http://www.escobedo.net/index.php/site/index/ Practical legal information and advice on Spanish Law en jose@escobedo.net Copyright 2009 2009-12-31T19:15:40+00:00 http://www.escobedo.net/index.php/site/escobedonet http://www.escobedo.net/index.php/site/escobedonet#When:19:15:40Z WELCOME TO MY BLOG. I am an Independent English Speaking SPANISH LAWYER based in Tenerife, Canary Islands, Spain.  About me | Where is my Office | Web map | My archives | I provide comprehensive Spanish legal & litigation services to all our English speaking clients. I am a licensed Spanish lawyer with 20 years practice in the Canary Islands, Spain. CLICK HERE TO ACCESS TO MY BLOG IN SPANISH In my blog you will find free legal information about many subjects that might affect your life, investments in Spain i.e. (conveyance & business laws, taxes, NIE, residencia, permits, spanish wills, inheritance laws, debt recovery, claims, law enforcement and much more). If you are interested in any matter relating to Spanish Law, this is the ideal site to find the information you are looking for.  My web site is directed towards anyone who does not speak Spanish but who needs an immediate answer to any practical LEGAL issues which have a bearing on their daily lives, business or investments in Spain. I am constantly updating my blog with free llegal information, useful links, news, the most recent spanish laws. Our blog is published in a straight forward style, it is easy-to-understand and we provide a great deal of practical legal information. The information provided is ideal for anyone (e.g. individuals, foreign professionals, entrepreneurs, etc.) with either economic interests in Spain (who wishes to find out more about their legal position. Reports, Property Law, 2009-12-31T19:15:40+00:00 http://www.escobedo.net/index.php/site/where_theres_a_will_theres_a_way http://www.escobedo.net/index.php/site/where_theres_a_will_theres_a_way#When:20:29:00Z Here you may find usefull advice, hints, tips and lots of info. regarding wills1. Who can make a will in Spain? As a general rule, the testator must be, at least 14 years of age, and legally capable to make a valid will. 2. Types of wills 2.1. Holographic will Anyone who had come of age can make this type of will. It shall be written entirely in the handwriting of the testator and shall be dated and signed by him. It must be verified as genuine before a judge. It is required that the handwriting of the decedent be authenticated by witnesses, who must be the decedent’s closest relatives. Once it is verified, the judge will enforce the will’s contents. The estate shall be distributed in accordance with the provisions of the will. 2.2. Open will This is the usual form of will for most people in Spain. It is made before a Notary, who shall keep the original document in his files. The Notary will send a notification of the will to the Central Registry of Spanish Wills (Registro Central de Última Voluntad) located in Madrid. The Notary may request the presence of 2 witnesses, who can also be required in case the testator is blind or illiterate. It must be shown that a minor, a person who is blind, deaf, dumb, and the spouse and closer relatives of the testator cannot act as witnesses. 2.3. Closed will Executing this will you will keep secret your provisions putting them in an envelope. You shall declare before the notary that your provisions are contained in the envelope and declare whether you have written them by yourself or it has been written by a third person, also you shall declare whether you have signed it or it has been signed by a third person for you. The notary then seals the envelope and signs it, then he files it and send a notification of the will to the Central Registry of Spanish Wills (Registro Central de Última Voluntad) located in Madrid. This will cannot be made neither by blind nor by illiterate persons. 3. The Central Registry of Spanish wills Every will has got a certification number in Spain which is kept on file to the Central Registry of Spanish wills (Registro Central de Última Voluntad) located in Madrid. The certification numbers of all Spanish wills are kept in this place in order to ensure that the estate neither be sold nor transferred illegally. A legal copy of a will can always be found there. In case you don’t know whether the decedent made a Spanish will or not, or if the will is lost, you can request a certificate to the central registry under the deceased person’s name. If the will exists, the registry will provide you with the number and the name of the notary who made it in the first place,this will enable you to get a copy of the will from the notary. The certificate can only be applied within15 days after the testator’s death. 4. Revocation of the will To revoke a will the testator must have the same mental capacity as it is required in making one. The provisions made in a will can be revoked even when the testator had previously declared his intention of not revoking these. A will may be revoked by the execution of a new will, which may amend, replace or make ineffective all prior wills. It can also be revoked when the testator declares before a notary his intention to cancel or keep any of the provisions of the will. The alterations shall be made under the same conditions as in making the previous will. If there is more than one will, only the last one made is legally valid. You can be informed about the number of wills the decedent made by requesting for a certificate to the Central Registry of Spanish Wills. 