Search:     Go  
The Spanish Lawyer Online
The Spanish Lawyer Online

Spanish Law Tribune

Keeping up-to-date with Spanish Law

Archive

Archive for the ‘Property’ Category

Buying Property in Spain: In my Own Name or Using a Company?

July 7th, 2011

Buying a property in a company name is, in many respects, a good proposition, unless you ask certain lawyers who will tell you that it is always beneficial (for them, that is, from a financial perspective). Logically, giving incorrect, wrong or biased advice is never the desired option if you want to stay in business for the foreseeable future and therefore, in our case, we tend to use the following tax and legal points, or parameters, so that a client can make a judged decision.

Buying Property in Spain: In My Own Name?

Most property transactions in Spain have physical persons as buyers, for the reason that mortgage lenders are not keen to lend to property-holding companies and when they do, loan-to-value ratios rarely exceed 50%.

Advantages:

  1. Less upfront cost (no company incorporation cost).
  2. No associated company running costs.
  3. Improved ability to obtain finance.
  4. Lower Capital Gains Tax (average of 19% on net profit).

Disadvantages:

  1. For non-residents, Personal Income Tax (PIT) is applicable to the property: this annual tax is calculated by applying the tax rate (24%) on the base rate (between 1.1% and 2% of the rateable value or 50% of the purchase price, if the former value has not been approved).
  2. Visibility: The Spanish land registry system is accessible by anyone who registers with them, via internet, or without registering, by applying directly in their offices. This may not be in the interest of people who wish to remain anonymous for any reason (defaulting on contractual obligations abroad, matrimonial disputes etc.).
  3. Reduced ability to request a VAT refund, as the Tax Office will view a non-resident self-employed foreigner (registration as such will be required) as a less likely candidate for a refund, given the historical records of unfounded VAT claims on holiday property and a financially strained Tax office.
  4. Only certain costs and improvements on property can be deducted against the profit on selling, not annual running costs (unless one registers as a trader).

Buying Property in Spain: In the Name of a Company?

The pros and cons of incorporating a Spanish company to purchase a property are summarized below:

Advantages:

  1. No annual taxes on corporate tax after a recent tax law change. Company running cost will depend on the firm dealing with the bookkeeping, €120 per month being an acceptable fee.
  2. Ability to deduct property running costs from profits.
  3. Anonymity: A company will allow the shareholder and ultimate owner to limit the exposure to any third party ownership information request. For a full-proof anonymity situation, buying shares of an off-the shelf company and not being appointed as the director is essential (only a Judge, or the Tax Office, could request the shareholders books to be made visible).
  4. Improved ability to register as an actively trading to request a full or partial VAT refund.

Disadvantages:

  1. Set up costs: Law firms will generally charge anything between €1,000 and €3,000.
  2. Maintenance costs, compared with paying personal non-residents income tax, where the property has a rateable value of €300,000 or less.
  3. Capital Gains Tax: Corporation tax is currently at 20% for net profits of less than €300,000 per annum, and 30% thereafter. A retention on dividends payment is thereafter applicable, at 15%. Non-payment of this tax goes largely undetected.

Generally, it is established that buying a property in a company name is recommendable, in our professional opinion, where:

  1. There is no financing requirement to acquire the property.
  2. There is a need or desire for anonymity.
  3. The property has a rateable value of €300,000 or more, as non-residents PIT will be approximately €1,500 per annum, as opposed to a company running cost of around the same value (irrespective of the value of the property).
  4. The purchase of the property attracts input VAT (new property sale), which is susceptible of being offset against output VAT, where the company embarks on a genuine activity, i.e. property is rented to another company (private individuals do not pay VAT on rental) or used for any other commercial activity, or in the event that the property is refurbished and then sold on.

And what about companies Gibraltar and other offshore jurisdictions?

I have already dealt with this on a previous post, from a rather negative point of view, even if it may have certain benefits.

