Solicitor asking for part payment in cash

Hello,

We are in the process of purchasing a property in Spain. We are cash buyers and due to complete next week.

Today our solicitors are asking for a part of the payment EUR 5,000 on the sale value of the property to be made in cash. Also the solicitor and agent fees have also been requested in cash. Is this commonplace in Spain, it seems unorthodox??

I can see how this might reduce the tax liability of the seller, but surely it would appear on the deeds at the reduced sum and possibly attract enquiry from the Spanish authorities.

Should we hold out and insist that all payments are made on a bankers draft?

Any help would be much appreciated! This is out first time buying in Spain.

 Sorry, boggey 79, to hijack your thread,, but I would  also like to know:

When selling, does the buyer normally  pay the seller direct with bank draft, at the notary's office, and then the seller pays estate agent, solicitor etc

When a deposit is made, does it go straight to the seller or a special "escrow" account. Can the seller insist where he/she would like it paid?

I would not feel easy about these payments going direct to estate agent or solicitor for obvious reasons.

5,000 off the sale price will not make any difference in practice to the price declared, i.e. it’s too small to attract any attention.

However, the only reason for wanting cash is so that the tax man will not see the transaction of the person who get it.

If you have signed the comraventa (sale agreement with the actual amount shown) then you can insist if you want to that it is the price shown on the Escritura.   If the  seller were to refuse to sell on that condition, then they must compensate you with the return of the deposit an equal sum. They won’t do it.

 it is quite normal for a draft and cash to be taken to notary as the overall payment has to be split on the day into.

vendors draft

agents commission

3% retention

any further retention 

tax

outstanding mortgage payment

solicitors fees

Most of the cash purchases that i complete have some cash involved.

I insist all deposits are made into the solicitors escrow account and are not passed over to the vendor before completion (they have been known to run off with the money!!)

 Thank you Georgia & Johnzx,

The cash element is relatively small so we'll let it slide! Appreciate your help!

This is most unorthodox.

Although we haven't yet adopted electronic transfers for property buying, the notary should be receiving facturas (Invoices) for professional services, ie your lawyer and agent fees, these would be plus IVA (vat).

I would like to think that you would get a schedule(statement) of payments from your lawyer prior to the notary, the total of this schedule should add up to the exact amount you are expecting to pay.

On a resale property it is normal for all amounts falling due to the seller(ie agents fees, outstanding debts,mortgage etc) to be deducted from the buyers money with the correct balance going to the seller.

boggey

Is it a new development? have you your own chosen lawyer? or one appointed by a builder/promotor?

 Hi Team GB,

We have had a full breakdown well in advance and yes there is no discrepency with the figures. The problem is, the vendor wants to receive a small part of her payment under the table, presumably to avoid tax.

From what I understand this is fairly standard in Spain, but I am obviously not keen on the idea, simply out of principle.

 As somebody pointed out earlier, if the purchase/sale price is underdeclared, then down the line that will have an impact for you. The "Hacienda" (tax authorities) will not only look at reported exchnage price but what they consider the value for VAT purposes, which could be higher. Further down the line when you come to sell you will pay capital gains on the difference of what was under-declared and the actual sale price. I repeat this is no longer common practice.

Saludos

Juan

 Thanks Juan,

Then we will insist that the full amount is paid on the draft.

 "Fairly standard" - it is against the law, full stop. Don't do it, insist that the full purchase price is declared on the escritura! Lawyers, agents (generally expat scum) etc. have to provide bonafide invoices stating all relevant details and amounts as required by Spanish law. This bullshit by so called official agents that this is the way it is done needs to be stamped out now, they should be exposed to the relevant authorities and be forced out of business. This also goes for the few so called lawyers who colude with agents to dupe their clients. THE ONES ON THIS FORUM KNOW WHO THEY ARE SO DO NOT BOTHER REPLYING AND TRYING TO SQUIRM OUT OF THE ACCUSATIONS. The holier than thu attitude just does not wash, stop trying to drum up trade!

IF SPAIN IS TO GET OUT OF ITS PRESENT PREDICAMENT, UNDER DECLARATION AND TAX FRAUD HAS TO STOP!

Also posting on a public forum about colusion in possible tax fraud is not a good idea, no-one is invisible your IP address is logged and you can be traced.

If you are concerned about not sleeping at night and not waiting for the tax man to knock on your door, do the right thing pay your taxes and do not be dishonest.

I personally would fire any lawyer that told me to pay any ammount of a property purchase in cash whatever the bullshit reason was. They are meant to be working for you and protecting your interests.

 Our sellers are Spanish, and I should add that it appears that the seller requested part payment in cash. What surprised me is that our Solicitors entertain these arrangements. They are suppose to be working for us. 

Cash, cheque, draft, used stamps etc is not what matters.  It is how much is shown  as the purchase price(declared value) on the escritura (deeds).

 

error

Yes, we've made it clear that the original agreed price is what we want stated on the deeds. If they don't agree, we are willing to walk away from the purchase.

Despite what may be accepted in Spain, this practice & the actions of your solicitor appears inappropriate !!

 If we walked away it would be because they have changed the terms of the agreement. I.e. agree at one price and then state a different amount on the deeds. I don't know how the law works in Spain but surely it would be a breach of contract and we would be indemnified against costs?