5. Nullity of will A will is null and void in any of the following cases: The “joint will” with provisions agreed upon by two or more persons. If the testator had no legal capacity to make it. The will made by a testator who is subject to domination, fraud or duress. When the testator designates as beneficiary a person who is unknown and cannot be identified. When the testator designates as beneficiary a person who is not legally capable. If the testator had revoked the will. An olographic will is null if it is not filed before the Judge within 5 years after the testator’s death. A closed will is null if its covers or the envelope containing it are damaged, or if the signatures are deleted… unless it can be proved that the testator damaged his will during a state of mental derangement. Reports, Property Law, 2009-03-14T20:29:00+00:00 http://www.escobedo.net/index.php/site/do_you_have_all_the_necessary_documents_for_your_spanish_property http://www.escobedo.net/index.php/site/do_you_have_all_the_necessary_documents_for_your_spanish_property#When:15:31:01Z Foreign property owners often do not realize that they haven´t got all the right documents for their property until they come to sell ... so why wait until the last minute to check through your papers. If you are a home owner, take a minute to check through our checklist below and avoid problems and delays when it comes to selling your property. These are the property documents and information that you must have when you legally purchase a property: 1. TITLE DEEDS (COPIA AUTORIZADA DE LA ESCRITURA): many foreign owners confuse the hard copy of the deeds (ESCRITURA) with the authenticated photocopy (COPIA SIMPLE). You must have the original title deeds which have been stamped and signed by the Property Ownership Registry (Registro de la Propiedad) and the Tax Office (Hacienda) 2. CEDULA DE HABITABILIDAD (certificate of occupancy): you need this document to contract electricity, water and gas supplies, and it proves that the property is legal and habitable 3. CATASTRO registration (Spanish fiscal land registry) 4. NIE (identity number for foreigners) 5. Proof of payment of taxes: FORM 600, FORM 211, FORM 214 and Plusvalia (capital gains local tax) 6. NEW DEVELOPMENTS: insurance policy for major defects on new constructions (10 year cover) 7. Architect´s certificate of completion of building works 8. Complex statutes 9. Payment of local taxes: refuse collection and IBI (annual Spanish property tax) 10. Annual taxes (form 214). Wealth and Income tax Finally, it is a good idea to do a search for your property on the Property Ownership Registry to make sure that there are no outstanding taxes or debts to be paid. You should remember that any tax liabilities must be cancelled within 4 years of purchase so that your property has a clean record. Jose Escobedo Abogado - Lawyer jose@escobedo.net C.C San Eugenio local 81 Playa de las Américas, Tenerife Reports, Property Law, 2009-03-14T15:31:01+00:00 http://www.escobedo.net/index.php/site/information_on_inheritance_matters_and_death_duties_for_non_residents http://www.escobedo.net/index.php/site/information_on_inheritance_matters_and_death_duties_for_non_residents#When:15:20:00Z 10 simple steps to avoid legal problems in Spain. A) DOCUMENTATION REQUIRED I will now try summarize the necessary documents and precautions to be taken in case of sudden decease of a non resident owner of a property in Spain: 1) Submit an inventory of assets to the Spanish tax office. You have to pay the death duties in Spain (inheritance tax) within six months after the decease date otherwise a surcharge will be imposed consequently prepare yourself to lodge an inventory of properties and assets to the Spanish tax office within the said time scale. 2) Get a Death certificate – legalized and translated officially with the Apostille of Foreign Office in London is a requirement in Spain 3) Get an authenticated photocopy of the Spanish Will if available 4) Alternatively an authenticated and legalized copy of UK Probate will be required. 5) A Copy of the Title Deed is also required 6) Last receipt for Rates (Impuesto sobre bienes inmuebles) 7) With all the above docs you will have to sign an Inheritance Deed in Spain consequently, this is the moment to contact a local solicitor. 8) Power of attorney to the solicitor will be required if you are not coming to Spain to sign the abve mentioned document 9) NIE numbers (Spanish Tax payer-  identification numbers) of all beneficiaries of th estate of the deceased. 10) Your solicitor will take care of getting a Spanish Certificate of Last Will ADVICE: It is not convenient to sign any purchase/sale undertaking contracts untill all the above documents are secured and made available to the Spanish authorities. This will prevent many legal problems with potentil buyers. B) INHERITANCE TAX I.- APPLICABLE LEGISLATION. Law 29/1987 (Law 29/1987), of 18 November on Inheritance and Donations Tax. Royal Decree 1629/1991 (Real Decreto 1629/1991), of 8 November, approving the regulations on Inheritance and Donations Tax. Law 21/2001 (Ley 21/2001) of 27 December, regulating the tax and administrative measures of the new system of finance for Autonomous Communities under the Common System and Cities with Autonomy Statutes. II.- TAXPAYERS. All heirs, legatees and beneficiaries who do not have their usual residence in Spain are liable to this tax; residents in Spain are also liable for this tax when the person making the bequest (deceased person) did not have their habitual residence in Spain. Usual residence is determined in accordance with the Income Tax Regulations (Legislative Royal Decree 3/2004 (Real Decreto Legislativo 3/2004).  III.- SELF-ASSESSMENT FORM. As a general rule, the form to be used is Form 652 “Inheritance Tax. Simplified Return”, which can be obtained from the Tax Agency Branch in Madrid, Sale of Forms section (Venta de Impresos) at C /. Guzmán el Bueno, 139, or can be downloaded directly from the Tax Agency website (www.agenciatributaria.es / templates and forms / returns / other taxes). IV.- WHERE TO PAY. When tax is payable, the self-assessment deposit document should be taken only to one of the financial institutions that accept tax payments (Banks, Building Societies and Credit Co-operatives), where you can pay in cash or by debiting your account. The tax identification labels provided by the Tax Agency must be attached to the self-assessment form. If a taxpayer who is required to make payment does not have a Tax Identification Number (NIF), they must take the following steps before requesting the labels. Non-resident foreign national taxpayers: They must apply for a Foreign National’s Identity Number (N.I.E.), either from the Police General Directorate or a Police station that processes foreign nationals or from one of the authorised Tax Agency offices. The documents required to apply for an N.I.E. are: An authenticated photocopy of the passport of the taxpayer (the heir). A photocopy of the Deeds of Acceptance of the Inheritance. A N.I.E application form. In the event of a taxpayer acting through a representative, the authorisation or power of attorney. V.