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Buying Property in Spain Through a Family Trust

Are you thinking about buying property in Spain? Many people consider buying property in Spain through a family trust. But how realistic is that option?

Is it possible to purchase property in Spain through a family trust?

Spain does not generally recognise a family trust as a legal entity. However, this does depend on the legal document regulating the trust in question. In some cases, it is possible to register property in favour of a family trust.

Would it be possible to buy property in Spain via a company controlled by a family trust?

Buying property in Spain through a limited company, controlled by a family trust or otherwise, is a very realistic and common option. Below we outline the main advantages and disadvantages of buying property in Spain as a limited company as opposed to as an individual.

Buying Property in Spain as an Individual

Buying Property in Spain Via a Company

Pros

Cons

Pros

Cons
Lower start-up costs compared to a company.

 

 Set up costs: minimum of €1,000. Increases according to the share capital.
  Lack of anonymity. The information contained in the Spanish land registry is accessible to anyone who registers with them on the Internet or requests information in their offices, in which case there is no need for them to even register. Greater anonymity. It is possible to limit who is able to view the owner and shareholders of a company.

 

  
No running costs.

 

 Company running and maintenance costs.
Better mortgage: It’s easier to obtain a mortgage, and at a better loan-to-value ratio than when buying a property through a company. Worse mortgage: It’s more difficult and expensive to obtain a mortgage.
  More difficult to control the amount of inheritance tax due.

 

 Easier to control the amount of inheritance tax due, especially if the shareholders are non-residents.  
You will pay more capital gains tax if you decide to sell your property in the future. You will pay less capital gains tax if you decide to sell your property in the future.

 
If you are a non-Spanish resident, you will have to pay non-resident personal income tax yearly calculated on the cadastral value of the property. No annual corporate tax due if there isn´t profit.

 
You can’t deduct the property’s annual running costs against the profit on selling the property. This is only possible with limited running costs and home improvements. You can deduct the property’s annual running costs from your profits.

 

Consult with Andalucía Lawyers

Are you considering buying property in Spain through a family trust or company? Contact us to arrange a consultation about your particular situation either in person in one of our offices, via telephone or online.

Contact Us
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Due Diligence When Buying Property in Spain

Are you thinking of buying property in Spain? Perhaps you have already found a Spanish property you like and you’ve decided to take the plunge and buy it. Before you continue with the process, there are some checks you need to make. Andalucía Lawyers’ article on due diligence when buying property in Spain tells you what you need to know before signing on the dotted line.

What is due diligence?

Once you’ve found a property you want to buy in Spain, there are some legal checks that need to be made – we call these due diligence. Due diligence is extremely important; it is essential to know exactly what you are agreeing to buy to avoid potential problems later.

Due Diligence Check-list

Before signing a property purchase agreement you should answer the following questions:

  • Who owns the property?
  • Are there are any unpaid debts against the property (e.g. mortgages or injunctions)?
  • Is the property being leased to a tenant?
  • Are there any unpaid Tenants’ Association fees or property taxes on the property?
  • What kind of taxes would apply in your particular case?
  • What’s the cost of buying the property and also maintaining the property?
  • What’s the property’s annual running cost, including taxes, community fees and insurance?

This last point is not just for your information when calculating future maintenance costs, is it also essential as it is usual to divide the annual running costs for the year of purchase between the buyer and the seller upon purchase.

If you wanted to find this information yourself then you could obtain the majority of it from the property registry (registro de propiedad) where the property is located, either in person or via the Internet. However, we would strongly suggest employing an experienced Spanish lawyer to find and check this information for you, not just to save you time but also to guarantee that everything is in order. If you’d like to enquire about our property buying services, you can contact us via phone or email.

Check-list for What the Vendor Should Provide You with:

  • An authorised copy of their deed of purchase.
  • A tax receipt stating that all property taxes are paid.
  • A certificate from the president or secretary of the Tenants’ Association confirming there are no amounts due on the property.
  • A formal statement stating that there are no leases on the property.

Check-list for What You Need before You Can Buy Property in Spain:

  • NIE number.
  • Spanish bank account.

What is an NIE number?

NIE stands for Número de Identificación de Extranjero and it’s essentially an identification number for foreigners (both EU and non-EU citizens). It is used to confirm your identity when carrying out fiscal or legal procedures such as opening a bank account, buying a house or car, and setting up phone and amenities contracts.

How to Get Your NIE Number

You need to go in person to the relevant Spanish national police station for your location in order to apply for your NIE number. Alternatively, it can be done through your solicitor with your passport or a notarized copy of your passport if you grant them a power of attorney.

Am I obliged to open a Spanish bank account to buy property in Spain?

In a word, yes! Even if you have bank accounts overseas you must open a Spanish bank account in order to buy property in Spain. When contracting services such as water, electricity and telecommunications you are required to provide both your NIE number and a Spanish bank account to which they can charge you.

How do I apply for a mortgage on a Spanish property?

In order to qualify for a mortgage, the bank will require the property to be registered in your name. However, this is taken care of during the buying process. In short, when you attend the notary’s office to sign the sale deeds a representative from the bank will also be present in order to sign the money over to the vendor.

Do I have to take over the property’s existing mortgage?

If the vendors of the property you wish to purchase already have a mortgage on that property, you don’t have to take it over from them, although you can if you wish. You have two options:

  1. You can agree to take over the vendor’s mortgage. In this case, you must request a certificate from the vendor issued by the bank stating how much of the mortgage has been paid off and how much remains outstanding. Don’t be afraid to negotiate a more favourable rate and improved terms with the lending bank. If they don’t want to give you a better deal you can shop around other banks for better conditions.
  2. Request the cancellation of the seller’s mortgage. You apply for another mortgage with better conditions for you.