Property

Bank of Spain Raises Real Estate Provisions Set Aside by Lenders

May 27th, 2010

It was highly anticipated since January this year that the Bank of Spain would raise –yet again– the provisions lenders have to set aside on real estate assets held in their portfolios as a result of NPL (http://belegal NULL.com/articles/showArticle/home-repossessions-in-spain-defaulting-on-mortgage)’s or on accepting daciones en pago (http://belegal NULL.com/articles/showArticle/spanish-mortgage-dacion-en-pago-handing-keys-bank) from ailing developers or struggling borrowers. The purpose of these provisions is to offset the likely capital depreciation.

Lenders are required to set aside 10% on adjudicating themselves these assets and deposit it before the BoS. If after 12 months the asset remains in their books they have to set aside an additional 10%. If a further 12 months go by a further 10%. So basically after 24 months they are unable to offload these real estate assets from their portfolio they must set aside provisions for 30%.

So the BoS not only has raised these provisions but additionally has also proposed to shorten the timeline to deposit them down from 24 months to 12 months. The outlined proposal will bring serious consequences on many fronts:

i) As a direct result lenders will suffer a further impact on their already deteriorating balance sheets as they will have to allocate additional funds to offset asset depreciation which sincerely couldn’t come at a worst time as credit is tight. Spanish savings banks will foreseeably suffer the greatest with this change to the point that some may even collapse (http://www NULL.cotizalia NULL.com/en-exclusiva/cajas-colapso-provisiones-banco-espana-20100527 NULL.html). The BoS itself estimates the huge impact of yesterday’s change in a reduction of 10%, on average, of Spanish banks’ pre-tax profit.

ii) Indirectly, as I had already anticipated in my article on “Advice to Struggling Mortgage Borrowers (http://www NULL.levantelifestyle NULL.com/index NULL.php?mod=art_det&art_id=707)”, this change in law would have as collateral victims those borrowers that seeked to hand the keys (http://belegal NULL.com/forums/showthread NULL.php?t=622) in lieu of being repossessed (AKA as Dación en Pago de Deuda (http://belegal NULL.com/articles/showArticle/spanish-mortgage-dacion-en-pago-handing-keys-bank)). Lenders were already increasingly reluctant on accepting them due to the BoS continued raises in these generic provisions in 2008, 2009 and now 2010. This is explained in detail in this post (http://belegal NULL.com/forums/showthread NULL.php?t=73&page=15#150).

What the above translates into, for practical purposes, is that when I wrote in my article on Dación en Pago on 2007 that as a rule-of-thumb 20% of positive equity was required (AKA no-negative equity rule) for a lender to accept a dación procedure the collar must now be raised to 30 or maybe even 40% following the changes in law over the last three years. If you compound this with a foreseeable hike of interest rates by the ECB by this year’s fall or early next year you have brewed a perfect storm for struggling Spanish mortgage borrowers who will no longer have this option available and will most likely be repossessed (http://belegal NULL.com/articles/showArticle/home-repossessions-in-spain-defaulting-on-mortgage) by their lenders on slipping into arrears.

And the reason is simple, property prices of new-build second homes on the Spanish coasts have fallen by an average of 40% from the appraisal value as the BoS itself acknowledges with the proposal of change in law. So it will be hard to find off-plan properties with 30 or 40% positive equity in them built over the last five years as borrowers typically took 80% or 100% LTV mortgage loans to acquire them. There simply isn’t enough equity left in such cases with such high LTV loans when you compound asset depreciation (- 40% on average). Which is why I think that properties built post 2005 are now probably in the red zone for the purposes of following a dación en pago procedure as owners will be unable to fulfill lenders’ new criteria to accept them.

The Dación en Pago was a solution of last resort to waive the dire consequences of a full-blown Spanish repossession procedure with everything that it entails (personal and unlimited liability with all your assets, both now and in the future); sadly, even this has probably now been removed as an option for all those who purchased with a mortgage loan post 2004 following the proposal announced yesterday by the BoS.