- WHERE TO FILE THE RETURN: Once the tax has been paid, in cases where there is tax to pay, or even where the tax due is negative, Form 652 for self-assessment should be sent with the relevant documents as shown in the next section to the Special Branch of the Tax Authority of Madrid, Document Reception (Recepción de Documentos). Guzmán el Bueno,139, 28071, Madrid). VI.- DOCUMENTATION TO PRESENT. Compulsory documentation: The original and a certified copy of the Deeds of Acceptance of the Inheritance. In the absence of this, the Inventory of Assets and Heirs, in duplicate, showing the identifying details of the person making the bequest and the heirs, an address for correspondence, a detailed list of the assets and rights included in the inheritance with the value of each at the date of death, together with any charges, debts or costs, the deduction of which is being sought. A copy of the Death Certificate. A copy of the Certificate from the General Registry of Wills and Testaments. A copy of the Will or the Declaration of Heirs. Other documentation to provide, if relevant: A copy of the IBI (Property Tax) bill and of the deeds of acquisition of the property, or in the absence of this the Property Register Certificate. A copy of the insurance contract or a certificate from the insurance agency. A bank certificate showing the balances in all accounts and deposits and/or securities deposited at the date of death. Documentary evidence of the costs, debts, taxes and charges that might be deductible, together with the age of the heirs. A copy of the passport, identity card or certificate of Foreign National’s Identity Number (NIE) of the heirs. Copy of the documentation of the vehicles that are the object of the inheritance (technical specifications, driving licence). IMPORTANT NOTICE If the documents were issued by civil servants or authorities in other countries, they must be accompanied by the Hague apostille and a sworn translation of the documents. VII.- FILING DEADLINE. In the case of acquisitions resulting from death, including those of beneficiaries of life insurance policies, the filing deadline is 6 months from the date of death. VIII.- APPLICATION FOR THE ADMINISTRATION TO CALCULATE THE TAX PAYABLE. If the taxpayer does not choose the option of self-assessment, they may opt, in the period indicated in the previous section, to request that the Administration calculates the tax for them. In this case, they should send the form requesting that the tax be calculated, accompanied by the documentation detailed in section VI, to the following address: Delegación Especial de Madrid de la Agencia Estatal de Administración Tributaria. Oficina Nacional de Gestión Tributaria. Sucesiones no Residentes. C/ Guzmán el Bueno, 139. 28071 Madrid. Jose Escobedo Abogado - Lawyer jose@escobedo.net C.C San Eugenio local 81 Playa de las Américas, Tenerife   Reports, Tax law, 2009-03-11T15:20:00+00:00 http://www.escobedo.net/index.php/site/holiday_rentals_in_the_canary_isles_questions_answers http://www.escobedo.net/index.php/site/holiday_rentals_in_the_canary_isles_questions_answers#When:22:52:00Z Since the publication of Law 7/1995 of 6th April, this matter has aroused a great deal of controversy among apartment owners in tourist areas throughout the Canary Isles.1. Can I rent out my apartment in the Canary Isles to tourists? Since the publication of Law 7/1995 of 6th April, this matter has aroused a great deal of controversy among apartment owners in tourist areas throughout the Canary Isles. There is no law in our legal system that expressly prohibits the letting of property in the Canary Isles. However, we should bear in mind that given the special strategic situation of the Canaries as a tourist destination, certain types of rentals and particularly those destined for tourists are protected by our Autonomous legislation. In view of this, Law 7/1995 of 6th April for the regulation of tourism in the Canary Isles distinguishes between two types of rentals (art. 42 section b): a) Private rentals regulated by state legislation (Law 29/1994 of 24th November for Urban Rentals and Civil Law): house rentals and rentals for non-residential uses (second home, short-term stays, and business premises) b) Holiday rentals for tourist accommodation regulated by Law 7/1995 of 6th April for the Regulation of Tourism in the Canary Isles. Given the vital importance of tourism in the Canary Isles, this second group enjoys special administrative protection. Because of legal requirements, holiday rentals to tourists are subject to the principle of unity of exploitation and to stringent fines when properties are rented secretly or illegally without the compulsory administrative permits which allow holiday rentals. 2. What does the principle of unity of exploitation refer to? This is defined in Article 38 of Law 7/1995. According to this Law, unity of exploitation is understood to be the requirement that a sole corporate entity be responsible for the holiday rentals in each residential complex or group of constructions, buildings or part of these, corresponding to any of the accommodation possibilities envisaged in this Law. Only those “companies” who are registered with the Canarian Government and who hold the compulsory permits may let holiday apartments for tourist accommodation in the Canary Isles.  Private owners may only offer their own apartments through registered tourist companies. This does not mean that private owners are not allowed to let their properties in accordance with national legislation, merely that they may only do so for “non-touristic” purposes. 3. What is the definition of a tourist? Article 15 of the law defines a tourist as anyone who uses tourist establishments or goods or who receives or contracts the services offered by this type of company as a client. Therefore, if we consider a tourist to be someone who travels for pleasure to a tourist destination and who stays in an establishment where they receive certain services (accommodation, food, excursions, etc.) for a short holiday period, we must logically exclude those people who stay in our apartment without paying either because they are family or friends. Consequently, although their property is located in a tourist complex, nothing prevents the owner using it for whatever purpose, as long as it is not used offered to potential clients/tourists in any way (agencies, Internet, media, etc.). Evidently if we want to rent our property as holiday accommodation for tourists, we must offer it to the company who holds the exploitation licence in the complex, community or building where the apartment is located. 