Consult with Andalucía Lawyers

Buying property in Spain can be a relatively straightforward process, when you have the right legal representative. If not, it is possible to fall into traps or simply to miss something that may end up costing you dearly in the future. Due diligence is an imperative part of avoiding these kinds of pitfalls and ensuring you know exactly what you are buying. Our English-speaking team at Andalucía Lawyers has over twenty years’ experience buying property in Andalusia, don’t hesitate to contact us to enquire about our property buying services.

Contact Us
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A Spanish Lawyer’s Guide to Getting Divorced in Spain for Expats

It’s not a happy topic wherever you are, but getting a divorce in a foreign country can seem more daunting still. Andalucía Lawyers have put together this guide to getting divorced in Spain for expats to help you better understand the process and the options available to you.

I’m not Spanish, can I still get divorced in Spain?

As an expat you can obtain a divorce in Spain if you and/or your spouse is a Spanish resident, or if your other half is a Spanish national.

Do I have to wait a certain time after getting married to be able to apply for a divorce?

You may divorce by mutual agreement if you have been married for at least three months. However, in cases of domestic violence (whether physical or psychological) the victim can apply for divorce before this three month period is up. It’s not necessary to have been legally separated before filing for a divorce.

Am I legally obligated to reveal the motive of our separation?

No, divorce law in Spain is no-fault. This means that it is not necessary to cite a reason in order to obtain a divorce.

I want a divorce but my partner refuses to give their consent, can I still get a divorce in Spain?

Yes, you can. In Spain it is not necessary for both parties to apply for a divorce, although if your partner doesn’t want the divorce it will be a longer and more complicated process. Read more about this below.

What is the process for getting divorced in Spain?

There are two main types of divorce in Spain:

1) Uncontested divorce

This is when both partners mutually agree to the divorce. This is the fastest and most straightforward way of obtaining a divorce in Spain; if no unforeseen issues arise the process can take as little as a few weeks.

Choosing a Lawyer

You will need a Spanish lawyer and a legal representative (procurador) to act on your behalf. If both you and your partner agree on the divorce and all its terms, there should be no problem in you both using the same Spanish lawyer. Your solicitor will be able to recommend a procurador. Contact us at Andalucía Lawyers to enquire about our services.

Required Paperwork

Along with your petition for divorce, you must also present the judge with the proposal of governing convention (convenio regulador), in which you state what you have agreed on together regarding the following points:

  • The amount, if any, of compensation allowance or alimony to be paid by one spouse to the other.
  • In the case of shared children, the cohabitation and custody arrangements for these, including visitation rights of the non-custodial parent.
  • The sum that has to be paid for the children’s alimony.
  • Use of the family home.
  • The manner, if any, in which the spouses continue to contribute to family expenses.

The marriage certificate and the birth certificates of any children.

The power to approve the governing convention and grant a divorce rests with the judge.

2) Contested divorce

This is when only one partner files for a divorce without the consent of the other. The court procedure in these cases is longer and more complex, taking anything from a few months to over a year.

Choosing a Lawyer

You will need a Spanish lawyer and a legal representative (procurador) to act on your behalf. If you and your partner don’t agree on any part of the divorce, under no circumstances should you use the same lawyer. It is important to employ a trustworthy and independent Spanish solicitor who will negotiate in favour of your interests. Your solicitor will also be able to recommend a procurador. Contact us at Andalucía Lawyers to enquire about our services.

Required Paperwork

Once again, the petition for divorce and the proposal of governing convention must be presented to the judge to apply for a divorce order, along with the marriage certificate and the birth certificates of any children. If you and your spouse cannot agree on the contents of the governing convention your respective lawyers will have to negotiate between themselves, perhaps also requiring third party evidence. In the meantime, temporary measures may be put in place concerning issues covered in the governing convention, such a child custody and support.

Appeals

The judge’s sentence concerning the divorce order will be filed to the Spanish Civil Registry, after which it can be appealed against. One or both spouses can apply for amendments to the sentence which will be decided by a subsequent judicial dictum.

Custody of Children

Custody is awarded to the mother in most cases, especially with young children, the exception being if it is proven that this would not be in the best interests of the child/ren. Lately the Spanish courts have increasingly come to support joint custody when both partners wish to share visitation rights.

Alimony

Spanish courts generally only award alimony in situations where one of the spouses will suffer a severe loss of income from the divorce, for example if they have given up a career to care for the children with the other spouse taking on the role of sole or main bread-winner. The amount of alimony awarded varies from case to case, but generally falls between 15 and 40 percent of the higher income.

The Division of Assets

Spanish law regarding the division of assets in a divorce is determined by the local law of the couple’s place of residence. In Catalonia, Aragon, Navarre, Balearic Islands and the Basque Country, for example, Separación de Bienes generally applies. This means that each partner keeps anything they owned before the marriage, and any joint purchases during the marriage are divided according to each individual’s investment in buying them. Court rulings have also attributed a financial value to non-monetary contributions, such as taking care of the home and raising children.

In the other Spanish regions, including Andalusia, Sociedad de Gananciales generally applies. This means that all assets acquired during the marriage are considered to belong to both partners equally, unless they are deemed ‘private goods’. Dual ownership would apply to rental income, businesses and goods bought with shared accounts or investments.

Remarrying Following a Divorce

You are legally permitted to remarry once a divorce is granted. Upon doing so, you will immediately lose any marital inheritance rights and widow/er’s pension rights. However, any obligations in regard to children from your previous marriage will remain unchanged.

Contact Us

Are you an expat getting divorced in Spain or thinking about it? Whether you want Andalucía Lawyers to take care of your divorce for you, or just discuss your options with us, you may contact us in complete confidence to arrange a consultation. We have offices in Granada and Sotogrande and can also provide consultations over the phone or via the Internet.

Contact Us
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