Source: Cotizalia (http://www NULL.cotizalia NULL.com/noticias/exprime-banca-provisiones-tocado-beneficio-20100526 NULL.html) and Expansión (http://www NULL.expansion NULL.com/2010/05/26/economia-politica/1274892946 NULL.html)

 

Related articles:

  • Buying Property In Spain Tips Part II. Off-Plan Property (http://belegal NULL.com/articles/showArticle/buying-off-plan-property-in-spain) – 18th April 2010
  • Advice to Struggling Mortgage Borrowers (http://www NULL.levantelifestyle NULL.com/index NULL.php?mod=art_det&art_id=707) -13th April 2010
  • 10 Common Abusive Clauses in Spanish Mortgage Loans (http://belegal NULL.com/articles/showArticle/10-common-abusive-clauses-in-spanish-mortgage-loans) – 4th June 2009
  • The Dación en Pago Explained (http://belegal NULL.com/articles/showArticle/spanish-mortgage-dacion-en-pago-handing-keys-bank) – 28th March 2009
  • The Dación en Pago Procedure – 21st November 2008
  • Bank Repossessions in Spain: A Legal Perspective (http://belegal NULL.com/articles/showArticle/home-repossessions-in-spain-defaulting-on-mortgage) – 25th June 2008

Property, Taxes , , , , , , ,

Polaris World Avoids Falling Into Insolvency

April 23rd, 2010

As we had previously reported, PW was on the brink of filing for Insolvency if it failed to renegotiate 85 million euros of debt. It had already negotiated successfully to refinance over 900 million euros.

PW has successfully waived filing for receivership on reaching an agreement late last night with CAM, Bancaja, Bank Popular and Bank of Valencia to sell assets for the amount of 83 million euros. In exchange PW has transferred ownership of dwellings, golf courses, plots of land and hotels. It has taken PW the last 4 months to re-negotiate its debt commitments. Official confirmation will be today.

The group of companies affected by the possible insolvency were two hotels (Mar Menor Golf Hotel and La Torre Polaris Hotel), El Valle Golf Resort, Polaris World Sports Centre, Polaris Desarrollo, Hacienda Riquelme, Polaris World Development, Polaris World Alquiler de Maquinaria Industrial, Polaris World Hormigones, Polaris World Real Estate, Hacienda Verde, Nicklaus Golf Trail, Mar Menor Golf Hotel, La Torre Polaris Hotel, Centro Comercial El Oasis de Alhama, Oasis Polaris Ciudad, y Alhama Golf Resort.

Currently it has 700 employees which is a long shot from the 2,000 it used to employ in the boom years.

Source: La Verdad (http://www NULL.laverdad NULL.es/murcia/v/20100423/region/polaris-world-elude-precipicio-20100423 NULL.html)

Property, Uncategorized , , , , , , , , , ,

Bank Santander Estimates Property Prices in Spain Fell an Average of 50% on the Costas and 30% in Cities

April 21st, 2010

Bank Santander released yesterday a report titled “The Contrarian View” which upholds that market adjustment in Spain’s property sector has now almost concluded. Indeed, living up to its name, it’s a contrarian view.

They estimate property prices have fallen on average 20 to 30% in large Spanish cities. These properties are in the vast majority main residences. The major fall has taken place on the Spanish costas, which are mainly second homes or foreigner’s overseas summer homes. They estimate the average fall in this segment reaches 50%.

In their report they estimate the real estate market peaked out in 2007.  They forecast that Spain’s GDP will resume feeble growth in 2011 picking up pace on the following years.

I find unsurprising the fact that main residences have fallen less than their second home counterparts; that was reasonably in line with what everybody expected.