4. What are the fines for renting holiday apartments to tourists illegally? The following scale of fines is imposed for the illegal renting of holiday apartments: a) For minor offences, up to 1,500€. b) For serious offences: between 1,500 and 30,000€. b) For very serious offences: between 30,000 and 300,000€. Very serious offences for tourist activity are those where: holiday apartments are being let to tourists by anyone who has not registered with the General Registry of tourist companies, activities and establishments or who does not hold the compulsory licences and permits for the undertaking of tourist activities as regulated by the Law for the Regulation of Tourism. Jose Escobedo Abogado - Lawyer jose@escobedo.net C.C San Eugenio local 81 Playa de las Américas, Tenerife España (Spain). www.escobedo.net www.spanishlaw.info Reports, Property Law, 2009-03-07T22:52:00+00:00 http://www.escobedo.net/index.php/site/capital_gains_for_non_residents_following_the_sale_of_property_in_spain_all http://www.escobedo.net/index.php/site/capital_gains_for_non_residents_following_the_sale_of_property_in_spain_all#When:22:49:00Z Questions and answers for the most common queries.1. Do we have to pay Income Tax in Spain when we sell our property? The answer is yes. If you owned a property which was sold in Spain and also live abroad, you will be considered a tax payer by the Spanish authorities despite being a non-resident. In the eyes of the Spanish Tax Office, any non-resident person or company earning income in Spain is a tax payer. The sale of a property in Spain is considered to be taxable. 2. How can non-residency be proved? Non-resident status can be proved by means of a certificate providing proof of residence in another country issued by the tax authorities of that country. These certificates are valid for one year. 3. What type of income is taxable in Spain? In relation to the properties of non-residents situated in Spain, all income deriving either directly or indirectly from these properties or the rights relating to them (territoriality criterion) are taxable. Let us look at some examples: a) Simple ownership of property is subject to non-resident income tax (we shall examine this in another article). b) Private or holiday rentals are subject to non-resident income tax (we shall examine this in another article). c) The sale of any non-resident property situated in Spain is subject to non-resident income tax (we shall look at this below). 4. What tax rate or percentage of gains is taxable in Spain? In the case of gains obtained by a UK resident as a result of the sale of property located in Spain, the Spanish Tax Office has the legal authority to tax the capital gains. (For example, a UK resident earns money for the sale of a property located in Spain. The gains will be taxed in Spain at the rate of 18%, after 1/1/2007; and at 35% for sales carried out before 31/12/2006). 5. How is capital gains calculated for the sale of a property in Spain? The gains will always be determined by the difference between transfer and purchase price. A) The purchase price will comprise the price which the property being transferred was purchased for, adding any expenses and taxes paid when it was purchased. Depending on the year when it was purchased, this price will be corrected by applying certain actualisation coefficients which are established annually by the National General Budgetary Law. B) The transfer price will be the real price paid for the property and this means that the tax office can on inspection verify and correct a price declared in a deed of sale. Any expenses (agency commissions, lawyers’ and accountant’s fees, etc.) and any taxes relating to the transfer which the seller has paid (municipal capital gain) must be discounted from this transfer price. If the property was purchased before 31st December 1994 and improvements made, the calculations need to be corrected and in this case it is advisable to consult a qualified professional as the capital gain calculation becomes complicated. 6. Non-resident tax retention The person purchasing the property, whether resident or not, must deduct and pay 3% of the agreed price to the tax office (for purchases made before 31st December 2006 the rate was 5%). For the seller, this retention is an advance payment of the corresponding tax for the gain resulting from the sale. The purchaser will therefore give the non-resident seller a copy of form 211 (with which the retention was made) so that the seller can deduct the retention of the amount to be paid resulting from the declaration from the gain. If the amount retained is higher than the amount to be paid, the difference may be refunded. If the retention is not paid, the property will be subject to payment of the tax. IMPORTANT OBSERVATION: It is important to remember that fiscal residence in Spain for declaring the inadmissibility of the retention before a notary must be proved by means of the corresponding certificate issued by the tax office. It is necessary to prove more than just residency: the seller must prove that they pay tax in Spain like any other resident. 7.  What form must we complete? Form 212 When the property being transferred belongs to a married couple both of whom are non-residents, it is not possible to present a joint tax declaration. 8. How long do we have to present the tax declaration? Three months from the end of the period in which the person purchasing the property has to pay the retention (this period is, in turn, one month from the date of sale). 9. Where must we present this form? At the Tax Office (Delegación or Aministración de la Agencia Tributaria) corresponding to the place where the property is located. 