Buying property in the Canaries

THIS is a kind of dictionary connected to the purchase of a property in theCanary Islands.

You can find a lot of information on the internet relating to this subject but sometimes, although the facts are correct, there are many things to bear in mind.

Normally, there are lots of legal steps to be carried out inSpainuntil you become outright owner of the property.

It starts with a contract of purchase, which is a private document whereby both vendor and buyer find an agreement. If there is a developer, the property will be a future house or apartment not built yet.

The developer usually includes a plan of the property and the buyer pays a deposit or first payment. The proceedings finish with the last payment at the time of signing the Title Deed of Purchase (Escritura de Compraventa), which is the public document to be recorded at the Land Registry.

Sometimes the developer finds a bank to finance the project and, consequently, there is a mortgage on the land where the development is to be built.

This mortgage is divided, charging every apartment (instead of the whole plot), and it has to be cancelled before granting the Deed of Purchase.

Alternatively, the purchaser can surrogate in the mortgage agreed by the vendor (with the acceptance of the bank). The buyer, of course, can get his own mortgage loan (you may find more information in my article about repossession).

Now, I am referring to some of the documents needed after purchasing a property before notary public. Before signing the agreement with the vendor, it imperative you check to see you are going to get clear Title.

Once you have the “Escritura”, you become the real owner of the property. In spite of this, it would be very important to register the Escritura at the Land Registry.

There are taxes to be paid before one month since the date of the signature of Escritura. It is a mistake to avoid the payment of taxes if you do not present the Escritura at the Land Registry.

Nowadays, the “telematic” information runs so fast, and the Tax office gets this information from the notary office.

Once you become owner of the property and register your Escritura, in addition to Transfer Tax-Stamp Duty (IGIC tax in some cases), you have to pay the “Plusvalue Tax” (“Impuesto sobre el Incremento del Valor de los Terrenos”) at the Town Hall.

You also have to contact the Community of Owners in order to fix the payment of future Community fees (this is not applicable if you buy an independent house).

Take into account that, at the time of signing the Title Deed, the vendor has to provide you with the information proving that he is up-to-date with the Community of Owners.

Another tax to be paid is the yearly rates (Impuesto sobre Bienes Inmuebles or IBI), which is paid to the Town Hall (or Consorcio de Tributos) once a year.

The electricity and water suppliers must also be informed about changing of ownership in order to bill the new owner. If you do not change it and the former owner does not settle the new invoices, you could suffer the consequences if the electricity is cut off.

The suppliers normally ask for a “Cedula de Habitabilidad”, which is a document provided by the Town Hall to the developer, who passes it on to the purchaser.

Useful A-Z dictionary for guidance

ADMINISTRADOR DE FINCAS: According to the Condominium Property Law (Horizontal Division Law), all the owners of properties in a complex must hold an Annual General Meeting to appoint a president, vice-president, secretary and administrator. The administrador de fincas is a licenced administrator, who deals with the accounts of the complex.

AMORTIZACIÓN (repayment or redemption): This is the refunding of a loan (fully or partially) as per the agreement signed with the bank. The repayment can be monthly, yearly or every six months. In cases of a mortgage loan, the word is “redemption” of loan.

AMORTIZACIÓN PARCIAL: The refunding of the loan before its deadline. It is subject to commission, which depends on the interest rate of the loan).

ARRAS PENITENCIALES (deposit or guarantee deposit): The amount the buyer gives the vendor as guarantee of payment of the property before a deadline. If the purchase is finally completed, the “arras” are taken as part of the price. If not completed through the purchaser’s fault, he loses the deposit. If it’s the vendor’s fault, he has to refund double.

AVALISTA (guarantor): The person who acts as guarantor of a loan and assumes the responsibilities of payment if the debtor fails to pay the debt and the interest on it.

There is far too much information for one column, so I will complete the dictionary next time.

Mariano Zunino Siri is a lawyer registered in Tenerife Bar Association since 1991. Tel: + 34 822 101 293.

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Posted by on Aug 3 2012. Filed under Legal Matters. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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