Property lawyer in Mallorca


 Toni Marqués. Real Estate specialist

My WhatsApp line it’s oppen. Don’t hesitate to contact me for free information.  +34 678 216 706   toni@palmalawyers.com


Congratulations.
You have finally found your dreams property in Mallorca and now it is time to get it.
Possibly the seller or the real estate agency has told you that you have to close the deal as soon as possible. 90% of the people who contact me have been assured that there is someone else interested in buying the house of their dreams. Often it is not true.
Remember: In this adventure rush is your enemy.

Let me guide you through this adventure… .

RULES ABOUT BUYING A PROPERTY IN MALLORCA


 Toni Marqués. Property Lawyer in Mallorca

Don’t hesitate to contact me for free information.  +34 678 216 706   toni@palmalawyers.com


You’ve found the property you’ve been looking for. So, what’s next?

-DEPOSIT. The vendor or Estate Agent will recommend you sign an Option Contract as soon as possible in order to be sure nobody else can buy that property. Don’t play this game. Offer a €400 to €4000 deposit to the vendor to hold the property for a few days (let’s say a week) and to prepare a Option Contract. The vendor has to commit to keeping the property off the market for a few days; the deposit you pay for this will be part of the Option Contract you are going to sign. If the vendor does not agree go to the next point.

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-GET INDEPENDENT ADVICE (from a Lawyer): Real Estate Agents are efficient and honest, but their main objective is to sell properties as quickly as possible before other agents can do the same. In case they have a conflict of interest, don’t forget they get their commission from the vendor and not from you. So, look for someone who has no other interests than yours.

As your adviser has to investigate important legal issues in local administration and deal with local people (neighbours, community of owners etc.) hire a lawyer who is established in the local area with contacts there. There is no sense hiring a lawyer in Madrid if you are buying a property in Mallorca, or hiring a lawyer who does not speak Spanish or Catalan to deal with the locals and neighbours in rural areas.

What can lawyers do for you?

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-GET A NIE NUMBER. The day you go to sign the purchase deed in front of a Notary, you must have your Fiscal Identify Number. Without it you cannot pay taxes in Spain. We will apply for one through the Chambers of Lawyers. As this sometimes takes 4 weeks, it is advisable to request one as soon as possible. So, once you are sure you are going to buy a property in Spain, request a NIE number.

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-PREPARE THE OPTION CONTRACT:

We will prepare the Option Contract in Spanish and English. This document –which is binding for both parties – will establish the terms and conditions of the purchase.

We will check:

a) The real ownership of the property. By checking the Property Registry we will find out who the real owner is. We will also identify any third person who has a right to this property as a right of way, right of use, usufruct etc…

b) The legality of the property. Lots of properties, especially in rural areas have illegal parts. If this cannot be checked immediately, we will ask the vendor to prove the legality of the property before signing the purchase deed. 

Illegalities are not only in rural areas; your new apartment in town could have an illegal terrace, or a room that was built on a terrace without a licence, or a third person with rights to or interests in the property. 

c) Debts. We will check whether the property has any debts with institutions (taxes), easements, mortgages with banks or particulars, or with the Community of Owners. When you have bought a property you are responsible for the debts from the previous three years with the Community of Owners. Therefore, it is very important to be sure all bills have been paid. 

Once again, if it is not possible to check this before signing the Option Contract, we will ask the vendor to prove the absence of any debts on the property.

d) Price: If necessary, we can provide you with an appraisal report in order to be sure the price asked by the vendor is in line with the market.

 

-SIGN AN OPTION CONTRACT: We will prepare a contract outlining the terms and conditions of the future sale. The vendor will prove the legality of the property, deliver all the necessary documents, prove there are no debts, and provide efficiency energetic certificate of the property, as well as the most recent paid-in-full supply receipts, tax receipts etc.

This contract will set the purchase price and date of completion, as well as establishing what will happen in case any party does not comply with the stipulated items in the Purchase Option.

Only YOUR LAWYER will protect your interests and guarantee the return of the option premium if the property is not in perfect condition.