10. What is the procedure for the return of the 3% retention? In the case of capital loss or when the retention is higher than the amount to be paid, you are entitled to a refund of the excess amount retained. The refund procedure begins with the presentation of declaration form 212 at the appropriate Tax Office. The amount is refunded by bank transfer to the account indicated on the declaration. The account holder will be the non-resident taxpayer concerned or their representative (the representative must have been granted express powers in the document certifying their status as a representative to receive the refund and in this case, it is advisable to grant power of attorney with special authorities). If the non-resident taxpayer does not hold a bank account in Spain, they can submit a document to the Tax Office Director requesting the refund by cheque. The copy for the non-resident transferee of form 211 with which the retention was paid will be attached to the declaration (form 212). The Tax Office can make a provisional settlement within six months from the end of the period established for the presentation of the declaration. When the declaration is presented late, the six months will be counted from the date of presentation. If the provisional settlement is not made in this period, the Tax Office will proceed on their own initiative to refund the excess on the self-assessed amount without affecting subsequent settlements which may be deemed legitimate. If the amount has not been refunded after six months for reasons attributable to the Administration, the corresponding interest will be added to the amount due to be refunded. jose@escobedo.net Reports, Tax law, 2009-03-07T22:49:00+00:00 http://www.escobedo.net/index.php/site/999_tax_exemption_on_inheritance_tax_donation_gift_tax_in_canary_islands http://www.escobedo.net/index.php/site/999_tax_exemption_on_inheritance_tax_donation_gift_tax_in_canary_islands#When:22:28:00Z New Law 14/2007 - 27th December - From 1st January 2008 parents may gift any property in the Canary Islands to their children and benefit from a 99,9% tax exemption. The said exemption is applicable to all donations (gifts) of real estate property situated in Canary Islands. Reports, Tax law, 2009-03-07T22:28:00+00:00 http://www.escobedo.net/index.php/site/wwwescobedonet http://www.escobedo.net/index.php/site/wwwescobedonet#When:15:16:00Z New legislation has been passed in the Canary Isles (Decree 13/2006 dated 8th February - B.O.C. 43, 2.3.2006) regarding living wills (testamento vital).This law will allow all individuals in the Canary Islands to prepare a letter which will be given to doctors and hospitals with instructions regarding their medical treatment and care that they wish to receive in the case of illness or injury. This document will be especially useful in situations where it is not possible for you to express your wishes. There is now a registry of living wills in the Canary Islands. If you decide to write a living will, you can appoint representatives to carry out your wishes and these instructions will become an essential guide for your doctors. The procedure is quite simple but it is always a good idea to consult a lawyer. It is not essential to have a living will as normally your relatives and doctors make any necessary decisions for you, but it can be a good idea because of the language barrier and because of legal and cultural differences which make communication difficult. All foreigners staying in Spain should at least consider the possibility of making one. Jose Escobedo Abogado - Lawyer jose@escobedo.net C.C San Eugenio local 81 Playa de las Américas, Tenerife @ jose@escobedo.net Reports, Property Law, 2009-03-04T15:16:00+00:00 http://www.escobedo.net/index.php/site/first_thing_to_do_when_you_decide_to_buy_property http://www.escobedo.net/index.php/site/first_thing_to_do_when_you_decide_to_buy_property#When:15:35:00Z Essential advice on buying property in Spain. The article that you cannot miss.Once you have chosen a property, you should request a Copy of the Seller’s Title Deed or Deed of Sale. It is possible that the Seller (owner) acquired the property by Sale, Inheritance, Sale by Judicial Auction, Dation in Payment, Exchange, Donation, Marriage Settlement, etc. so it is necessary to make sure that the seller’s title deed is a Public Record, i.e. a Notarial Deed. In Spain, only those documents signed before a Notary may be registered in the Land Register. If the seller gives you a Private Document you should be particularly careful as it is possible that the person who is offering the property for sale is not the same as the one in whose name the property is registered in the Land Registry. Furthermore, as long as the seller does not register the property in his/her name in the Land Registry it remains open for the enforcement of any type of charges, embargoes, mortgages and even in favour of other people. Having said that, if you don’t know Spanish you should take the Public Title Deed to a lawyer so that he/she can study it in detail and check the current legal situation of the the property being sold in the Land Registry, i.e. if there are any Charges, Attachments, Mortgages or anything which affects either the value of the property or the ownership of the person who is offering the property for sale. If the seller gives you a copy of his/her public title deed, you should check whether this title deed has been submitted for registration in the Land Registry. Make sure that the corresponding Capital Transfer Tax (Impuesto de Trasmisiones Patrimoniales) has been paid. Look through the last page of the title deed and see if it has been signed by the Registrar and read any comments. You should also ask the Seller for a photocopy of the Property Tax (Impuesto sobre Bienes Inmuebles) receipt. Remember that you must provide a copy of this receipt at the Notary’s Office when you go to sign your Public Deed of Sale. The Property Tax is a small Municipal Tax that is paid each year to the Town Hall where the Property is located. The quantity of this Tax varies according to the Rateable Value of the Property which appears on the receipt. The Rateable Reference or Number is also very important. The Notary who authorises the Public Deed of Sale and also later the Town Hall once the public title deed has been signed at the Notary’s Office must both be informed of this reference. You should also ask the Seller for the last electricity bill, water bill and the Municipal Refuse Collection Tax. If you are buying a house rather than an apartment, you should also ask the Seller for a copy of the First Occupation Licence and the Certificate of Fitness for Habitation for the property. When the dwelling is located in a building, it is also a good idea to ask the seller