Is it Dangerous to Buy Property in Spain?

Published on 10/01/2010 in Buying Process

Almost everyone is now aware of Spain's reputation as somewhere that is hazardous in which to buy property. Indeed, virtually every week a headline appears in the international press highlighting yet another scandal concerning Spanish property. Again and again, stories describe the plight of people who have bought property in Spain only to find, to their horror, that their properties have potentially ruinous problems. Some of these properties are not fully legal or subject to considerable liabilities, whilst others risk the compulsory loss of part of their land or, worst of all - a possible demolition order. It is enough to make anyone thinking of moving to Spain change their mind.

So, is it really dangerous to buy property in Spain?

Well, the honest answer to this question is a qualified - no. No, if you know what you are doing and no - if you are exceptionally careful and know the 'rules of the game'.

The trouble is that most people who buy property in Spain do so carelessly whilst naively imagining that the Spanish property industry operates much the same way as in the UK. It does not. Not at all! In fact, understanding this point, in its most raw and brutal form, is essential if you are to buy a property in Spain that is a safe and sound buy - both from the point of view of legality and investment.

Of course, if you are moving to Spain permanently and intend buying a property in Spain then the stakes could not be higher. Indeed, if you make an error it may be one that will cost you your life savings, turn a dream into a nightmare and risk everything that you have worked hard for over many long years. All of which is unnecessary - if you have the right knowledge.

After seven years in Spain (including working extensively within real estate), I think I have seen, one way or another, most of the problems and scams relating to Spanish property. Unfortunately, half the property problems in Spain are caused by the very nature of the Spanish property industry and half by property buyers themselves - who are frequently taken advantage of and act like 'lambs to the slaughter'.

Of course, there are guidelines to buying Spanish property safely. Some of the most important are:

1. Know the difference between 'Urbanizado', 'Fully Urbanizado' and 'Rural'. To understand these absolutely critical Spanish property terms is not 'rocket science' - but is so fundamental that you should not even be looking at property in Spain before you know what they mean and their very serious and differing implications.

2. Every Spanish property should have a Licencia de Primera Ocupación or First Occupancy Permit (sometimes known as a 'Certificado de Habitacion' or 'Cedula'). If it does not have one - do not buy it.

3. Only buy a property that is easily re-saleable - so be prepared to compromise on what you want if it means buying a re-saleable property. Obviously(!), know (objectively) what is or is not re-saleable. Guidelines are available and they are very important...

4. Never confuse a 'bargain' price with a sound buy. The two are not necessarily the same thing! This is as true of a property crash as it is of a boom.

5. Never accept the very existence of a property in Spain as evidence of its legality - even if it has been around for a long time. The property may still be illegal, semi-legal or have huge potential liabilities.

6. Be extremely wary of buying any Spanish property that is situated within less than at least 100 metres of the highest point that could be reached by the sea in a major storm.

7. Always use a Spanish lawyer for your conveyancing who:

a. Is completely independent of the seller and any estate agent.

b. A specialist in conveyancing.

c. Completely fluent in your language.

d. Fully and properly insured.

e. Is prepared (and does!!) place all advice in writing to you.

8. Always use a properly qualified, fully insured, experienced building surveyor to survey your property - even if this means using an ex-pat surveyor. (Good Spanish surveyors specialising in house survey work are very hard to find).

9. Never pay any 'black' money for a Spanish property - i.e. cash that is not shown on the Escritura (deeds) as part of the total property purchase price.

10. Never be pressured, never rush and always double check what you are told - and obtain written proof if you have the slightest doubt about the truth of some matter.

Follow the above and you will be well on your way to buying a sound property in Spain. Break the 'rules' and act without the right knowledge and you will almost certainly regret it!

Finally, I must stress that you can move to Spain and buy property in Spain safely. We did - and our property has been a sound choice on all levels. Even now, in the midst of a massive property crash, it is easily re-saleable and has preserved the essence of its value. But then we knew what we were doing and that moving to Spain to buy a property was an undertaking requiring serious preparation and planning - if it was not to end in disaster...

Written by: Nick Snelling (Moving to Spain)

About the author:

Nick Snelling lives permanently in Spain with his family and is a journalist and author of four books including 'How to Move Safely to Spain'. For more information about his books and articles see http://www.nicholassnelling.com




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Comments:

shelagh fifteen said:
13 December 2012 @ 09:21

We have had property in Spain for 11 years and this week(for the first time) we have been told we need a certificate de habitacion to be able to sell!!
I thought the lawyer was trying to con money!
But it is true and will now cost us about1200 euros
with the costs of all.
Unbelievable.....



shelagh fifteen said:
13 December 2012 @ 09:19

We have had property in Spain for 11 years and this week(for the first time) we have been told we need a certificate de habitacion to be able to sell!!
I thought the lawyer was trying to con money!
But it is true and will now cost us about1200 euros
with the costs of all.
Unbelievable.....