What I find surprising is the report claiming that property prices have fallen 50% on the Spanish coasts on average. As many would-be buyers who actually booked flights from the UK or elsewhere to fly over to Spain (when that was still possible!) on the hope of finding a dream villa for a 50% discount can attest that this simply is not the case. There has been a lot of hype going on property falling by 50% but frankly this contradicts any empirical observation.

There has been a significant market correction, no doubt, but not to the extent of a 50% fall on the costas. It’s true that some isolated off-plan developments perched atop hills which are a good 10 minute drive from civilization have fallen 50% or maybe even more, but these are few and do not constitute a general rule.

I would say, being coherent with the articles I write, that property prices will still keep on falling across the board over the next years, however steadily. I find the report’s conclusions a tad overoptimistic to be honest. For example, it remains to be seen how the huge property portfolio in the hands of struggling Spanish savings banks (http://ftalphaville NULL.ft NULL.com/blog/2010/04/14/202681/the-slow-death-of-the-cajas/)will unfold in the near future affecting price fixation when –and if– they are released openly into the market.

This could seriously add pressure driving down prices further adding to the oversupply. Lenders are going to great lengths not to release en masse their ever-growing property portfolios as a result of repossessions (http://www NULL.marbella-lawyers NULL.com/articles/showArticle/home-repossessions-in-spain-defaulting-on-mortgage) or “daciones en pago de deuda (http://www NULL.marbella-lawyers NULL.com/articles/showArticle/spanish-mortgage-dacion-en-pago-handing-keys-bank)“. Fortunately the Government is always there to help them (if not bail them out) amending accounting rules where necessary so balance sheets aren’t hurt.

It’s reassuring that those in need are helped out when needed.

Nevertheless I’d say there are already available interesting bargains (since 2009 actually) mainly from the classic three D’s (divorce, disease, death) and non-performing mortgage loans. But we have not yet reached that stage of capitulation in the property market which this report seemingly implies. I’m sure we will get there at some point or other.

In any case the spring season traditionally brings a surge of conveyance procedures and we are now witnessing a renewed interest in Spanish property over the last month. That is, providing volcanic activity keeps a low profile! Fingers crossed.

Source: Cotizalia (http://www NULL.cotizalia NULL.com/en-exclusiva/santander-pisos-inmobiliaria-caida-20100421 NULL.html)

Property

Is Polaris World Running Out of Time?

April 14th, 2010

Polaris World. We’ve all watched the TV ads with renowned golfer Jack Nicklaus selling us an affordable dream lifestyle under the sun surrounded by beautiful golf courses just a short drive away from the beach.

Unfortunately the dream may turn into a nightmare for many would-be off-plan buyers as Polaris World is now on the verge of filing for Insolvency within the next week. The events which have lead to this situation can be summarised as follows:

  • On the 22nd December 2009 Polaris World filed before Murcia’s Company Court number two a proposal to reach an agreement with its creditors within three months thus avoiding filing for Creditor Protection.
  • On the 22nd of March 2010 it requested an additional -and final- extension of 30 days which was granted by the court.
  • This extension ends in 8 day’s time, on the 22nd of April 2010.

If Polaris World fails to refinance its whole debt within the next week it will be forced to file for receivership in what would become one of Spain’s largest insolvency proceedings do date.

The positive note is that out of the €985 million (870 million pounds) in debt that it needed to renegotiate so as to remain afloat it has already successfully negotiated over €900 million over the last three months. Within the next 8 days Polaris World legal representatives will lead a frantic race against time to strike a deal on the last hour on the pending €85 million.

The stakes are high and the pressure must be almost unbearable for all those involved.

Taking in perspective what’s already been achieved by the negotiators, I believe the €85 million seems a feasible goal.

Source: El Economista (http://www NULL.eleconomista NULL.es/empresas-finanzas/noticias/2049813/04/10/Polaris-tiene-10-dias-para-pactar-con-la-banca-o-presentar-concurso-de-acreedores NULL.html)

Litigation, Property , , , , , , , , , ,

Promociones Eurohouse 2010 Files For Receivership

April 9th, 2010

As we had previously reported on the month of February 2010 Promociones’ Eurohouse 2010 receivership was imminent. Perhaps the “2010” included in its name was as an ill omen.  

