Spanish Law FAQs

• Building License (“Licencia de Obra”) under which the building activity is initially allowed by the authorities on the basis of the technical project produced by an architect/expert technician initially presented to the authorities. It also verifies that the building activity proposed is in accordance with URBAN PLANNING SCHEME (PGOU) provisions and minimum requirements (such as “urban” qualified land, building limits, etc). This license should be obtained before starting building work.
• Final Building Certificate (“Certificado Final de Obra”) issued by architect/ expert technician which verifies that the building activity has been completed in accordance with the Building License initially granted.
• First Occupation License (“Licencia de Primera Ocupación”) which confirms that the housing is ready to be occupied and electricity/water supplies can be connected.

If there is no valid Will, then the Estate will pass in accordance with intestacy rules, which set out who is entitled to inherit. Intestacy rules vary in each country so it is important to ensure the correct ones are observed.Spanish Intestacy Law fix a list of beneficiaries who would be entitled to inherit:

• Descendants (the closest have preference i.e. children, grandchildren)
• If no descendants, ascendants (parents, grandparents…).
• If none of the above, survivor spouse
• Brothers/sisters, if none nephews/nieces
• Other collateral relatives up to 4th grade i.e. cousin
• Spanish State, if so the assets in the Estate will be distributed as follows: 1/3 to local charities/social entities in the municipality of deceased’s domicile, 1/3 to charities in the province, 1/3 subject to Cabinet’s decision to the most convenient purposes.

If Spanish Intestacy Laws apply the beneficiaries may not inherit the assets as you would have wished, therefore a Spanish will is highly advisable.

In some cases the Intestacy Rules can have profound implication for example if you are neither married nor in a civil partnership but you own a property in Spain with your partner and you die intestate, your partner could have difficulty in establishing their rights. . Your share in any Spanish property will be inherited by whoever is entitled to it according to the applicable Intestacy Laws and your partner may end up sharing the property with that person without being in the position to sell it unless an agreement with the co-owner is reached.

The benefits of making a Spanish will are:

• You will leave your assets to your chosen heirs
• It will be quicker, less expensive and easier to deal with the Spanish estate upon death
• You can mitigate Spanish Inheritance Tax.

The Sale-Purchase private contract cannot be registered even if it is perfectly valid because the Land Registry Regulation requires that certain transactions must be notarised in order to have access to the Registry. Registration is not compulsory but if registered the owner of the property protects their rights any third party who may claim other non registered rights on the property.

Therefore it is advisable to sign a public sale-purchase deed before a notary which can be duly registered. Nevertheless it must be clarified that the private Sale-Purchase contract is perfectly valid if it complies with Spanish Law, so the presence and involvement of a notary is not a validity requirement but a registration requirement.

When judicial proceedings are issued to enforce a mortgage for failure to make regular payments there are basically three options that can be agreed by a judge (as per Spanish Ley de Enjuiciamiento Civil art. 691 ss):

• Public Auction (“Subasta”)
• Private agreement (“Convenio Privado de Realización”)
• Enforcement by specialised agent or company (“Realizacion por persona o entidad especializada”)

If you are falling into arrears it is advisable to speak to your bank to discuss available options. We can assist you in your negotiations with the lender.

In essence the local tax known as IBI which stands for “Impuesto sobre Bienes Inmuebles” charges the right of ownership/usufruct/surface/administrative concession on urban or rustic real estate, being calculated and collected annually by the local authority in charge of the municipality where the property is located.

This tax is calculated on the basis of the “Cadastral Value” as per the Cadastral Registry records, which includes the value attributable to the land and the value attributable to the building if any.

When fixing cadastral values various criteria is taken into account such as the urban planning circumstances of the land, market value, building circumstances, etc) . The cadastral value can be updated by applying certain indexes which may vary in each specific case. It is possible to challenge cadastral values in accordance to applicable Law.

By applying certain rates on the cadastral value the tax payable is obtained. There are maximum and minimum rates which can be increased by each Town Hall under certain requirements. There are certain benefits which may reduce the payable tax if legal requirements are met in certain cases (i.e. official protection property)

If the IBI receipt is not paid within the legal term stated in the receipt issued by the local authority there will be a surcharge and under certain circumstances the local authorities can initiate legal proceedings to recover payment which could even lead to embargo (charges) procedures.If there are outstanding bills for IBI and a property is sold, the IBI debts will be passed on to the new owner who will assume the debt.

The tax liability is for the owner so the tax receipt will be issued in the landlord’s name.What happens if I stop paying my Spanish mortgage loan? Is the Spanish bank entitled to claim against my assets in the UK?

The bank can initiate a legal proceeding in Spain by taking legal action if the monthly mortgage charges are not paid. Each bank has its own criteria but usually if there are three consecutive outstanding bills the bank will initiate the proceeding which could lead to an embargo on the property . However the bank can offer alternative solutions to avoid the said proceeding by renegotiating the mortgage loan terms.

If the bank initiates legal proceedings in Spain, the Court will decide whether or not to authorise an embargo on the Spanish property and a a sale at public auction if the debt remains unpaid.

