You will need advice on a range of issues that will be very different from the advice needed by a person from Spain buying a house in Spain.
You will need to have the Spanish system – and its implications – explained to you. You will need to plan your affairs taking into account the combined effect of the legal and tax systems in your own country and those in Spain. The local system may produce the most unexpected and undesirable results if left on its own.
As we mentioned in the section on preparation, it is vitally important to choose the best form of legal ownership for the property. This can save you thousands of pounds. The interaction of your own law and Spanish law, particularly with regard to taxation and inheritance rights, calls for careful consideration. This is especially so as the cost of rectifying a wrong initial decision is often as much as, if not more than, the whole expense of the purchase in the first place!
Giving all this advice calls for specialised knowledge of both legal systems and, increasingly, also of European Union legislation on property, tax and inheritance. Of course, it also requires language skills.
A local lawyer cannot be expected to be conversant with foreign legal & tax systems and will almost certainly not be in a position to advise non-Spanish clients appropriately and fully. He or she will, often, not think about the problems that their 'normal' procedure may create for foreigner buyers.
The local lawyer may also not speak English, at least to the standard needed to have a sensible discussion with you about complex technical matters.
It is, therefore, potentially very expensive not to seek the assistance of a specialist lawyer able to advise on Spanish legal matters within the context of your own law and your own legal and tax system.
The International Law Partnership is the ONLY firm of solicitors that deals ONLY with international transactions and that can offer you, under one roof, the services of a team of lawyers from many jurisdictions, including Spain.
How can The International Law Partnership help me buy a home in Spain – and what will it cost?
The work we can do for you
We offer you the choice of four services. You may want to use just one of these services, or several.
Preliminary Meeting
We strongly suggest that you arrange a meeting with us before you go to look for property. This way we can discuss all of the key issues – including which areas might best suit your needs, the types of property available, who would be the best owner for tax purposes, how the property should be paid for, mortgages, inheritance issues and how to minimise your tax liabilities – calmly before you get into the rush and pressure involved in buying.
The meeting can also cover whatever other issues may be important to you. It can be face to face, over the telephone or by video conference.
To arrange a meeting just telephone us. The meeting will typically take an hour to an hour and a half and we will follow it up with a letter confirming the points discussed.
Our fee is a fixed £500/€750/$950 + UK VAT.
Preliminary check of your Contract or Offer to Buy
If you are asked to sign ANYTHING we strongly suggest that you fax it or email it to us first.
We will then phone you back and:
- Discuss whether it is necessary to sign anything at all at this stage.
- Go through the terms and legal effect of the proposed contract with you.
- Advise you whether the terms are fair and reasonable.
- Suggest any changes we think are necessary.
- Try to negotiate those changes, there and then, with the agent or developer concerned.
You will then be clear about what you are signing and the consequences of signing it. This is not as good as giving us time to carry out a full investigation but it is a great deal better than nothing at all.
We can normally provide this service, Monday to Saturday, 'while you wait'.
We will charge for the work we do on a time basis. You will appreciate that some contracts are much longer than others and that some need more modification than others. A typical fee for a short(ish) reservation contract would be £150/€225/$285 – 1 hour's work and the fee for a 5 page preliminary purchase contract might be £300/€450/$500 – 2 hours' work.
Our 'International' Service
This service gives you advice about ONLY the INTERNATIONAL legal and tax issues arising out of your purchase. This leaves you free, if you wish, to use a local Spanish lawyer to deal with the actual purchase of the property.
We will, for example:
- explain the way the local system of property purchase works
- discuss the special issues to look out for when buying a property in Spain
- guide you as to some of the things you should make sure your Spanishlawyer looks into
- discuss the tax and inheritance issues and any other relevant problems arising out of the interaction of the English and Spanish legal systems.
Once we have done this we will confirm our advice to you in writing and also brief your Spanish lawyers by writing to them covering the key points we have discussed and explaining your wishes.
You can choose the Spanish lawyer yourself or we can, if you wish, introduce you to one. This will, wherever possible, be a lawyer who has already given good service to our clients and who we know speaks satisfactory English. In making this introduction we would simply be introducing you to the lawyer as a client. You would then deal directly with that lawyer, not via us. We do not accept any responsibility for the advice given by that lawyer, his actions or inactions. We make no extra charge to you for introducing you to the lawyer as he will share a part of his fee with us to reflect the work that we have done.
This service goes into much more detail about your proposed transaction and covers much more 'international' ground than our preliminary meeting.
Our fee for this service is 0.5% of the value of the property, with a minimum of £750/€1,125/$1,425. For properties over £500,000/€750,000/$950,000 there is a scaled reduction in our fees.
Our Property Transfer Service
In short, this service covers everything needed in an ordinary property purchase: establishing your requirements; checking the contract documents; producing a full report concerning your proposed purchase; liaison with you, your Notary, the estate agent (US: realtor) and/or the seller etc.
