In order to boost the real estate market in Spain, the figure of the SOCIMI (real estate investment company) emerged in 2009. These are listed companies that principally carry out the acquisition, promotion, and restoration of leasehold urban assets.
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.
Article 17.1 in the Law of Construction Planning, “Responsibilities and guarantees,” regulates the civil responsibility of the agents involved in the construction process as well as the deadlines for dealing with them.
The figure of the construction developer was not defined uniformly in Spanish legislation until the entry into force of the LOE. Article 9 establishes that a construction developer is understood as a promoter and what his obligations are, while Article 17 determines his civil liability regime.
The Building Regulation Act (BRA) in Spain establishes in article 8 that all people involved in a building process are to be considered building agents. It is worth considering who is classified under this condition as well as the different types of building agents in Spain.
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.
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.