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Archive for October, 2009

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.html) and the Commonhold Act (http://www2 NULL.icamalaga 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.html?a=STAd673ea6dce5b7ad0a7c9d8eaad1e02ce&t=1256894335)

Related blogs and articles:

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

Non-Paying Tenants? No Longer an Issue

October 23rd, 2009

One of the major problems landlords face post credit crunch is the increasing number of non-paying tenants. Many landlords rely on this source of income to offset partially or wholly the mortgage repayments of the property that is being leased being forced to have them legally evicted (http://www NULL.marbella-lawyers

In my article on “Landlord: Keys to Successful Rental Income (http://www NULL.marbella-lawyers” I pointed out that one of the best ways to avoid non-paying tenants was to take pre-emptive measures such as screening candidates carefully weeding out those with unsuitable profiles.

There is now a helpful website available that lists non-paying tenants nationwide: Fichero de Inquilinos Morosos (http://www NULL.fimiberica (FIM). For a reasonable fee of only 9,95€ you will be able to search –in English- if your prospective tenant has actually defaulted previously on a Tenancy Agreement. As pointed out in my article, there are professional defaulting tenants that roam the country in search of their next victim, preying preferably on trustful non-residents. In hard times such as these, many struggling landlords cannot endure the hardship of a financial leach that eagerly exploits Tenancy laws shortcomings.

This website’s database is continuously updated with the input provided by both eviction rulings as well as by other users’ feedback. You can additionally include your own non-paying tenants in their list providing you comply and follow the online form’s instructions. Professional non-payers who’ve made a lifestyle out of it will have already been included in the list.

I think it is a useful tool that compliments nicely other tools such as rental insurance, rental bank guarantees, adding an arbitrage clause and screening out your prospective tenants. This gizmo can be used only for those candidates who’ve made it to the top of your screening list. You might as well spend a few dozen Euros now rather than having to fork out thousands at a later date. Better safe than sorry.

Related blogs and articles:


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

Pssst! Looking For Cheap Spanish Property?

October 5th, 2009

cheap spanish propertyLook no further. We had noticed early on this year (http://www NULL.marbella-lawyers NULL.php?t=193) how Spanish banks had offloaded large stocks of properties from their books and funnelled them to existing or newly incorporated real estate divisions under their control, much like SIV’s. This had turned Spanish banks de facto into the largest real estate agencies. What we had also noticed, based on the failed conveyance procedures our clients had endured this year due to them being unable to secure finance, was that banks seemed to offer significantly more competitive lending terms on those properties owned by them!

This weekend I’ve read for the first time in the financial press that banks are actually offering incredible financial terms on those properties held by them:

  1. 100% Loan to Value for residents (yes, you read it right, not a typo)
  2. Euribor plus a spread of only 50 basic points (or 0,50)
  3. Timeline? Take your pick. 40, 30, 25 years; anything goes.
  4. Interest-only? Not a problem Sir. Will it be 1, 2 or 3 years?
  5. Grace period? How would you like it, Sir? 1, 2 or 3 years?
  6. Opening commission? Early redemption commissions? It’s commission-free, Sir (!)
  7. Discounts available of up to 30 and 40% off from the market’s peak in 2007. Prestigious valuers’ appraisals ready-at-hand to prove the fall in price. Take your pick.

So where’s the catch? There’s none. There’s no small writing to be gleaned. It’s a straightforward deal. Banks will make money in two manners, both on the sale and on granting a mortgage loan on the property.

Reading through the spreadsheet just left you gobsmacked. It was as if we had stepped back in time using HG Well’s time machine to the good old days of …2006. How could you possibly miss on the opportunity of buying a property through them with all the above lending terms bearing in mind the Euribor Rate is at an all-time low? Touchée, that’s exactly the point to be made.

How can developers or Estate Agencies compete against this? They cannot, it’s that simple. Banks have become the fiercest competitors in the Property Market taking no prisoners in their wake. If you request a mortgage loan on any property other than the bank’s, they will only offer you 50/70% LTV (non-residents), Euribor Rate plus a spread ranging from 0,7-1,50%, opening commissions (usually 1%), early redemption commissions, no interest-only, no grace period, no…well, you get the drift.  This is clearly a competitive advantage that, unless you are a fellow bank, you cannot hope to overcome.  

If this is not a buyer’s market, then frankly, I don’t know what is.

Spanish Mortgages