What should you bear in mind when buying real estate in Spain? What is to be done not to get to the tricks of scammers?
We understand full well – purchase of a real property is an important decision, which is intended to boost the economic efforts. Real estate investments should eventually pay for itself.
To make investments effective during a preliminary search of housing we must be alert. In case of anxiety and suspicions of cheating, we must know how to act.
As a real estate personal shopper I am going to tell you about certain unethical situations that could be. Moreover, I will tell you the questions to ask to avoid the fraud.
Is the seller the owner of the property ?
This kind of fraud is classified as selling of another person’s property. It is the transfer of goods without possession of the goods. It is a very specific form of fraud considering alleged seller has the power to dispose of what he/she does not possess in reality. Punishment for this offence is up to 4 years of prison in Spain. The buyer should make sure that the seller and the buyer is the same person by requesting in the real property register (Registro de Propiedad). Or check if the seller represents the owner legally.
Are there implicit debts for property?
Criminal liability is specified for this kind of fraud. In this case, the seller deliberately conceal the debts of the property. Situations vary: it can be a mortgage or buyout of property or debts on the fact of flooding the neighbors’ apartments. Consult the real property register (Registro de Propiedad). The same way it is necessary to consult the president of the community or the city administrator of real estate (Administrador de Fincas) to make sure that the owner has made payments of usual fees and additional fee.
Is the down payment document original?
This criminal action makes the buyer to sign a fake down payment document, which is not legal. It is a trick of fraudsters to get the money. When the amount of advance money is got the alleged seller disappears. To avoid this kind of cheating it is important to consult a lawyer or buy and sell through the agency.
What are black cash payments fraught with?
This practice was common during the latest crisis. Nowadays it is coming up again.
The seller agrees to show the lower price if the buyer is ready to pay cash out of taxes control. Therefore, the seller can reduce the surplus value and the buyer reduces VAT (IVA) or transfer of property tax (Impuesto de la Transmisión de Propiedad). However this scheme can have consequences in future when the buyer would like to sell the property. He/she will face the higher surplus value.
Is it worth to buy off-plan property?
Many buyers continue fight in the courts to recover the amounts paid for the not built property. If you think about buying off-plan property you should check the land ownership and the certification back. In addition, do not forget to make sure in the commercial register (Registro de Comercio) to identify the entries of confiscation or the bankruptcy proceedings initiated. All the sums paid by the buyer must be guaranteed or ensured.
What is the point to learn the news of the “comunidad de vecinos” (residents’ association)?
I always ask to provide me with 3 or 4 last house community reports. From the reports one can get a very valuable information about the perspectives. If there is constant non-performance of utilities, in future it might lead to unplanned expenses of my client. Another example: if it is scheduled installation of an elevator in the house. It will entail a high rate tax.
Knowing the plans of the residents’ association, you can predict the utility expenses for 3- 5 years. Sometimes we are talking about quite large sums.
Here is another example from my experience. It was one of my first purchases in Madrid. After a renovation, the neighbors and the president of the housing block claimed that the previous owners built illegal construction in patio. According to them, the new owner had to demolish it in 2 months. The toilet was the question! No more, no less! I asked for the reports of the residents’ association and found out that the construction became legal automatically behind the statute of limitations. It would be very difficult to clear up the situation without the lawyers and real estate specialists.
Language barrier and ignorance of the law can turn a foreign buyer into hostage to scammers pressure, or will lead to unforeseen expenses. That is why I urge potential buyers to contact people you can trust and specialized agencies.