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The Spanish Lawyer Online
The Spanish Lawyer Online

Antonio Flores’ Blog

Thoughts about laws and regulations which affect foreigners in Spain

Spain Speeds up Squatter Evictions

June 19th, 2018

Spain’s Senate has approved specific measures against illegal occupiers of private property. Under the new bill, named specially “Amendment to Procedural Act 1/2000 in respect to illegal occupants of property”, squatters will be served with an eviction notice and told to justify ownership of the property through a title deed, or show lack of one on the part of the claimant. If no sufficient justification is provided by the squatters, the court will order immediate repossession of the home with no chance of appeals.

What´s interesting is that squatter´s rights to fight the case in Court -and effectively ‘buying’ an average of 15 months whilst the case in dealt by the Courts- are drastically curtailed under what is a fast-track procedure aimed at preventing, in particular, what the preashutterstock_354121799mble of this described as “extorsion to the owner or lawful possessor of the property with the purpose of obtaining financial compensation as a condition for the recovery of the property”, often conducted by  “very organized mafia-style networks”.

Courts will now serve notice on squatters (identified or not) giving them 5 days to produce a rental agreement, or any other document enabling them to lawfully stay in the property, failing which the Court will order immediate eviction. In addition, under the new law the Courts will have to observe the following:

  • Squatters will have no rights other than to produce a valid agreement to cover their stay in the property. Opposing any application to have them evicted will not have suspensive effects.
  • Sentences against squatters will have no right of appeal and will be immediately enforceable.
  • Social services will be on stand-by in case of eviction of children, elderly or people with special needs.
  • The reform will only affect properties whose owners are “private individuals, non-profits and public agencies that own social housing.” It leaves out real estate held by banks and investment funds.

The above measures will become applicable 20 days after the publication of the law reform in the Official Gazette.

Property , , , ,

Driving in Spain: The costly experience of using a fake driver’s license

May 13th, 2018

shutterstock_277982513It is a well-documented fact that the Spanish Costas’ rich variety of foreign residents increases the complexity of legal issues and driving licenses -that turn out to be fake- is one of them.

This same paper reported some months back that a US national was fined €500 for carrying a ‘bogus’ international driving license, a lucky escape I should say considering that a middle-eastern businessman is facing prison time for using an “International Driver’s License” issued by an entity named as International Automobile Alliance (IAA), purportedly based in New York.

According to the State Prosecutor’s writ of accusation, the license was deemed “fake in its entirety, having a photograph affixed by the owner or a third person” and, based on those findings, requested the Court that the alleged offender is sentenced to a minimum prison term of 19 months for forging a public document and plus an additional criminal fine of 12 euros/day for a period of 18 months if the offender is unable to show evidence that he did have a valid driver’s license from another country (it now appears that only U.S. officially-approved “AAA” and “AATA” associations can issue such international licenses).

The are tens of online ‘businesses’ selling fake driving licenses, along with passports and IDs. One advertises its business offer as having […] year of experience producing original quality real/false passports, ID’s, drivers’ licenses.

Alongside these obvious clandestine operators, there is second tier of businesses that -purporting to have a specific Government official approval- state they can issue valid international driving licenses pursuant to Annex 9 of the Geneva Convention and Annex 6 of the Vienna Convention.

To sum up, a) international drivers’ licenses are generally only issued by officially recognized agencies to drivers who already have a valid license from the country and b) the agencies issuing them must be approved by the specific Government.

Legal Practise , ,

Tenants and Occupants Could Face Jail for Theft and Damage

April 17th, 2018

shutterstock_1057453064A recent writ of accusation by a Murcia-based prosecutor is a stark reminder that certain illegal practices by toxic tenants, and other occupants of real estate, will not enjoy impunity. The writ refers to a non-paying tenant who -in the middle of an eviction process- chose to retaliate against the landlord by stealing, among other items, 2 fans, a mattress, a washing machine, a dishwasher, hobs, curtains, a coffee machine, a microwave over, a table and 4 chairs.

The State Prosecutor is asking that the tenant serves a minimum of 2 years in prison as the value of items stolen exceed 400 euros.

In a similar case, Criminal Court 15 in Valencia has imposed a 14-month prison sentence to a tenant for misappropriating furniture items and a 3,000 fine for causing damage to various others, consequence of “a deep resentment and a direct intention of causing financial and emotional harm to the owner”, according to the sentencing Judge.