or even the administrator of the Owners’ Association for the official building documents, i.e. the Municipal First Occupation Licence (Licencia Municipal de Primera Ocupación), the Architect’s Certificate for Termination of Work (Certificado de Terminación de Obras del Arquitecto) and the Certificate of Fitness for Habitation (Cédula de Habitabilidad). FOREIGNER’S IDENTITY NUMBER (N.I.E.): The N.I.E. is a document issued by the Spanish Home Office, and should be applied for at the “Oficinas de Extranjeros” of any National Police Station. The N.I.E only identifies those foreigners who pay taxes in Spain. For this reason, obtaining the Foreigner’s Identification Number does not mean that you have been granted Legal Residence in Spain; nor does it prove your identity to the National Police. Only the residence card and the work permit prove legal residence in Spain. To obtain the Foreigner’s Identity Number you must go to the nearest National Police Station and ask for the Oficina de Extranjeros where you will be given a very simple form to fill in. Once you have completed it, you must take your passport, a photocopy of your passport to the Police Station. You will need to submit your application and you will normally be asked to return within a month to collect the original document. Once you have been given the original document, i.e. the Foreigner’s Identity Number Certificate issued by the Home Office, you will have to go to your local Tax Office to register your Foreigner’s Identity Number so that you can be given your Fiscal Identity Card. Useful advice: when you go to the National Police Station for the first time, you should take a photocopy of your Passport, your Original passport, . This way, you won’t have to go back and you can fill in the form on the spot and hand it in immediately. The NIE must either be collected by the applicant in person or by a duly authorised representative. If you want to appoint someone to collect the NIE for you, this should be recorded on your official application when you submit it at the police station. If you want someone else to process your application for you, you can confer Power of Attorney before a Notary or a Spanish Consul abroad. The person who goes to collect your Identity Number for you must show this Authorisation or Power to the staff at the police station. THE LAND REGISTRY: In order to be able to buy a property safely and to avoid any type of risk there are certain things which you should understand: How Land Registries operate in Spain. First of all, they are open from 9.00am to 2.00pm for the presentation of any public document so that it may be registered. In the Registries, there is a book called the daybook (libro diario) in which a note is made of the date, the time, the person presenting the document and the type of document, and it is given a number. This book is very important since it establishes the order of priority for those presenting documents at the Land Registry according to chronological order. Time and Date. If the seller’s creditor presents an attachment order before you present your Title Deed or Public Deed when you go to register the property in your name, the Land Registrar will make a note that the property has been purchased with an attachment order although there is no mention of any attachment in your title deed. In which case, you should be extremely careful and ask for information about the property you wish to purchase before making any payment. In general, there are three ways to get information from the Land Registry: a)  Simple Information Note (Nota Simple Informativa). b)  Certification of Ownership and Charges. c)    Access to Books. a) The most common of these is the Information Note, although as it is not very expensive and is given to anyone interested in purchasing a property, the information contained in the Simple Information Note is not complete since it might not mention documents which have since been included in the register or which are waiting to be registered. b) The safest system is to request a CERTIFICATE OF FREEEHOLD OWNERSHIP AND CHARGES. The Certificates of Ownership and Charges are signed by the Land Registrar and they state who is the owner, if there are any charges on the property and in whose name these charges appear and finally, if any documents have been submitted to the Land Registry from the date of issue of the Certificate which could affect the ownership or the charges on the Property. c) EXHIBITION OF THE LAND REGISTRY BOOKS is not possible in all the Registries. It is necessary to submit an official application beforehand, and the person in charge of the Land Registry at the time will then show you the book where the property is registered so that you can examine it and take any notes you consider relevant from the page where the registered property appears. In order to access the information services of the Land Registries in Spain you must fill in an official application with the REGISTER DETAILS OF THE PROPERTY. If the Property does not have any Register Details or if you do not know them, you can request a Certificate of Ownership and Charges specifying the name of the person claiming to be the owner of the Property and National Identity Document or NIF, or in the case of foreigners the Foreigner’s Identity Number or NIE. Official applications for the Certificates are available for anyone who wishes to request information at the Land Registry. The staff at the Land Registry will help you to fill in the official application if they can, time permitting. Interpreting the information from the Land Register can be extremely complicated and we therefore advise you to consult a lawyer whenever you obtain information since the legal terminology used is quite complicated for anyone who is not an expert in Spanish Law. If you have decided to purchase a property in the country, a plot of land to build a house on or even an apartment in a building, it is always a good idea, although not essential, to consult the technicians at the Town Hall where the Property is located. In general, the Certification or the consultation at the Town Hall is essential when buying Plots and Pieces of Land to build on, and also when you are buying apartments, flats or houses under construction. This consultation is not necessary for old buildings in urban areas which have already been