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The Spanish Lawyer Online

Spanish Law Tribune

Keeping up-to-date with Spanish Law


Archive for June, 2009

Spanish Mortgages: No Tax on Term Extension or Switching to Interest-only

June 26th, 2009

stamp-duty-spanish-mortgageSpain’s Tax office has replied within the last month two binding legal queries which shed some light onto the taxation of the amendment of mortgage terms.

On the first reply of 25th of May, the Dirección General de Tributos (DGT) clarified that switching  to interest-only will no longer attract Stamp Duty. On the second reply of 10th of June, the DGT has stated that changing the mortgage’s reassessment date will no longer pay Stamp Duty either. It would be regarded as exempt following art 9 of Law 2/94. E.g. a borrower changes the mortgage resetting from once a year to a quarterly basis.

Regardless if the borrower chooses one or both options they will not attract tax. Also, a lender cannot lawfully charge more than 0,1% to extend mortgage repayments

This is welcome news indeed for struggling mortgage borrowers that will now have more options available to them without being taxed on choosing them. Reducing citizen’s tax burden is always the right path on the road to financial recovery.

Property, Spanish Mortgages, Taxes

Paying the Rent Late Twice will be Cause of Eviction

June 4th, 2009

tenant agreementA mere delay in paying the let for a second time, by a non-paying tenant who has been previously sued by the landlord, will be a just cause for an eviction procedure. This new scenario has been made possible thanks to a recent rulling by the Spanish Supreme Court of Justice.

As explained in my article on Eviction Procedure in Spain (http://www NULL.marbella-lawyers, one of the strategies a non-paying tenant could follow to stall the procedure after the landlord had filed a law suit against him requesting a formal eviction, was by paying late (“enervación”). This stalled the procedure and forced the landlord to continue with the tenancy agreement. Albeit the tenant could employ this tactic only once.

The new change will mean that if the tenant should pay belatedly a second time (i.e. for two consecutive months), after the landlord has previously initiated an eviction procedure for the same reason, it will no longer mean the case can be dismissed or thrown out of court. It will mean the tenant breached the contract. Period. Spain’s Supreme Court has now unified the different approaches and regards that the tenant has breached the Tenancy agreement, provided the contract stipulates a deadline in which the payments have to be met every month.

This puts an end to non-paying tenants which continuously abused the legal system on deciding when they felt fit to pay their landlords in lieu of when they were meant to. This change has been brought about by one of the latest ruling of Spain’s Supreme Court. This is the second ruling on the same issue with a similar outcome which will now set jurisprudence in our legal system. The prior ruling (http://www NULL.elmundo NULL.html) is also from this year.

Both of these rulings aim to address the increasing problem landlords are faced with in Spain on letting their properties to professional defaulting tenants. Additionally, the dire financial circumstances have forced what used to be trustworthy tenants into defaulting their lets and abusing our system too. These rulings will now add new legal tools to defend landlords, as in Spain, the laws have been traditionally biased towards tenants for historical reasons which need to be adapted to social reality without delay.

Litigation, Property , , , , ,