In Barcelona, the Appeal Court (Section 10) passed a prison term to a tenant that, with the intention of causing the maximum possible damage, knocked walls, pulled pipes and cables, broke shutters and tore curtains and generally, left the property in a lamentable state of despair.

Its worth noting that in all the rulings, the actions caused by the tenant exteriorize a deliberate and intentional desire to cause monetary loss to the owner.

If the above scenarios want to be avoided by both tenants and owners, it is highly recommendable that parties carefully examine the property to be rented and draw up an inventory (photographic or video if possible) before granting possession.

 

Property , , ,

The Language of Law in Spain

February 16th, 2018

shutterstock_222873250We often hear statements relating to the implication of contracts and other legal documents that are in a language different from Spanish. One of those statements has, by its own right, risen to the category of legal myth/urban legend: I am referring to the belief that a contract signed in Spain in a language different from official Castilian (or for that matter regional languages) is null and void and thus, does not create rights or obligations.

There is an evolution of the above far more twisted: that if a person that does not understand Spanish signs a legal document in this language, they can challenge it in Court where, incidentally (according to a minority of expats) the Judge should -at the very least- know English but if not, a translator should always be provided at to ensure his/her rights are protected.

The following notes should help dispel any potential confusion as to what is correct from what not, “language-wise”:

  • A document of a contractual nature can be drafted in any language for which an official translation service is available. This implies that contracts in any language that is official somewhere in the world is legal, since a valid translation can be provided.
  • Not understanding the content of a contract is not an excuse, as much as ignoring the law excuses no one, as the principle goes (save for some exceptions, notably in financial or investment contracts).
  • Pursuant to art. 142.1 of the Civil Procedure Law, “In all judicial procedures, the Judges, Senior Judges, Public Prosecutors, Court Clerks and other civil servants in courts and tribunals shall use Castilian Spanish, the official language of the State.”, but it also adds in 143.1 that “when a person who does not know Castilian Spanish nor, in the event, the own official language of the Autonomous Authority has to be questioned or make a declaration, or when it is necessary to personally let him know a decision, the Court Clerk may issue an order authorizing any person who knows the language concerned to act as interpreter, in which case the said interpreter shall be required to swear or promise that the translation is true to the original.”
  • And finally, in accordance to art. 144.1, “any document worded in a language other than Spanish or, as appropriate, the official language of the Regional Authority in question shall have a translation of such document attached thereto.”

Legal Practise ,

Inheritance Tax in Andalusia and ‘Brexit’

January 30th, 2018

brexit concept background with uk and eu flags

Back in February 2016, the Tax Office in Andalusia divulged interesting IHT data: only 7% of all inheritors in this region had had to pay tax following the demise of their loved ones, at a time when maximum allowance per beneficiary was of €175,000.

Of the 7% who had to pay IHT, only 2.1% were beneficiaries classed as next-of-kin of Group I (children -natural and adopted- and other descendants under 21) and Group II (children and other descendants aged 21 and over; parents and other ascendants, and spouses, with the remaining 5% being more distant relatives or beneficiaries with no family ties with the testators.

In 2017, the exemption was increased to €250,000, thus reducing even more the overall impact of this annoying tax.

In 2018, a further tax cut has increased the exemption by €1,000,000 -provided the beneficiary does not have savings or assets of up to the same amount-. This exemption, which applies to residents of Spain but also, any inheritors -foreign or not- who at the time of death of the testator were residents of the European Union or European Economic Area (EEA), means that pretty much nobody will pay IHT in this region, except of course if the inheritor happens to be a resident of the UK and Theresa May sets Britain on course for a hard Brexit (if she has not already done).

For if the UK do not negotiate a separate agreement with the EU to maintain the status quo currently enjoyed all EU/EEA residents, the negative impact in inheritance tax will become particularly visible for thousands of potential inheritors from the UK, for whom the maximum deductible amount will be -on average- €16,000 per inheritor, just as any non-EU citizen.

The negative effects will equally translate to income obtained in Spain, which will be taxed with 24% -as opposed to 19% now- and without the possibility to deduct costs and expenses, and CGT relief when reinvesting in a habitual domicile, which disappears.

 

Immigration, Inheritance , , ,

Supreme Court amends Spanish tax residency rules

January 4th, 2018

Испанская налоговая служба берет на вооружение новые информационные технологии

The criteria for residence for tax purposes varies considerably from jurisdiction to jurisdiction, and “residence” can be different for other, non-tax purposes. For individuals, physical presence in a jurisdiction is the main test. Some jurisdictions also determine residency of an individual by reference to a variety of other factors, such as the ownership of a home or availability of accommodation, family, and financial interests.