The official announcement (http://www NULL.boe NULL.es/boe/dias/2010/03/30/pdfs/BOE-B-2010-10991 NULL.pdf) has now been made in Spain’s Law Gazette. Creditors will now have 30 days to lodge their credits joining the Creditor’s List.

The deadline to join the Creditor’s List ends on the 30th of April 2010. Credits submitted after the said deadline may be jeopardized.

Non-exhaustive list of affected off-plan developments:

  1. Fortuna Golf Gardens
  2. Fortuna Hills Golf Resort
  3. La Mirada
  4. Residencial San Pedro
  5. Residencial Miramar
  6. Miramar
  7. Residencial San Pedro del Pinatar

Off-plan purchasers need to collate the following original documents:

  1. Original Private Purchase Contract
  2. Original stage payment receipts of having sent over the funds (including the initial reservation deposit) on to Promociones Eurohouse 2010.
  3. Original bank guarantees (http://www NULL.marbella-lawyers NULL.com/articles/showArticle/spanish-bank-guarantees).

To represent a client throughout the whole receivership procedure (not just to merely add them to the Creditor’s list) a Power of Attorney will be required which needs to be both notarized and legalized (with the Hague Apostille). Arranging this POA takes on average 7-10 days from the UK so it is advisable to plan ahead so as not to overrun the 30 days deadline.

Lawbird offers this legal service for a flat fee of €1,300 plus sundries (TBA).

Payment in installments is available upon request.

Appointed lawyers will seek to best defend client’s interests in the ensuing procedure taking the following actions, amongst others:

  1. Claiming from the judicial administrators the creditors’ position of the clients submitting all the necessary documents on time and in the due manner. To challenge adopted resolutions on the matter if proven detrimental to the inclusion in the Creditors’ List (this may entail additional legal fees).
  2. Continued monitoring of the receivership procedure ensuring client’s rights are upheld
  3. To negotiate with the judicially-appointed administrators reaching agreements as necessary.
  4. To keep the client informed on the ongoing procedure
  5. Assisting to Creditors’ meetings to defend the client’s interests
  6. To claim or challenge judicially agreements taken by Elche’s Mercantile Court number 3.

Litigation, Property , , , , , , , , , ,

Light at the End of the Tunnel: Developer Habitat Will Resume Trading After Putting and End to its Insolvency Procedure

March 31st, 2010

High profile developer Habitat filed for receivership in December 2008. Its receivership procedure was the second most important in Spain after Martinsa-Fadesa which filed for receivership in 2007 owing in excess of seven billion Euros.

Barely two years on, an agreement striked at the Creditors General Meeting  held early on this year will reschedule Habitat’s outstanding financial commitments.

As we had explained previously, the aim of Spain’s Insolvency Act of 2003 is to allow financially struggling companies to buy time and re-arrange their financial commitments with their creditors, either by extending the loan period or by reducing the debt burden or both. The whole receivership procedure is geared towards saving these ailing companies which may be undergoing severe temporary cash flow problems.

Following the trail of developer Llanera, which also concluded successfully its receivership last year, 82% of Habitat’s financial creditors have backed the overhauled debt plan as well as by 80% of the normal creditors. The former are namely major lending institutions which constitute the bulk of habitat’s debt which tallies over a billion Euros. The latter would include off-plan buyers for example.

It is foreseen Habitat will officially exit its receivership on the 19th of April this year when the judge of Barcelona’s Company court number three will put an end to it.

The Repayment Proposals
 
The first proposal establishes that creditors will receive 80% of their debt, of which 50% will be paid in the following 8 years and the balance will become a syndicated loan.

The second proposal has a shorter waiting period of only 5 years but in return creditors forfeit 30% of their credit recovering only 70%.

