Buying land in Spain on the coast could be the key to having a golden retirement, with a nice house, the possibility to generate some useful additional income from tourist rentals...unfortunately problems may arise along the way and you should be prepared! Many of our clients have a very similar idea - the perfect plan to retire:
- Buy some land in Spain.
- Build a home ( with swimming pool).
- Prepare extra rooms for guests and rent them with Airbnb or another agency.
Quite often a Spanish real estate agency will be contacted and a visit to Spain arranged to view some options.
When buying property in Spain, it can still be reasonably easy to find a nice plot not too far from the beach - or perhaps a rural property in Spain surrounded by forests and mountains with road access and very close to populated urban centres. So far so good, but be careful, because it is at precisely this point that problems can and often do arise. Our experience in helping many clients resolve such problems in the past provide us with many examples of what can go wrong from this point on.
Purchase Agreements
The first problem that can arise is when the purchaser is asked by the Estate Agent to sign a purchase agreement to buy the plot - with the Agent acting as an intermediary - and a requirement to transfer a provision of funds of 3,000 euros (the real estate agent always pressures the clients to sign quickly with the excuse that otherwise they might miss out on the property since anyone could come anytime and acquire it). What is the problem here?
Well, often the problem lies in the drafting of the contract which we have seem sometimes include terms that provide for the estate agent to be paid a commission even where no property is purchased. While this might seem absurd, if the contract is drafted in Spanish, how would the purchasers know any better?
On a slightly more practical level, if the initial conveyance does not proceed for any reason, purchasers can find it difficult to obtain the return of the deposit paid. They will often come under considerable pressure from the estate agency to allow them to retain it while they help you find another suitable plot.
However, what if they don’t have anything suitable on their books – they may well try their best to push you into a plot that you are not fully content with.
Power of Attorney
Since the buyers may well return to their home country while the building of their property begins, it can seem very convenient to sign a power of attorney in favour of the estate agent so that the agent can take care of everything: hire an architect, a builder, apply for building permits, etc.).
In one case in which we were asked to become involved, this is exactly what happened - a 1,500 square metre plot of land was purchased and the estate agent was put in charge of dealing with the different professionals and workmen in building a house with a budget of around 130,000 euros to include a swimming pool. This was a real bargain. Or was it?
One year later the couple were settled living in the house when they received a notice from the local Council with a fine of 70,000 euros for illegally building a property without due permits along with an order to demolish their house. They did not understand anything, there were more houses around; however, the local Council explained to them that all those houses were also illegal and those other houses also had a demolition order. When buying Land in Spain (as in many other subjects in life) cheap becomes expensive.
This situation really could have been avoided if the buyers had hired a lawyer to supervise all aspects of the operation. They should have made the power of attorney in favor of a lawyer, and not in favor of a real estate agent.
While the lawyer would charge them for their services, they would be independent and would not be motivated to push ahead with a conveyance despite building permit issues.
Other Issues to be Careful About
Building on land illegally is not the only problem that may arise when acquiring land in Spain, others may arise, such as having property tax debts or a fine that is acquired along with the land, or that there is a government plan for building a road right where you have your house, and then the State a few years after building your house, expropriate your land, demolish your house and pay you a ridiculously small amount in compensation. It is even possible in some more rural areas that there is right of way for animal herds across the land, and therefore you cannot put a perimeter fence around your land and you are forced to let animals, pass through.
Time and again it has been shown that hiring a lawyer to accompany you when buying land in Spain is not only a good idea, it is essential.
If you are buying land in Spain, please contact us for more information on how we can ensure that the process is simple, safe and straightforward.