New criteria in Spain to establish tax residency for 2018

The Spanish Supreme Court, in a recent ruling of the 28th of November 2017 (only released now) has departed from the traditional understanding of the concept of physical presence the Spanish Hacienda was using to determine the place of effective residency for tax purposes.

According to the Spanish Tax Office, the main criteria of physical residence -more than 183 days spent in Spain- would not take into account what they called “sporadic” stints in another country, as it was necessary then to prove effective residency in another country. In addition, the Tax Office was introducing the subjective criteria element -what was the real intention of the taxpayer (?)- to determine effective tax residency.

The Supreme Court has now altered this notion and stipulated that residency for tax purposes, if determined solely in accordance to the effective time spent in Spain, will no longer be influenced or linked to an element of will or intention to reside abroad but to a simple day-count exercise (number of days in Spain vs. abroad), thereby eliminating the subjective component of the reasons for residing abroad in favour of the mathematical criteria.

 

Taxes , ,

Dealing with unregulated Spain-based Independent Financial Advisors.

November 7th, 2017

The collapse of Continental Wealth Management (CWN), an Alicante-based advisory firm, has left tens -possibly hundreds- of investors worried sick.  CWM was not regulated to provide investment advice in Spain and was loosely regulated to provide insurance advice, through German-based Trafalgar international (who also does not appear to be registered in Spain).

In the world of the investment ‘smoke and mirrors’ expat business, where few things are what they appear to be and what`s real is often portrayed to be something else, clarifying concepts becomes a necessity.

So, let’s get under the bonnet of these clandestine firms (this article does not allude to properly regulated advisory companies) to know what are the real chances of victims caught by the lack of scruples of runaway bogus consultants:

  • Most of the IFAs currently operating with the expat market in Spain are not regulated.
  • Equally, some of insurance or pension providers have never been regulated to operate in Spain (Old Mutual Isle of Man, Premier Group Isle of Man, Generali Worldwide Insurance Guernsey, RL 360º etc.), thus falling foul of Spanish laws that declare all such policies in violation of national laws and consequently, null and void.
  • Very often, investments are carried out via ‘life-insurance/assurance companies’ that provided wrappers, whole-of-life or unit-linked policies. These policies are linked to an investment portfolio.
  • Whether offered validly in Spain or not, life insurance policies linked to an investment are being declared void by the Spanish Supreme Court because they do not consider them life insurance policies. The reasons? Well, the calculation of the premium and payout lack ‘actuarial’ methodology, there is no transfer of risk from insured to insurer and it is irrelevant for the insurer if the insured party lives over a certain date, or dies.
  • Courts ruling on the nullity and voidness of a life insurance policy will order the company to reimburse the premium in full (minus any surrenders made), plus annual legal interest and without detraction of fees or commissions charged.
  • Financial or insurance mis-selling can be said to be automatic where the agents are not regulated (nobody can provide valid advice if not regulated). This violation of mandatory laws implies the responsibility of the principal (i.e. insurance or pension providers).
  • Claimants should aim for Insurers, Investment Funds and Pension Providers.
  • Lawyers should be able to identify the best way forward, always aiming for compensation (and not retribution).

Litigation , , , , , ,

Buying Property in Catalonia?

October 9th, 2017

bcn1

The Catalonian separatists’ independence adventure has ended up in economic failure: no longer a Catalan bank has its HQ in the region, following Banc Sabadell and Caixa’s hasty departure to pastures new -Valencia-. And they’re not alone: fearing massive loss of clients and being left out of the protective umbrella of the EU, hundreds of companies are following suit in what could be, potentially, an unprecedented financial debacle for any European country or region.

But rather than macroeconomics, what interests me is the -possibly- hundreds of foreign investors with private contracts exchanged for property in Catalonia that have been caught in the middle of this nightmare. What are their options? Should the proceed, or wait? Can they rescind and recover their down payment, or must they complete or lose their deposits?

We can confirm, almost without margin for error, that no contract signed for any property in the Catalonian region would include a “political unrest” get out clause. You can probably say the same for any EU country. Unfortunately, political unrest is exactly what is happening in the region, as confirmed by the Foreign and Commonwealth Office in a recent warning to travelers.

So, without contractual stipulation to the contrary, it appears that those who deem the situation uncertain, to say the least, don’t have a remedy under Spanish law…or perhaps they do.

