lawyers speak English, have property knowledge and also immigration and residency knowledge. It means you avoid having to use two lawyers because they will inevitably butt heads.


Conclusion

Firstly, as a buyer, use a lawyer. Secondly don't expect the lawyer to keep you totally up to date with all of these jobs as they tick them off. They should be busy making sure everything is in place. A good communicative lawyer is best but don't call them every day to ask "Are we there yet". And you know that thing about never using a lawyer recommended by the agent, that's the selling agent or the developer. Never use their recommended lawyers as they aren't on your side. As buyer's agents it's somewhat different.


Property and Description of the Week

Almost 50% of our client are from the US these days, and so we have become very familiar with what they would like in a property. Big bedrooms, big living areas, big showers. Just big in general really. Some spend most of their time visiting properties just plain mystified by how we Europeans can possibly live in these dinky little apartments.

Y’call this a bedroom? My illegal immigrant poolboy’s shack has bigger bedrooms than this, etc etc

Anyway, this apartment in the centre of Valencia city won’t disappoint. 226m2 shared out in a 3-bedroom apartment. Best quality finishes, natural wood floors, heating, air conditioning and lighting integrated throughout and it is in an excellent area of the city, just a couple of minutes’ walk from both the city centre and the riverbed.

So to our American clients, this could be the one for you. whatever it is you need all that space for, you’ll have plenty here. To run active shooter drills, store all your healthcare invoices, launch a half-arsed attempted coup to overthrow your country’s democratic institutions – whatever it is, you’ll be able to stretch out and do it in style here.


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