Entrevista a Jaime Montoro
Jaime Montoro es abogado de la firma BSA-Law in spain, empresa ubicada en nuestro Centro de Negocios Melior Vasari, en Marbella. Desde Melior queremos compartir ,con nuestros usuarios, esta entrevista (en ingles), que le realizaron en la revista especializada de negocios Business Innovators, sobre las prácticas legales relacionados con la compra de la propiedad en España.
Jaime Montoro, Expert in Spanish Property Law and Conveyancing in Marbella, Spain, Highlights Some of the Legal Practicalities Related to Purchasing Property in Spain
Jaime Montoro is a fully qualified lawyer based in Marbella. A graduate of the University of Granada in 1998, he has over 15 years’ experience as a property lawyer in Spain. A senior partner at BSA-Law in Spain, he is assisted by his partner, Lara Pacheco.Both partners have also practiced in the USA, Jaime Montoro as a real estate agent and Lara Pacheco is licensed by the State Bar of New York.
Their knowledge of Spanish law, combined with their understanding of the international aspects of property law—especially the differences that can arise between different legal systems—allows them to quickly understand and address many of the concerns that foreigners have when purchasing a property in Spain. Jaime Montoro and Lara Pacheco are both fluent in Spanish and English. Lara is also fluent in French.
Ricky: Jaime, you have been a professional lawyer specializing in conveyancing for over 15 years in Marbella. Could you give me an idea of the type of clients and transactions that you are involved in?
Jaime: As conveyancers, we handle both private clients who are looking to purchase a single property, to investors, both private and institutional, looking to invest in the residential, as well as commercial, Spanish property market. We handle all the legal aspects of the transaction, including the necessary initial due diligence and ensuring that all the paperwork and conveyance are correctly structured. We also assist, if requested, in the actual negotiations of the purchase.
Ricky: You mention due diligence. As I understand Spain has an established and regulated legal system. How important is it for a lawyer to do the due diligence? Could the buyer not undertake this on his own?
Jaime: Spain has a very robust legal system in place that governs property transactions; however, it is not without its flaws and abuses. As I am sure you have read in the news, in the recent years there have been numerous cases of properties having been constructed either without planning permission, or with planning permission that has subsequently been declared null and void. Whilst this practice has all but been eliminated, there remains an important number of private homes, as well as entire developments, left in limbo with no legal status.
One has to consider that the relevant checks regarding the legal status of a property, whilst straightforward in many countries, have an extra dimension added to them due to these historic bad practices. A lawyer’s role is to be able to assure their clients with absolute certitude that there are no impediments to him taking full legal possession of the property. This requires far greater research into the legal status of the property, in order to be in a position to provide these assurances. Unfortunately, a simple property title search is not sufficient.
Ricky: You mentioned that you are often involved in the negotiations regarding the terms of the contract. Is this not something that a client can handle himself?
Jaime: Most of our clients are successful business people who are perfectly capable of negotiating favorable terms. That being said, we do recommend that we assist during any meetings in order to ensure that any final contract is enforceable, correctly structured and reflects clearly the terms that were agreed upon by all parties.
Ricky: I understand that the Spanish property market is particularly attractive for foreigners. Is purchasing a property in Spain more complex for foreigners and how does Spanish law compare to other jurisdictions?
Jaime: Firstly, there is a question of language—one should only enter into a legal contract when one fully understands the terms and conditions. Regardless of legal expertise, I would certainly not sign any document in a foreign language without having a trusted legal advisor explain it to me. Having worked both in Spain and in the USA, I am perfectly comfortable in both languages.
Furthermore, especially in the case of buyers from the UK, there is a fundamental difference between the law in most European countries and the law in many of the Anglo-Saxon countries. UK law is based on common law. The law evolves over the years based on previous legal rulings, each ruling influencing future cases. Spanish law is based on civil law, rooted in Roman law or Napoleonic code, whereby the law is founded on a comprehensive list of legal codes. Legal decisions in Spain reference the original Civil Code and not necessarily the outcomes of recent cases, whereas rulings in common law reference previous legal cases.
You simply cannot apply the law of your country to a real estate transaction in Spain, nor can you expect Spanish law to act in the same manner. One example would be bank guarantees. Certain properties in Spain, according to the applicable law, must be sold with a bank guarantee. In the case of stage payments for a property that is to be completed at future stage, this amount needs to be the exact same amount paid to the developer.
If the development is never completed the buyer will be able to execute the bank guarantee and recover in full any payments made. We recently recovered close to 900,000 € for a client, that were paid towards a property that was never completed. It is of course essential that any guarantees that benefit the buyer are in place prior to any contract being agreed upon. This is the sort of legal advice that only a lawyer with a full understanding of Spanish law, as well as its interactions with other legal systems, can provide.
Ricky: Are there any other potential minefields that you could highlight?
Jaime: Indeed, there are quite a few. One, in particular, relates to the taxable value of the property. Regardless of the purchase price of the property, the tax authorities assign each property a fiscal value that is formulated using their own internal calculation. This value often differs, sometimes substantially, from the actual purchase price. This value needs to be ascertained in advance to avoid unpleasant surprises.
For example, a buyer may be purchasing a property that is distressed at well under market value, for argument’s sake 250,000; however, the fiscal value may be 350,000. This has the potential of creating additional tax on the 100,000 difference if not attended to in advance.
Ricky: Are there particular differences in the way that purchases are completed in Spain in relation to other countries that you can highlight?
Jaime: We are often asked if property can be purchased leasehold in Spain. Whilst this is fairly common in the UK, it is relatively rare in Spain.
Ricky: Would you advise a client to use a real estate agent, as well as a lawyer?
Jaime: A major part of any transaction is the reduction of risk. This includes ensuring that there is value in the property that you are buying that is consistent with your requirements.
As lawyers, we handle the legal aspect of the transaction, but ultimately we are not real estate agents and we cannot decide whether the price that is being paid for the property is fair value given its characteristics, location and the purchaser’s needs. A professional and trusted real estate agent can provide this service. This will add value to any property transaction, by ensuring that you are purchasing the right property at the right price.
Ricky: At what stage would you recommend that a client involves a lawyer in the transaction?
Jaime: It is imperative that a lawyer is involved as soon as you have decided on a property and intend to proceed with the purchase. Absolutely no agreements should be made, especially in writing, before a lawyer has verified the proposed contract. Any document that you sign in Spain that has been incorrectly drafted could work to your detriment. For example, any conditions or terms—that you may have included in order to protect yourself—may not be valid under Spanish law and thus not enforceable.
Ricky: Finally, Jaime, how do you see the future of the Spanish property market?
Jaime: Despite the fluctuation in prices over the past years, Spain remains one of the top destinations for international clients wishing to purchase a holiday home or relocate to a warmer climate. As a result, there is always a demand for property in the Costa del Sol and Costa Blanca. Currently, properties are priced competitively and clients are looking to take advantage of this. There is no doubt that Spain will remain an attractive location to purchase property for years to come.
Fuente Business Innovators Magazine