The principle clausula rebus sic stantibus  (Latin for “things thus standing”) is the legal doctrine allowing contractual undertakings to become inapplicable because of a fundamental and extraordinary change of circumstances not envisaged by the parties. It is essentially an “escape clause” that makes an exception to the general rule of pacta sunt servanda  (“promises must be kept”) and favor contractus (“conservation of contracts”).

For instance, the hotel chain Accor persuaded the Supreme Court that the 2008 crisis impacted tourism so dramatically that a 29% reduction in the rent for a hotel was acceptable. Similarly, a couple who had specifically intended to finance the final payment on an off-plan property and were left “high and dry” by banks following the onset of the worldwide financial crisis, were granted remedy. Still, the Spanish Supreme Court remains cautious when applying the clause and recommends a case by case analysis of each contractual scenario.

As for the buyers of Catalonian-based property, we suggest a wait-and-see approach as the next days, if not weeks, will hopefully relax the political turmoil and allow for safe decision-making.

 

Property ,

Spanish Notaries and Supreme Court at war over validity of powers of attorney.

August 14th, 2017

According to the General Council of Notaries, these highly qualified professionals fulfil an essential part of the judicial life of this country by bringing legal sshutterstock_601180544ecurity and certainty. Their website states the following: “Notaries are State civil servants required to provide citizens with the legal certainty guaranteed by the Article 9 of the Spanish Constitution within the context of extra-judicial legal dealings.”

A recent ruling by the Supreme Court -and more so a previous one of 2013- seem to cast doubt over such convincing and forceful statement in respect to one the main functions of Notaries: granting powers of attorney (POAs) and their presupposed validity if the grantor challenges them in Court.

The 2013 sentence -supported by a prior one of 2010- shook the notarial establishment when it declared that POAs to settle, dispose of, mortgage or perform any other act inherent to ownership (art. 1713) would have to […] clearly specify the object and subject, in a clearly defined and predetermined manner. The high tribunal’s interpretation of general POAs to sell or mortgage is thus far-reaching: if the POA does not specify the property or the lender, the transaction can be rendered null and void.

Again, in 2016, the Supreme Court stated that those transactions where such POAs were used could also be declared null and void where the recipient abused or exceeded the instruction. This is how the Court explained it: […] In this context, the will of the parties stands as the guiding interpretation criteria, ruling out an automatic or mechanical reliance on the literality of the POA granted, but principally on the intention and will of the grantor to establish the purpose and sense of the instruction. And secondly, the obligations of fidelity and loyalty are indispensable guidelines connected to carrying out the instruction.

The importance of these rulings (dated 6/11/2013 and 20/5/2016) is that they rendered a Deed of Gift and a Deed of Sale of Shares null and void, even if the POAs were -allegedly- properly granted in front of Notary Public, with all the required solemnities and formalities.

For its part, Notaries believe that their job is separate from that of Courts and that the above rulings represent solutions to specific disputes brought before them.

Legal Practise , ,

Why you need a Lasting Power of Attorney in Spain

May 9th, 2017

shutterstock_89635177Lasting Powers of Attorney (LPA), well known and extensively used in common law jurisdictions, are legal documents which allow a person who is at least 21 years of age (‘donor’), to voluntarily appoint one or more persons (‘donee’) to make decisions and act on his behalf as his proxy decision maker if he should lose mental capacity one day.

In Spain, very few know that there are two almost identical legal documents that grant the same powers to a trusted person should the time of incapacitation arrive.

These documents are known as the “Poder Preventivo”, or Preventive Power of Attorney (PPA), and the “Autotutela”, or “Appointment of Tutor”, both of which are granted before a Notary Public.

The Preventive Power of Attorney is one where a person can deal with the financial affairs of the grantor, with immediate effect after a certain date or once a medical doctor declares a person incapacitated. For its part, the Appointment of Tutor deals with health and care decisions, daily routine or where the affected person should live (but will require judicial approval where the sale of assets is concerned).

It is recommendable to grant at the same time both the Preventive Power of Attorney and the Appointment of Tutor to avoid the lengthy (and costlier) process of applying for a judicial decision -appointment of tutor- following a clinically diagnosed incapacitation or intellectual disability because of disease or accident, a process that furthermore will require a separate procedure to sell real estate or other assets.

It is worth noting that both appointments can be revoked by the grantor whilst capable, and that Notary Publics in Spain have an obligation to communicate any such documents to the Spanish Civil Registry.

Family Law, Inheritance , ,