Are you worried about the legalities of your Madrid property purchase? Read this article to learn how a lawyer can help with your transaction and get an incredible offer for all your property purchase legal work.
Why you need a lawyer for your Madrid property purchase
There are legal aspects to the Madrid property market that are unfamiliar to most international buyers. They may seem tricky, but the reality is the process is very standardized. With the proper legal representation, your Madrid property purchase will go smoothly and you will not need to bear unnecessary risk.
Make sure you have proper legal representation before purchasing Madrid property. It will save you a lot of worry and stress when navigating the quirks of the Madrid real estate market.
Risk 1: Does the “seller” indeed own, and have the legal right, to sell the property?
The first thing your lawyer needs to do is verify that the person representing themselves as the seller is the legal owner of the property.
When a property is bought and sold, all changes are made in the escritura, which is the deed to the property. It is signed by both buyer, seller, their lawyers and the notary. A copy is kept at the notary where it was signed and the document is submitted to the Land Registry.
Before purchasing a property, your lawyer should ask at the Land Registry to see a summary of the escritura. This will tell everything you need to know about the property. Your lawyer can look at it and verify that the person selling the apartment is indeed the legal owner, if there is any debt attached to the property (see below for more about this) and other important details.
Do you have questions about the legal aspects of buying Spanish property? If so, please follow this link to arrange a FREE CONSULTATION to learn more and take advantage of the special offer they extend to Moving2Madrid clients.
Risk 2: Is the property what it is represented to be?
It is very important to verify that the size of the property is accurately represented and registered with the authorities. This is important because your property tax (IBI- Impuesto sobre Bienes Inmuebles) is not based upon the market value of your property, but on a calculation based upon the size of your property. This calculation is roughly half the market value of the property, and is updated periodically by the Ayuntamiento (City Council) in which your property was purchased.
This requires your lawyer to look at a second legal document, called the Catastro. This document contains two measures: metros construidos and metros utiles. Metros construidos includes:
- All the space within the perimeter of the property
- Your share of the total square meters of the common areas.
Metros utiles refers to a property’s usable square meters. It includes cupboard and storage spaces. It excludes walls, pillars, false ceilings and attic space.
When it comes to outdoor spaces like terraces and patios, 50% of their area is included in the usable square meters calculation.
The size of a property is logged three places:
- With your architect
- The Land Registry
- The Catrastro
Your lawyer should check to verify that all of these measurements of your Madrid property purchase are the same. In reality, there is almost always some discrepancy between these measurements. The Land Registry and the Castrato do not communicate with each other. Moreover, there is an incentive compatablity issue as the owner of the apartment desires a smaller measurement to be registered (less taxes) and the authorities want a bigger measurement (more tax revenue). Your architect is likely to give you the most accurate measurement.
As long as the measurements listed by all three parties are close, it is find to go ahead with your Madrid property purchase. However, if there is a big discrepancy in the measurements stated in the Land Registry and in the Castrato, your lawyer needs to get involved. They can try to get the purchase price lowered. If the owner does not oblige, they will likely counsel you to pull out of the deal entirely. We would like to stress that this is usually not the case. However, you need to make sure a lawyer checks all documents just to be sure.
This is a page from an actual Castrato. As you can see, it very clearly specifies the measurements of all private and common spaces in the property.
Risk 3: Is there any debt linked to the property?
In Spain, debt is linked to a property, not to the debtor. Therefore it is extremely important that your lawyer check that there is no debt linked to your transaction. This information is found in the escritura.
A large percentage of properties do have debt linked to them, as most real estate purchases are debt financed. Standard practice is the proceeds used from the property sale are used to pay off the existing mortgage. The debt is then cancelled. Spanish banks are quite adept at getting this done.
The risk is timing. Sometimes the banks can be relatively slow clearing the debt, particularly in a rapidly moving property market. That is why you need to make sure your lawyer is very proactive and drafts all documents in your favor.
The best lawyer for your real estate transaction
We highly recommend our partner law firm for your Madrid property purchase. They bring a number of things to the table that other Spanish law firms often neglect.
One-stop shopping
Our preferred legal partner is able to help you with every step of your transaction. In addition to being lawyers, they are also tax accountants and immigration lawyers. Thus they can help you purchase your property, set-up a company to purchase your property (for more on this please read: How settting up a company for your property investment saves up to 45% on Madrid real estate taxes), obtain Spanish residency for yourself and your family and pay your real estate taxes.
An international background
Many Spanish lawyers only speak limited English. Our legal partners are all bi-lingual. Moreover, they are well versed in international legal practices. Therefore, they can explain the idiosyncracies of the Spanish legal system in terms that international clients understand.
Client-centric approach
Our legal partner is 100% focused on their clients, which is not always the case in Spain. They ensure that the terms of your contract protect you, so you don’t need to worry about your bank moving slowly or other common pitfalls. Even if something is outside of their mandate, they will still take ownership over your transaction. In short, they go “above and beyond.”
A special offer just for Moving2Madrid clients
Most Spanish lawyers charge 1% of the transaction price to help purchase a property. Moreover, they often charge extra for due diligence. Our preferred legal partner, who we consider the best lawyer for your Madrid property purchase, follows a precise due diligence checklist for all Moving2Madrid clients. Moreover, they only charge our clients 750€ for legal representation.
To take advantage of this special 750€ offer, email us today to start your Madrid property search.