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The Seven deadly sins of foreign property buyers in Spain... and how to avoid them
Foreigners make loads of mistakes when buying property in Spain, but these can be easily avoided with a few expert tips
by John Michael Kirby, Technical Architect and Building Engineer
This week I had a meeting with the professional college of lawyers ICALI to discuss the problems stemming from the principal deadly sins committed by foreign buyers in Spain and possible solutions to them. Below is a description of the problematic areas we discussed and the solutions proposed. You will see that some, most in fact, of the problems have a quick fix and are easily within the buyers’ ability to avoid. By highlighting them I hope future buyers are afforded a degree of protection from them.
Some need a more institutional framework which in some cases requires just a bit of time and internal effort on behalf of those institutions, ICALI, CTAV, COACV, ASICVAL, GVA, IVE. Others require a change in the law and so take a little longer and require political approval as well as the technical solution. The most important part of the conversation was the mutual recognition that there are problematic areas for foreign buyers, a consensus both as to what those areas are and, to a very high degree, that these are fixable problems.
As the institutional solutions detailed below take shape and become available to current and future owners a road map explaining how to access them will be published right here.
1. Using the lawyer recommended to you by the estate agency trying to flog you the property
The success of your project has to be paramount for your lawyer but, clearly it isn’t in the case of a lawyer recommended to you by an agency. Regrettably, in those cases they have much more of an economic interest in the success of the sale than in you.
Here’s the conflict of interest that you are currently exposed to that you shouldn’t be. The estate agency lawyer’s income stream depends more on their relationship with the estate agency than on their relationship with any particular client. It is the most common mistake made, it happens in 99.99% of cases but luckily it is 100% avoidable.
Most people do it but, most of the time it doesn’t matter as buying the property is not normally going to result in the ruination of the client as a result of some detail which was omitted to be passed on. That said it can, it has, in the tens of thousands of cases just in the Valencia region, and will if we don’t take measures to stop it.
Beginning from the premise that as a foreigner that is not well versed in the language, nor the building code, nor town planning regulations, nor contract law or fiscal obligations you absolutely do need to use a lawyer. Fortunately as they say other lawyers are available, 20 thousand of them just in the autonomic region of Valencia, and a lot of them speak English, especially the ones that graduated post -2010, which is when it became a requirement to have a minimum of B2 level, upper intermediate in order to graduate.
The meeting I had with ICALI, the college of lawyers, the following 2-step solution was proposed:
- Develop a specialised group within the college, managed by the college, with a number and email you can contact at the college in your own language. That group of independent lawyers will have to be competent in two areas, the law and how it is applied to the needs of foreign buyers, and the language skills required to communicate with their clients.
- Make access to the list easy. Working with ASICVAL, the autonomic association of estate agencies for the Valencia region, which has over 400 member agencies (we will publish the list). I will also publish the list and I will endeavor that the list be published on the Embassy website as well. I will let you know what they say.
If an estate agent insists that you must use their lawyer, please remember to close your door on the way out as you run in the opposite direction.
2. Get a pre-purchase technical inspection on second hand properties
The risks that you are exposed to are truly daunting. I used to be a Judicial Expert witness for property in the courts of Valencia. That’s the guy that represents the court, not any of the parties involved. Here’s a couple of real life examples from cases I have worked on. Sockets and switches in the walls but, with no cables in the walls. Another one with cables in the walls but no capacity left in the transformer so no electricity can be fed to the house. A complete block of apartments sold that were condemned less than ten years after construction.
Unless you are an expert in construction, builders are not experts in construction, they do what the technicians tell them they must do, you need someone to give you their written opinion about the property and any potential problems.
Some people use a local builder to do the inspection. Here’s why that’s a terrible idea. Builders can be highly skilled but that skill never involves evaluating the cost of all building defects or comparing existing building conditions to code, a code I hasten to add they have not read or tested on.
A technician, a Technical Architect/ Building Engineer or Architect has access to and is familiar with using the IVE, The Valencian Institute for Building (Instituto Valenciano de Edificación) database. This has all current reference prices for both work and materials for all construction activity. It is the very same database we use in court.
The time to get a report varies, if your offer is contingent on the conclusions of a building inspection report being “positive” in theory there is no rush but, in reality wording the contract in such a way that you’re protected post deposit is difficult. Having a PPI before you leave the deposit is a good idea, don’t be rushed into a sale. The results of the PPI can be used to reduce the purchase price and In that sense they can pay for themselves.
I’m working with the college of Architects of Valencia to both design a template for PPI and the creation of a group within the college of specialised, bilingual and independent technicians. As soon as we have an agreed format you will hear about it right here.
3. The scope of any inspections, legal or construction related, which are carried out needs to be defined at the outset
Even then, under the most benign conditions, for example if we manage to create an accessible body of competent bilingual independent, replacing the lawyer “recommended” by the estate agent, it could still be argued that we still haven’t established a system that guarantees. To avoid omissions or just mistakes the scope of the investigations to be undertaken on your behalf must also be defined.
