Acquisition of real estate in Spain can generate various fees for which, without careful preparation, the buyer can quickly find himself liable. Furthermore, the transaction can accrue taxes, which can be quite different for the buyer and the seller.
Real estate law governs property transactions of immovable goods and rights that exist over them: sale of properties and real estate companies, leasing, etc. Construction law governs construction, regional planning and land use and it also governs the powers and obligations of land owners.
In Spain, banks usually finance real estate acquisitions through mortgages as well as other services. Borrowers run the risk of finding the liability for fees incurred by the appraisal of the property, notarisation of the mortgage and entry into the land registry shifted onto them.
Seeking real estate in Spain can be done by internet, with the help of a real estate consultant or through an agent. Care should be taken if using an agent, as well as in signing a contract, because agents generate fees and only notarisation can ensure acquisition in good faith.
Forward purchase and forward funding contracts are particular kinds of contracts that perfectly meet the characteristics of a sales contract of a future good. These are two types of bilateral sales contracts of a future building concluded between an owner builder seller and an investor buyer. These contracts are often used in large real estate transactions.
An immovable property seller must take the risks that an immovable property sold to a buyer might encounter. In other words, the seller is held liable for the faults and defects that may arise after the sale. The Spanish Civil Code along with Law 38/1999, of 5 November, on Construction Planning (LOE) establishes the different types of liability, as well as the limitation period for actions for damages.
Before the economic and financial crisis, the Spanish real estate and construction sectors constituted one of the pillars of the country’s economy and real estate promoters used to benefit from the support of national banks. Because of the crisis, the real estate market has sharply declined. Real estate promoters had to find alternative funding sources.
A sales contract of a property under construction is similar to a sales contract of a future good. The future good is certainly an object that does not exist, but on whose existence the parties have already agreed upon. Consequently, the parties agree on the object of the contract, in this case the building to be constructed, on the price, the rules to calculate the price, the obligations, and the conditions regarding the transmission of the building once it has been constructed.
Selling a property under construction consists in the conclusion of a sales contract related to a property that has not yet been constructed, but the parties have already agreed on its existence and hence on its creation as well as on its price. Therefore, the parties conclude a sales contract related to a future good which involves its own different characteristics.
Investments in real estate funds in Spain are currently attractive due to low interest rates. For individual investors, there exists the advantage of being able to invest in real estate funds in larger projects such as shopping malls or office complexes. There is a distinction between open and closed real estate funds.
The building lease market in Spain has strengthened from the economic crisis and has begun to displace the ownership regime. However, the war between supply and the demand, and the hidden decoys behind feasible rents, can entail the assumption of taxes and expenses that parties should understand and negotiate.