developed although it is advisable. The consultation is also essential for those houses which are very close to the coast as there may be regulations which affect or restrict the purchasers’ rights. There are two ways to request information at the Town Hall: - The first is to ask for an Urban Development Certificate (Certificado Urbanístico) to see if there are any problems or charges which might affect the property. - The second is to meet the technicians from the Town Hall (Architect) in person. OWNERS’ ASSOCIATION: In Spain, under the Regime of Owners’ Associations, an association is created for any building consisting of more than two dwellings with different owners. The Owners’ Association exists when there are common areas or elements within a Building which are shared by the Owners living there. Common expenses arising from these Common areas must be shared on the basis of a percentage quota which appears in the Property Deed between all the members of the association. Law 8/1999 recently altered the Legal Regime of Owners’ Associations and established important new features. One of these makes it necessary, when signing the Deed of Sale, to provide a Certificate signed by the Administrator Secretary of the Owners’ Association which has been approved by the President to prove that the property is up to date with all the common expenses mentioned above. Without this document, the Notary will not authorise the Public Deed of Sale except in the case of the purchaser relinquishing his right to be informed of the debts weighing on the property. You must bear in mind that if you purchase the property without checking with the Owners’ Association, you will be responsible for the previous owner’s debts until the end of the current year and for the one immediately prior to the purchase date . For his/her part, the Seller is obliged to inform the owners’ association of the sale of the Property and failure to do so may lead to joint responsibility for the quotas of the Owners’ Association which have been accrued after the transfer of the property, in such a way that the Owners’ Association can judicially claim these expenses both from the new purchaser as well as from the previous owner who did not inform the Owners’ Association of the sale of the property. It is also advisable to ask for a copy of the Statutes of the Owners’ Association and to read them very carefully to see if there are any regulations which restrict your rights as an owner or which may negatively affect you in any way. You should also make sure that the property which you are purchasing and all its elements or annexes (terraces, courtyards) are exclusive areas which belong to the property and which do not have any type of restrictions or belong to the Owners’ Association. You should also examine the Deed of the Horizontal Division of the Complex. PRIVATE CONTRACT OF SALE OR PUBLIC DEED When you have decided to purchase a property, you need to ask yourself how long will it take to raise the money necessary to pay the purchase price in full. Once you have thought about this and if you consider that you may need one or two months or even more, it may be necessary to draw up and sign a Private Contract of Sale in order to Reserve the Property and avoid it being offered to others. This document will fix a definitive price for the property which cannot be changed by the Seller at a later date. In general, there are three ways to purchase a property by means of a Private Document: a)  The Precontract or Promise of Sale/Purchase b)  The Call Option c)    The Private Contract of Sale/Purchase It is important to understand the differences between these three ways so that you can choose the one which best suits you. In order to avoid confusing technical explanations, we will provide a simple definition of each of the types of contract, together with the advantages and disadvantages of each one when compared with the others. A)  The Precontract or Promise of Sale/Purchase. In this contract, the parties have agreed on the essential elements of the sale such as the object (house, garage, etc.), the purchase price and the date on which the Public Deed of Sale will be signed. In order to reserve the property, a quantity of money is handed over and this is called the deposit or down payment, and the signing of the Deed of Sale is postponed until a later date. The Contract or Operation of Sale will only be complete once the Purchase Price has been paid in full and this normally takes place when the corresponding Public Deed of Sale is signed before a Notary.  You should remember that the Spanish Civil Code establishes that once the deposit or down payment for the contract has been handed over, the parties are bound in the following way: if the Seller sells to a third person or refuses to sign the Public Deed of Sale, he/she must return the deposit plus compensation for damages which is the same as the amount which the Purchaser handed over as the deposit or down payment If on the other hand, the Purchaser decides not to go ahead with the Purchase, he/she will lose the sum handed over which will be kept by the Seller as compensation for damages. B)  The Call Option. In the call option, a sum of money is handed over. However this is not considered as payment towards the price of the purchase nor as a deposit. In the Call Option the payment is called the Call Option Premium and establishes a preferential right of purchase before any other person for a certain period of time. The parties are completely free to agree the quantity of the premium to be paid and this document can even be signed before a Notary Public and registered in the Land Registry, which is advisable when the Premium is high and the time period for the Call Option is quite long. In this way, when someone is interested in purchasing the property, if they request a Simple Information Note from the Land Registry they will see that someone has a preemptive right to purchase. In practice, people who sign a Call Option never submit it as a Public Document nor register it with the Land Registry since this requires a considerable sum to be paid for the Capital Transfer Tax. In general, the Call Option can be an interesting option when fairly large property operations are carried out on plots of land or in buildings and some time is needed to raise the necessary money to complete