Source: Invertia (http://www NULL.invertia NULL.com/noticias/noticia NULL.asp?idNoticia=2315979)

Property, Uncategorized , , ,

Spanish Capital Gains Tax Raise to 19% Goes Unnoticed

March 22nd, 2010

Spain’s Government has raised Capital Gains Tax (CGT) for both residents and non-residents to 19% as from the 1st of January 2010, which effectively means any property sold on as from the said date will attract CGT at 19%. This tax change seems to have gone blissfully unnoticed by the majority of people, or this is what you realise when you read what the so-called experts write on the many different expat forums available.

After a protracted process grounded on discrimination, the European Commission forced Spain to equate the Capital Gains Tax for both residents and non-residents alike leaving it at 18% as from the 1st of January 2007. Previously it stood at 35% for non-residents and 15% for residents.

This new tweak is related to Spain’s widespread efforts to prop up its dwindling coffers in view of its beleaguered Economy. This policy of increasing taxes in the aftermath of a property bubble has come under heavy criticism by reputed financial experts and may even hamper an early recovery as well as possibly incentivizing under declaring.

The following table sums up CGT amendments over the last years:

  Until the 31-12-2006 2007-2009 As from 01-01-2010
Tax rate 35% 18% 19%

For those who are still sceptical, and doubt wether this is true or not, I refer you to the official Modelo 212 instructions (http://www NULL.agenciatributaria NULL.es/AEAT/Contenidos_Comunes/La_Agencia_Tributaria/Modelos_y_formularios/Declaraciones/Modelos_200_al_299/212/Instrucciones/instr_mod212 NULL.pdf) (PDF – Spanish) for further confirmation.

Related article: Taxes when Selling Spanish Property (http://www NULL.marbella-lawyers NULL.com/articles/showArticle/taxes-when-selling-spanish-property) – 2nd May 2002

Property, Taxes , , , , ,

Promociones Eurohouse 2010: Imminent Receivership

February 24th, 2010

Promociones Eurohouse 2010 is a well-known developer based in Orihuela, Alicante, and is a subsidiary of San Antonio Group. Its off-plan developments have been bought mainly by UK and Irish citizens looking to retire and enjoy the mild Mediterranean weather. Regrettably off-plan buyers are in for a nasty surprise within the next days as this developer is the latest victim claimed by the ongoing recession.

It is yet unclear at this stage on whether it will be a voluntary receivership filed by the developer itself or else a forced receivership procedure imposed by one of its numerous creditors (Atlas International) as both have been lodged on the same day before Elche’s Mercantile court. It will now be up to the Mercantile judge to decide on which one it finally accepts. The reported debt, yet to be confirmed, is over 150 million pounds.

As soon as it’s officially announced in Spain’s Law Gazette (“BOE”) creditors will have only a strict deadline of 30 days to lodge before the Mercantile court their financial interest. Failure to join the receivership within this deadline will result in a loss of their stage payments.

Once more, we stress that a developer filing for a receivership procedure does not necessarily equate to bankruptcy, as some sources keep mistakenly reporting. That is something that will be decided at a later stage by the Mercantile judge overseeing the receivership procedure. Spain’s Insolvency Act is geared towards saving ailing companies who may be suffering temporary cash flow problems. Filing for receivership in Spain allows these struggling companies to buy time allowing them to renegotiate and restructure their financial commitments.

In fact many high profile developers who filed for receivership back in 2007 and 2008 have already announced they are exiting receivership and resume normal trading i.e. Llanera Will be the First Spanish Developer to Exit Receivership

Non-exhaustive list of affected off-plan developments:

  1. Fortuna Golf Gardens
  2. Fortuna Hills Golf Resort
  3. La Mirada
  4. Residencial San Pedro
  5. Residencial Miramar
  6. Miramar
  7. Residencial San Pedro del Pinatar

Off-plan purchasers trapped in the ensuing receivership will need to collate the following original documents:

  1. Original Private Purchase Contract
  2. Original stage payment receipts of having sent over the funds (including the initial reservation deposit) on to Promociones Eurohouse 2010.
  3. Original bank guarantees (http://www NULL.marbella-lawyers NULL.com/articles/showArticle/spanish-bank-guarantees).