Our fee for this work is 1% of the price of the property, subject to a minimum. In the case of a resale property the minimum is £1,500/€2,250/$2850. In the case of a property under construction/renovation or being sold for the first time the minimum is £2,000/€3,000/$3,800. New property is more expensive because it involves more work and because we may be dealing with your case for 2 years or more. In each case there is a scaled reduction in our fee for properties over £500,000/€750,000/$950,000.
Which service will be best for you?
For your convenience, at the end of this guide we set out the features of each of these services in tabular form so that you can compare them and decide which is best for you.
Revising our Estimate
We try to stick to the estimated charges set out above but if the transaction becomes unusual or unduly complicated for any reason, we reserve the right to revise our charges. For example, we have had situations where one of the parties has died part way through the transaction, or divorced, or for some reason has refused to cooperate in the sale. Or where the sellers or buyers have fallen out between themselves. Or where the property has become the subject of a court case. Or where there have been defects in the title or planning situation. Or where there has been delay in the construction. Or where the money has been lost or delayed in transit by the bank. Or where you wish to negotiate substantial changes to your contract.
Payments on Account of Fees & Expenses
We require an initial payment on account of our fees and expenses. We ask for further payments on account as the work progresses. If you do not make the payments requested we reserve the right to stop work!
What does the whole purchase cost?
Our own charges are normally only a very small part of the overall cost of buying!
As a general guide, in the case of a RESALE property, the TOTAL costs (our charges for our Property Transfer Service, land registry fees, Notary's fees, taxes, bank charges etc) normally come to about 11% of the price of the property.
In the case of a PROPERTY UNDER CONSTRUCTION, the TOTAL costs, excluding any VAT or equivalent payable on the property, normally come to about 4% of the price of the property. In Spain new properties are subject to tax at 7 + 1 Stamp Duty% which, just to confuse you, is sometimes (but not always) included in the price of the property as quoted to you. If you are buying a new property it makes sense to ask whether the price includes the tax. 7 + 1 Stamp Duty% is a lot of money!
In both cases, if the property is less than about £50,000/€75,000/€95,000 the overall percentage will be higher. If the property is over about £500,000/€750,000/ $950,000, the overall cost will usually be a little lower.
These can, of course, at this stage be only the most general of estimates. We will give you a more detailed estimate of the likely overall cost once we know more about your particular purchase.
If a transaction does not proceed to completion – for whatever reason – we charge at our current hourly charging rate for the work actually undertaken.
Finally, all or part of these charges may attract Spanish or English VAT at the current rate.
Extra work
Other examples of extra work are explained in our Buying a Property Questionnaire.
This extra work is charged for over and above our standard charges. If any extra work is needed we will notify you before we undertake it and agree with you either a fixed price for that work or another way of charging for it.
Why are your fees so much higher than for buying a property in the UK?
Because there is a lot more work involved! The average purchase of a new property, for example, involves about 20 hours' work, most of which is invisible to you.
This is partly because the process is often more complicated and partly because our clients, who know little about the country, its legal system or its culture, need a lot more explained to them than they do when buying a property in their own country.
Are your fees higher than I would pay a lawyer in Spain?
That depends. Sometimes a local lawyer will charge you less than we do. Sometimes they will charge a lot more – and for doing a lot less.
How does using the International Law Partnership differ from using a local lawyer?
There are a number of ways:
Although we are thoroughly familiar with the local laws and practices (because most of our lawyers are qualified as lawyers in other jurisdictions and our staff work very closely with lawyers from all of the countries we serve) we are also used to the requirements and expectations of the Anglo Saxon client. These are often very different from the requirements of a local Spanish client.
Because we view transactions through the eyes of a foreigner we will often explain things to you that the local lawyers would not explain because they think they are obvious. They may be obvious to them, but they are often the exact opposite of what you would expect in your own country! Better still, we explain in clear English!
Most local lawyers will (quite understandably) know little or nothing about UK, Irish or US law. They are, therefore, quite likely to suggest a solution that would work well for a local person but which is disastrous (for example, in terms of taxes payable or inheritance law) in your own country. Our teams of specialist lawyers from different countries exist to provide that international overview. This can save you a LOT of money.
In most of the countries that we deal with lawyers are much less regulated than they are in the UK. For example, they may not have to have negligence insurance or be required to keep your money in a separate client account. These are significant safeguards for the client.
In many of the countries that we deal with it is difficult or impossible to obtain compensation from your lawyers if they make a negligent mistake. This is something that you take for granted when dealing with an English solicitor.
How do I take things forward?
If you would like us to represent you, please telephone, email or write. Our contact details are on the front cover of this guide.
We can then have a brief discussion over the telephone and, if necessary, make an appointment so that we can meet to look at the matter in more detail.
We are used to acting for Clients from all over the world and, generally, find that it is not necessary to meet in order to deal with the purchase of a property in Spain. Of course, we are delighted to meet to discuss matters personally if this is convenient for you.
What do I do next?
If you would like more information, please contact:
The International Law Partnership LLP
Solicitors & International Lawyers
Holborn Hall
193-197 High Holborn
London
WC1V 7BD
Tel: 020 7420 0400
Fax: 020 7836 3626
Email:
info@LawOverseas.comInternet: www.LawOverseas.com© The International Law Partnership – August 2007