Anne said:
18 January 2010 @ 09:58

So long as there are warring factions within local, regional and government authorities, the answer to the question "is it really dangerous to buy property in Spain" is a qualified YES. Experience to date demonstrates that the "rules of the game" get re-written. What one authority deems legal is then over-ridden by the other. You only have to read this Daily Mail article www.dailymail.co.uk/news/article-1243586/If-come-bulldoze-villa-chain-inside-die-Spanish-dream.html to recognise how human rights are being compromised at this time, even when due diligence and great care has been taken.
Without doubt the message is a resounding buyer beware.



Kelly Coles said:
13 January 2010 @ 11:55

I think that a lottery is the perfect description for buying property in Spain, although it is probably similar in other European countries. We bought an apartment off plan in the Murcia region from a well known developer. We had a good Spanish lawyer and he did actually warn us that we were taking a gamble but we decided to proceed anyway. Later we learned that the development didn't have planning permission after we put down our deposit, therefore we couldn't get the bank guarantee until sometime later when a corrupt mayor was ousted from Cartagena and the planning permission was granted retrospectively. After this we found out that the 'Certificado de Habitacion' had not been granted to the developer on the day we were to take possession and we couldn't have the mortgage after paying all the remaining cash up front. We ended up with an interim contract with the developer so we could actually move in without a mortgage for three months. All ended well in the end but it could have gone terribly wrong, and the lawyer who had an inkling that something wasn't right didn't have all the facts to advise us. I would do it again, but probably wouldn't buy off plan. We love Spain anyway and just accept that things are never straight forward.


hardmansspain said:
12 January 2010 @ 18:32

I cannot under any circumstances champion buying in Spain. We five years ago laid a deposit down on a development in the Murcia region. Progress was slow until we threatened along with many others legal action, the development has now been "completed" to a totally unaceptable finish with none of the facilities promised. In order to put the deposit on this property I had to save 60k pre tax. The result will be my deposit rotting in Spain whilst I try legally to get it back!

I will would rather buy in Angola than Spain!



David Morrist said:
12 January 2010 @ 17:48

I am afraid that buying in Spain is a total lottery - even taking all the steps Nick outlines there is a good chance your purchase will have problems. We bought off-plan on the beach at Begur after doing due diligence on the promoter (quoted on the Madrid Stock Exchange) and the builder (leader in Cataluna). Our very good Catalan lawyer scrutinised the documentation at every stage. The developer found he couldn't make money on the project so put the local subsidiary into liquidation (the parent company sails on). Fortunately our phase was largely finished and the comun and the generalitat signed off on the poject. Within weeks a local environmental group got a court ruling that the comun had ignored its own building reulations and that the top floor (ours!) should be removed! The owner are appealing
Happily we are the only gringos among the 24 owners. Others (all from BCN) include a high court judge and the head of a major real estate firm - so even with that level of knowledge and expertise buying alongside, we are in the poo!

The Spanish legal system is an oxymoron and a joke - having the European Courts sort it out is demeaning for the country and expensive

Very frustrating place to do business but we love it here!



Sean D. said:
12 January 2010 @ 16:52

We followed all legal advise and went over board getting one English and one Spanish solicitors who had lived in the area for over 30 years and 3 months after we had got our keys to our brand new apartment a 3 storey monstrosity was built in front of our balcony which had when we bought it beautiful gardens and sea views and now the view is this monstrosity with a dozen or so ugly air conditioning units and the our glorious views gone for ever.

And they say buyer beware,WE HAD 2 LEGAL EXPERTS and were still had.



Sarah D said:
12 January 2010 @ 11:11

I would not recommend buying in spain under any circumstances, we followed all recommendations for the purchase of our property El Patio dona Julia, Casares, as set out in points 1 - 10 and were still burned as although the first occupancy licence was granted (fraudulently in my opinion!) the properties were not ready for occupation or close of sale, the developer (Eve Marina) has gone into liquidation and the properties have been siezed by the bank! Our English speaking lawyers were worse than useless and apparently are a very reputable firm! its a joke!


Karen Griffin said:
12 January 2010 @ 09:08

I think this article is misleading, especially as it carries a picture of the Albox demolition. This area was affected by the 'crooked mayor' scandal in 2005, which added another horror separate to the rural/urbinazado issue. We purchased two properties in 2004 (in Vera Playa and Palomares) - both had the Licencia de Primera Ocupacion and both were urbinazado. We employed a qualified bi lingual solicitor before we signed on the dotted line, who underwent all the checks in writing etc etc. One we have had the pleasure of using since 2006. However, the second fully completed apartment is still 'in limbo' awaiting a court case as the completed complex, and dozens around it, were never signed off due to the licencia being retrospectively withdrawn due to the 'crooked mayor' scandal. The Bank Guarantee will probably eventually pay but as the apartment is completed, the banks feel it has done its bit until a court case sets a new ruling. This apartment is in Palomares, close to Albox. So yes, do all the checks as Nick suggests - but it is still buyer beware whatever country you buy in.

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