In countless cases, both past and present, information which was available to be had and should have been placed at the disposal of any potential buyer was not and I can tell you from first hand experience the consequences can be utterly devastating with very few options available for solutions.
In Spain, to belong to a professional college there are no requirements to continue studying. That’s a huge problem principally for consumers. When you hire a lawyer or a technician you may get a guy that finished studying thirty or forty years ago and done no studying since. That’s a real possibility and you have no way of knowing if that’s the case or not. So long as they pay the college fees, they will always belong to that college.
Just as an illustration of the risks that this situation creates as the building code, the CTE, is from 2008 it is possible, perhaps even probable, for a lawyer or a technician to be working right now, perhaps advising on the CTE, that has never studied that code and yet they are fully backed by their professional college credentials.
In the meeting with ICALI, the college of lawyers, this week we also discussed designing a template for a standardised Pre Purchase Inspection (PPI) report with a predefined scope which leaves no room for selective omissions or technical or professional incompetence. A standardised Pre Purchase Inspection would define the scope of the professional works to be carried out and also limit exposure to basic incompetence or ignorance.
4. Checking the legality of any future works before you buy
The creation of entities such as the AVPT, the agency for territorial protection, should give you a good indication that the rules of the construction game are much tighter now than they used to be.
Carbon copying, buying a property and converting it into something similar to those properties surrounding it used to be an option even without checking its legality. It’s not now. For example, since 2019 there is now no statute of limitations on infractions committed on rural land (SNU). You will always live with that sword of Damocles over your head and what’s worse, your family’s heads.
Be it a covered terrace, an extension, a guest house, a new window opening, a pool, a pool house, a garage, a brick shed, a tennis court, a barbecue building, it all requires licensing and “yes” log cabins also require licensing and they count as construction for your construction density.
Do not buy a “fixer-upper” unless a technician has given you a written opinion validating your project. In a similar vein MIT licenses are designed to legalise houses, not allow people to buy and convert ruins into houses and then legalise them.
5. Kick the tyres of a property, your lawyer isn’t going to do it and neither is your technician
For example the new law, Ley de vivienda 2022 limits rent increases and confers more rights to renters, especially but not exclusively in high-demand areas called ‘zonas tensionadas’. That’s something you should and could know.
So how do you find that out? A quick chat to a neighbour or a cafe owner in the area will give you access to the video from which all the little snapshots which appear on official documents are taken. You might think the language is a problem but, usually are more open than they might first appear. Even if that doesn’t work and you find out that they are all raging anti foreigner pitbulls, better to find that out before you have a house next to them, right?
Physically, the unknown unknowns can be reduced virtually to zero. Do your bit of due diligence; turn everything on, keep it on for while, open everything that can be opened.
6. Declare the full purchase price
Unless you already have a big pile of fiscally undeclared “black” money, buying a house in a foreign country where you don’t know the law or the language is not the time to start.
While it’s true to say that, according to the tax office, almost 17% of GDP is undeclared, turning hard-earned already taxed and declared income into much less useful “black money” is essentially reverse alchemy turning gold back into dirt. If they say you can’t buy the property without black money, ask them to put that in writing... and wait for the laugh as you are leaving.
7. Use a qualified, licensed tradesman
A client with no written contract for building work doesn’t have a contract. They are ergo a client without protection.
You wouldn’t do it at home where you know the basics of the law and the language so why do so many people do it here? The language barrier. That’s the only reason, all the rest are disadvantages: they don’t know their trade as a very important part of knowing your trade is knowing the legal and technical framework (the building code), they don’t know about planning/ permits and planning law, most of them don’t even have a grasp of the language so they are unable to resolve those unknown unknowns that not infrequently crop up in the building processes.
This deadly sin, as many of you will also have noticed, is also related to the previous one about not getting involved with black/undeclared money. We need taxes to keep medicine in hospitals or books in schools and If there’s no contract there can’t be any declared income or taxes.
As a Judicial Expert Witness for building matters in Valencia here’s some advice: try not to hire one of these guys, but if you do find out where the guy lives and take loads of pictures. Pictures of them bringing the materials, unloading them, starting work. Get the guys not just the work. This will at least put them at the scene of the crime. It won’t help you in court but, the threat might get them to come back and fix whatever needs fixing.
John Kirby is a Technical Architect and Building Engineer (UPV), having won the award for outstanding academic achievement. He is the first foreigner to win that award and the only foreigner to ever be Municipal Technical Architect in Spain and a Judicial Property expert witness in Spain. He is Commisioner for Expatriates of the Valencian government and Ambassador for Spain and Gibraltar for Chartered Association of Building Engineers (UK).
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