When the Option Contract is signed, you, as the purchaser, have to pay the deposit as the option price. The amount will be set by both parties, but usually it is 5 or 10% of the purchase price. Normally the vendor holds the deposit, but if both parties agree, it can be also held in a notary’s escrow bank account or in a lawyer’s bank account.

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-SIGN THE PURCHASE DEED:
 The purchase deed is signed in front of a public Notary and the full price is paid at that moment. On the same day the purchaser gets all the documents relating to the property and the keys, and becomes the new owner. 

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DONE?

Not yet…Now you can enjoy your new property, but there are still more things to do.

-Registry: Once we got the purchase deed from the Notary it must be sent to the Property Registry, where you will be entered as the new owner. The same goes for the Cadastre. You become the legal owner the day you sign the deed, but in order to make this information public it must be entered in the Property Register and the Cadastre.

-Also, if you buy a property in a complex you need to inform the Community of Owners and provide a bank account number in order to pay the community bills.

-Supplies: The water, power and gas supply contracts must be put in your name as soon as possible.

-Taxes and expenses.

Read our post about taxes and expenses when you buy a property in Mallorca.


 Toni Marqués. Property Lawyer in Mallorca

Don’t hesitate to contact me for free information.  +34 678 216 706   toni@palmalawyers.com


When you buy a property in Mallorca or elsewhere in Spain first you have to pay TAXES

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 Toni Marqués. Property Lawyer in Mallorca

Don’t hesitate to contact me for free information.  +34 678 216 706   toni@palmalawyers.com


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When you buy a property in Mallorca or elsewhere in Spain first you have to pay TAXES

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NEW PROPERTY: If your buy a new property the vendor will add 10% IVA (VAT) to the price. This VAT will be paid by you on the day of purchase directly to the vendor, who will deposit it for the tax authorities.

You will also have to pay an extra 1.2% tax called “Actos Jurídicos Documentados” (Stamp Duty). This tax must be paid during the 30-day period after signing the purchase deed by you or your representative using the model 600.

So, for a €300.000 NEW PROPERTY you end up paying €337.200.

SECOND-HAND PROPERTY: If you buy a resale property you will have to pay all the taxes the day you sign the deed, and from that moment you have 30 days to pay the Transmission Tax, (“ITP Impuesto Transmisiones Patrimoniales”). This tax is progressive, so it will increase proportionally to the value of the property as follows.

-From €0 to €400.000               –8%

-From €400.000 to €600.000     –9%

-From €600.000 to €1.000.000 –10%

-Over €1.000.000                     –11%

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e.g.1. You buy a property for €185.000.

-From €0 to €400.000 — 8% of €150.000, you pay €14.800.

So, the ITP tax for purchasing a €185.000 property is €14.800.

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e.g. 2. You buy a property for €550.000.

-From €0 to €400.000 — 8% of €400.000, you pay €32.000.

-From €400.000 to €600.000 — 9% of €150.000, you pay €13.500.

So, the ITP tax for purchasing a €550.000 property is €46.500.

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e.g. 3. You buy a property for €2.350.000.

-From €0 to €400.000 — 8% of €400.000, you pay €32.000.

-From €400.000 to €600.000 — 9% of €200.000, you pay €18.000.

-From €600.000 to €1.000.000 –10% of €400.000, you pay €40.000.

-Over €1.000.000 — 11% of €1.350.000, you pay €148.500.

So, the ITP tax for purchasing a €2.350.000 property is €238.500.

COSTS:

As well as the taxes mentioned above, when you buy a property you have to pay costs. Some are mandatory and others are optional.

Mandatory:

Notary fees: The purchaser has to pay the notary deed.

Property Registry Fee: your property must be entered in your name with the local Property Registry

Lawyer fees: These go from 1% of the purchase price if your lawyer is only advising on the purchase, up to 2% if your lawyer is helping you get a mortgage or signing the deed on your behalf using Power of Attorney.

Optionals: Hiring an architect or surveying the property you are going to buy, as well as getting a valuation. If you are going to apply for a mortgage then a valuation is mandatory.