To represent a client throughout the whole receivership procedure (not just to merely add them to the Creditor’s list) a Power of Attorney will be required which needs to be both notarized and legalized (with the Hague Apostille). Arranging this POA takes on average 7-10 days from the UK so it is advisable to plan ahead so as not to overrun the 30 days deadline.

Lawbird offers this legal service for a flat fee of 1,300€ plus sundries (TBA). Payment in installments is available upon request.

Appointed lawyers will seek to best defend client’s interests in the ensuing procedure taking the following actions, amongst others:

  1. Claiming from the judicial administrators the creditors’ position of the clients submitting all the necessary documents on time and in the due manner. To challenge adopted resolutions on the matter if proven detrimental to the inclusion in the Creditors’ List (this may entail additional legal fees).
  2. Continued monitoring of the receivership procedure ensuring client’s rights are upheld
  3. To negotiate with the judicially-appointed administrators reaching agreements as necessary
  4. To keep the client informed on the ongoing procedure
  5. Assisting to Creditors’ meetings to defend the client’s interests
  6. To claim or challenge judicially agreements taken by Elche’s Mercantile Court

Lawbird Legal Services is a Spanish law firm with broad experience in litigation representing hundreds of clients in similar high profile receiverships. Learn more about the Firm (http://www NULL.lawbird NULL.com/about/).

 

 

Litigation, Property , , , , , , , , , , ,

Express Eviction Law Passed by Congress

October 30th, 2009

This much-anticipated law was finally approved yesterday. It amends the Civil Procedural Law, the Tenancy Act (http://noticias NULL.juridicas NULL.com/base_datos/Privado/l29-1994 NULL.html) and the Commonhold Act (http://www2 NULL.icamalaga NULL.es/funcio/legales/coleg6/lphingles NULL.htm).

The gist of this new law is as follows:

  1. Timeframe reduced to file eviction law suit down from 2 months to 1. Landlords had to imperatively wait two months of unpaid rental before they could initiate the formal eviction procedure through the civil law courts. This has now been reduced to only one month’s waiting time.
  2. Swift execution of the eviction. The judge’s ruling will suffice to execute the eviction on the day and time that is agreed. The landlord is free to agree with his non-paying tenant to condone part of the debt providing the defaulting tenant leaves the property immediately. As from the ruling, the deadline to vacate the property has to be a statutory minimum of 15 days. It may even reach one year depending on what’s agreed.
  3. The whole legal procedure is substantiated through a verbal court procedure, as per Spain’s Procedural Law (this is not a novelty). This should be faster, in theory.
  4. The landlord can now waive the statutory long-term let of 5 years. He may now include clauses within the Tenancy Agreement in which this compulsory timeframe does not apply. i.e. a clause whereby it is stipulated that the property will be needed for the landlord’s own use or for his family’s. However, if after 3 months’ time the landlord or his family have not taken possession of the property, he will be forced to re-install his ex-tenant and award him a suitable compensation to offset the expenses of the move.
  5. Changes in the Community of Owners. Commoners will have to approve by simple majority (3/5) those improvements in the community whose aim is to be ecologically-friendly i.e. improved water or energy ducts. If these improvements can be individually enjoyed by the commoners then only a vote of 1/3 is required.

Source: El Mundo newspaper. (http://www NULL.elmundo NULL.es/elmundo/2009/10/29/suvivienda/1256805906 NULL.html?a=STAd673ea6dce5b7ad0a7c9d8eaad1e02ce&t=1256894335)

Related blogs and articles:

Litigation, Property, Spanish Rentals , , , , , ,