TerraLex Cross-Border Real Estate Guide

The registration of the rights in the Spanish land registry gives a presumption of veracity of such registered rights, therefore it is highly recommended to register all properties in the land registry.

Registration in the Land Registry is strictly necessary for very few rights (although highly recommended). The most common one requiring registration would be the mortgage.

1. Request a tax number
2. Opening of a current account in a bank entity
3. Granting of powers of attorney to carry out the sale and purchase (if applicable).
4. Signing of a deposit contract (if applicable).
5. Signing of the public deed of sale and purchase before a notary public.
6. Payment of taxes related to the sale and purchase.
7. Registration of the sale and purchase at the Land Registry.

Investors usually invest in Spain as individuals or through limited liability companies: "Sociedad de Responsabilidad Limitada (S.L.)"

The acquirer must pay the real estate tax (IBI) and other taxes associated with the ownership of the property. He must also pay the recurring payments of the community of owners, if applicable. With respect to the contracts of supplies, either the subrogation of the purchaser can be agreed, or the seller cancels such supplies at the time, or prior to the sale.

The owners must be up to date with their tax obligations as well as with the community of owners (if applicable). Failure to meet such obligations could result in the seizure of the property and/or tax penalties, among others. On the other hand, it is advisable that the owners take out an insurance policy to cover potential damages that could be caused to surrounding properties, such as leaks.

It is compulsory to obtain a tax number prior to buying any property. In addition, it is highly recommended to carry out a legal due diligence process in order to verify that no defects or contingencies arise from the property once the acquisition has been executed.

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Yes.

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Property owners must pay the real estate tax (i.e. IBI), as well as other taxes derived from the ownership of real estate, for example the waste collection tax or the garage tax.

On the other hand, the transfer of properties will imply the payment, depending on each case, of taxes such as VAT, stamp duty or transfer tax (TPO). Likewise, and although they are not taxes as such, notary and land registry fees must be taken into account.

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Commercial leases give more leeway to the free agreement between the parties. This type of lease requires the deposit with the public administration of a security deposit for a maximum amount of two months' rent, and the lessor may also be given additional guarantees in the form of a bank guarantee or cash deposit.

Sometimes, especially if the lessee is going to carry out a reform, the lessee is granted a payment grace period of one or several months. In addition, the rent is usually updated annually in accordance with the CPI.

Housing leases are currently subject to protectionist legislation with the tenant.

The landlord must deposit with the public administration a deposit worth one month's rent and may require an additional guarantee from the tenant for a maximum amount of two monthly rents. Tenants currently have the right to maintain the lease for a minimum period of five years, or seven years if the lessor is a legal entity.

Both in commercial and residential leases, the tenants hold the right of first refusal, nevertheless, in most lease agreements such right is waived.

When it comes to commercial leases, such rules are more flexible and may be agreed between the parties. Usually, a minimum term is established for both parties, subject to one or several term extensions. The tenant usually requests such extensions.

On the other hand, the residential leases have a compulsory period of six months. As noted, before, Tenants currently have the right to maintain the lease for a minimum period of five years, or seven years if the lessor is a legal entity.

It is important to note that lease agreements can also be terminated in case of a breach of agreement whose effective breach has expressly been established as a condition subsequent.

In the event of default on rent payment, the tenants may be expelled from the property, and must pay the amounts of rent due, increased with the corresponding late payment interests.

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Construction projects are usually priced via basic & implementation projects to be drafted by architects and/or engineers. In addition, several appraisals might be needed in order to finance the construction.

Construction projects are usually priced via basic & implementation projects to be drafted by architects and/or engineers. In addition, several appraisals might be needed in order to finance the construction.

There is a wide range of regulation related to construction such as the Building Act (Ley de Ordenación de la Edificación), the Technical Building Act (Código Técnico de la Edificación), the Spanish Civil Code (Código Civil) and other ancillary regulation (i.e. labour law, tax etc).

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