As the Spanish property guarantees the loan, the claim will be against it. But if the sale of the property does not cover the outstanding mortgage loan, the bank can claim against other assets owned by the debtor either in Spain or abroad. Therefore the handing over the keys to the Spanish property to the bank is not accepted as a solution to satisfy the outstanding debt. The debtor’s liability affects any assets worldwide. So if there is a property in the UK in your name it is possible that the Spanish bank can make a claim against it.

If you own a holiday home at a complex in Spain you must be aware of the applicable legal system and your Community of Owners´ internal rulings as described in the Community Statutes which will definitely affect your property and your rights or duties as an owner.Do not ignore the Community of Owners General Assembly Meetings as if you do you may miss the opportunity to vote on important decisions such as annual budget approval or maintenance costs which at the end of day will affect your pocket.

At the General Meetings all the owners of the complex are invited to attend although those owners who are not up to date in the payment of the Community fees are only allowed to attend but they will in general terms be excluded from their right to vote.

It is essential to ascertain that the Meetings are valid in accordance with the Law and the Community Statutes as the agreements agreed at a Meeting which has not complied with the said requirements may not be valid.

The Meetings should observe the following requirements:

1.-Previous step: official notice of the general meeting

• The Meeting should be called by the President of the Community (or by those Owners who have suggested it if the President does not) either personally by the President or through the Secretary or Administrator.
• There is a minimum notice period of six days for Ordinary Meetings which can be extended under the Statutes but never shortened.
• Notice should be sent to the address of each owner or through the publication on a notice board or common place used for the publication of announcements.
• The Notice should contain the date, hour (there must be at least 30 minutes between the first and the second calling of the general meeting) and the place in which the Meeting will be held, as well as the Agenda for the Meeting.

2. – General Meetings & voting:

All owners may attend the Meeting, in person or through a representative, and those who are up to date in the payment of the Community fees will decide and vote. Exceptionally debtors will be entitled to vote if they have either disputed their debts judicially or deposited the funds with a Judge or Notary or if there are certain rules re quorum.

In what regards the quorum requirement, if a majority of owners representing the participation shares (quotas) are not present at the time of the first calling of the meeting, the meeting shall be called again on second call without the need for a quorum.

Requirements for voting of resolutions will vary depending on the kind of agreement or decision to be taken.

• Unanimous vote: amendment of constitutional deed (i.e. quotas) or Statutes.
• Qualified majority of 3/5 (Owners and Quotas) for establishing or removing common elements of general interest (i.e. security).
• Majority of 1/3 (Owners and Quotas) for agreements on special occurrences, as per request of any Owner, in connection with common infrastructure for access to telephone and television, as well as new energy systems (i.e. solar power).
• Simple majority: the remaining resolutions.

Owners who do not attend general meetings that require unanimity or a qualified majority will be considered to be in favour of a resolution if they do not declare their disagreement by any reliable means during the period of 30 calendar days from the meeting.

3. – General Meeting Resolutions & Minutes or :

The Minutes of the meetings will be drawn up by the Secretary and filed in the Book of Minutes (which must be recorded by the local Land Property Registrar) and signed by the President. A copy of the Minutes must be sent to each Owner.

The Secretary must keep all the documentation (notices, communications, authorisations and other documents) for five years.

The resolutions/decisions of the General Assembly (Meetings) can be challenged in the Courts under certain circumstances i.e. They are contrary to the Law or to the Statutes (i.e. the General Assembly notice is not observed or the Minutes do not reflect what really happened in the meeting)

The resolution/decision must be challenged within the period of time legally stated (one year or three months depending on the case) which begins to run from the notification to the Owners in the terms set out (individually or by notice board).

The resolutions can be challenged by the President who represents the Community or by any owner who considers that it is convenient as long as he is up to date with Community fees (although there are some exceptions to this general rule).

The agreements contained in such challenged resolutions will be:

• Voidable agreements (those which imply a breach of the Community Statutes or the Horizontal Law Property, these agreements can become valid under certain circumstances).
• Automatically void agreements (those that imply either a breach of any mandatory or prohibitive Law, or they are contrary to morals or public order, or they have been adopted fraudulently in Law, therefore these agreements cannot be rectified as they are null and void).

It is important to highlight that challenging the agreements will not stop them from being executed unless the Court of Justice states so as a provisional measure.

A new Regulation has been passed by the Andalusian government with the aim to provide a legal framework to regularise, if possible, register illegal properties built on non-urbanisable land.It refers not only to individual housing but also to complexes and urbanisations on rural areas and it covers a wide range of irregular situations.

In respect of individual housing it distinguishes legal or potentially legal properties from illegal properties, including those which cannot be challenged by local authorities as the term within which they can be challenged has expired. Different scenarios are considered such as houses built without building permission but observing Planning requirements or those which do not even comply with Planning regulations.

It will be necessary to look at each specific case and the available route for legalisation will vary depending on current circumstances, subject to the local authorities control, so this cannot be considered as a general and indiscriminatory regularisation tool.

The fact that the Andalusian government facilitates the regularisation of these properties is good news not only for current owners who are willing to sell an irregular property or who find themselves in serious difficulties when trying to connect electricity, but also to potential buyers who are looking for a mortgage loan which would never be granted by a bank unless Planning regulations are observed.