the Contract of Sale. The Call Option Contract should establish very clearly how the notification is to be made by the optant of his/her of his preemptive right to purchase since once the Seller has been notified of the Purchaser’s Call Option, the Contract becomes a Contract of Sale, since there is full agreement between the parties. C)  Private Contract of Sale. By means of this contract the parties have reached full agreement about the object, the price and the method of payment. There are no further discussions or promises since there is a strong intention to buy the property. In this case, if the money is available, the most advisable thing is to sign the Public Deed of Sale before a Notary without delay so that it can be submitted to the Land Registry. However, in certain circumstances, it may be necessary or convenient for it to remain as a Private Document for a certain period of time. The Contract of Sale must be perfectly drawn up placing special emphasis on how the Contract of Sale can be rescinded in the case of nonpayment, sale to a third party, charges or encumbrances existing on the property which prevent it being freely purchased. It is a good idea for the subsequent conditions of the Contracts of Sale to be drawn up by legal professionals who should consider the circumstances of this operation. The Private Deed of Sale must always be settled of the Capital Transfer Tax although most people prefer not to do this until they have signed the Public Deed of Sale. However, you should be aware that nonpayment of the Capital Transfer Tax and keeping a sale as a Private Document for too long a period of time can lead to problems which in certain cases may be irremediable since as long as the Land Register continues to be open and the property registered in the name of the Seller, charges and encumbrances may be registered which could affect the Property. If any problems arise during the sale and the Capital Transfer Tax has not been paid, it will be very difficult to prove both that the date of the private document is as it states in this document and also the authenticity of the signatures of the intervening parties, and it will be necessary to resort to the Courts and Judicial System of this country requiring additional proof as to the identity of the parties, the signatures, the payment of the price and the date of the contract. The advantage of the Private Contract of Sale between two parties over the two previous ways is that any dispute will be resolved in a Court of Justice whereas this is not necessary in the other two cases. Lawyers are the only qualified professionals in our country who can defend the interests of others in Courts of Law. However, the Lawyer’s ability to defend his/her clients in a Court of Law does not restrict him/her to solely offering advice services but of no lesser importance are his/her powers to prevent risks; this is one of the lawyer’s main jobs. When you contact the lawyer, you should value this professional’s experience, your ability to communicate with your lawyer in your own language is essential. Before asking the lawyer to do anything, you should agree to the price for the lawyer’s professional services. Once you have reached an agreement with the lawyer, you will be asked to provide a certain sum of money to cover the fees and charges which the lawyer will have to pay as a result of the professional job which you have asked the lawyer to undertake. Once you have paid the lawyer this sum of money and so formally contracted the lawyer’s professional services, your lawyer will deal with all the formalities relating to the sale thereby ensuring that as a result of the lawyer’s professional experience and ability the sale will go through as satisfactorily as possible for the purchaser and without any risk. Lawyers who badly advise clients or who do not foresee any risk which is obvious or evident in any Public Register are liable for any damages which the client may encumber. Your lawyer will be responsible for drawing up the Private Contracts of Sale, obtaining Certificates and Information Notes from the Land Registries, checking the Seller’s documentation and giving advice when it comes to signing the Public Deed of Sale. They can even intervene on your behalf with Power of Attorney. Jose Escobedo Abogado - Lawyer jose@escobedo.net C.C San Eugenio local 81 Playa de las Américas, Tenerife @ jose@escobedo.net   Reports, Property Law, 2009-02-14T15:35:00+00:00 http://www.escobedo.net/index.php/site/what_is_an_nie_tax_identification_number_now_necessary_to_complete_any_prop http://www.escobedo.net/index.php/site/what_is_an_nie_tax_identification_number_now_necessary_to_complete_any_prop#When:20:07:00Z A NEW LAW has been enacted in November 2006 - Law 36/2006 dated 29th November. From 1st December no property purchase can be registered in the land Registry office without the NIE of all the parties concerned in a property transaction. A NEW LAW has been enacted in November 2006 - Law 36/2006 dated 29th November. From 1st December no property purchase can be registered in the land Registry office without the NIE of all the parties concerned in a property transaction. In Spain everybody is assigned a Tax Identification Number, which must appear on all tax returns and in all communications with the Tax Authorities. In general, for people with Spanish nationality, the NIF is the number of their National Identity Card (DNI); for people without Spanish nationality, the NIF is their Foreign National’s Identity Number (NIE), which is obtained from the Dirección General de la Policía (Police General Directorate). However, foreign nationals who are not obliged to have an identification number may request a NIF from the Tax Authorities. As stated above this new requirement it does not mean that you cannot buy property without an NIE number BUT, it is essential to get your Title Deed registred in The Land Registry Office. The situation may be more complicated if you are planning to finace the purchase ith a mortgage You must keep in mind that from December 2006, all major Spanish BANKS are reluctant to sign mortgage deeds without NIE numbers. If you are planning to buy property you must carry out all the necessary arrangements to lodge your NIE application before agreeing an specific date for completion. Reports, Tax law, 2009-02-12T20:07:00+00:00