Mortgage costs: If you get a mortgage to buy the property, this mortgage will also be signed in front of a Notary. You will also have to pay the cost of this notary deed. In addition, the mortgage also has to be entered in the property registry; to do this you have to pay the property’s Registry tax.

Once you have signed the mortgage in front of the Notary, you have one month to pay an extra 1.2% of the total amount of the mortgage as “Actos Jurídicos Documentados” (Stamp Duty). Usually the bank will pay this on your behalf.

In brief, the costs and expenses of buying a property are approximately an extra 10 or 13%.

OTHER TAXES

As well as the taxes and expenses related to the purchase, once you have become a property owner in Mallorca, or elsewhere in Spain, you will have to pay other taxes annually.

Annual taxes and declarations arising from your property ownership in Mallorca or elsewhere in Spain

.-IBI (Land Tax) The “Impuesto sobre Bienes Inmuebles” is a tax you have to pay every year. It goes from €100.00 for a small apartment up to a few thousand for a large detached house. Before signing any contract you should ask the vendor to show you the last annual receipt in order to know how much you have to pay for your new property.

– National income tax for NON-RESIDENTS in Spain only(“Impuesto sobre la imputacion de rentas de inmuebles a no residentes”):  If you earn any income from your property, e.g. if you rent out your apartment, you will have to pay tax on it. Even if you do not earn any income you still have to pay this tax. It is between 1.1 to 2% of the cadastral value of your property.

– Garbage collection: The Town Hall in your municipality will charge you a garbage collection tax annually. 

– Waste incinerator tax. This tax is also paid annually.

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 Toni Marqués. Property Lawyer in Mallorca

Don’t hesitate to contact me for free information.  +34 678 216 706   toni@palmalawyers.com


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Most common problems when buying a property in Mallorca

Yes, If you don’t check properly the propperty you gonna buy, your dream may become a nightmare

The days of illegal construction being allowed in Mallorca ARE OVER.

A few years ago, when a purchaser asked about the legal status of a property before buying it, the answer was always the same “Don’t worry. Mallorca has plenty of properties with illegal parts, but nobody cares”. 
And maybe that WAS true in the past, but NOT ANY MORE.

.-The Consell de Mallorca (Mallorca’s regional government) is taking this matter very seriously. It’s making a big effort to track down illegal properties and then act accordingly. In fact, this legislation has doubled the staff at the Agency responsible for combating illegal construction on the island.

War in Mallorca to illegal urbanism based on fines and demolitions
Demolition announced in twitter

.- Only at the session of February 24th 2017 did the Territory Defence Agency of Mallorca (“Agencia de defensa del territorio de Mallorca”) order the demolition of seven constructions built without a license.
They also regularly announce on Twitter and facebook any buildings or parts of buildings that were knocked down on their orders. 

.-In the first 6 months of 2016 the number of files on violations of construction plans grew by 250 % if you compare them with the whole of 2015. (Read it in local news)

So. Buy or not? 

Buy, of course. Be sure to hire a specialized lawyer to avoid buying illegal property.


Don’t hesitate to contact me for free information.
Toni Marqués. Property Lawyer in  Mallorca.
toni@palmalawyers.com….WhatsApp: (+34)678216706


F.A.Q.

-Am I responsible for any illegal building done by a former owner?

If you buy a property and any part of it is illegal, the penalty will be incurred by the one who carried out the building works without a license. So the penalty will be incurred by the former owner, not you.
But if the right of the administration to order the demolition has not expired, or if the proeperty is in a protected area where the right of order the demolition will never expire then YOU MAY have to knock it down/demolish it and also pay for the costs.
But also, if the right of the administration to order the demolition has expired, then if in the future you ask for any building permits for your property, the administration may ask you to demolish any illegal parts as a previous condition of your being granted a permit. Although the administration may not be able to ask you to knock down the illegal parts of your property, but you will never be able to make any improvements or carry out any building works on it.

-The vendor told me 100% of the property had been registered with the Property Registry. I read the entry and the description matches reality.

Be careful. Just because your property is registered with the Property Registry and with the Cadaster does not mean that it is 100% legal. Only by checking the original building license at the Town Hall and aerial pictures (of very old properties) is it possible to be sure about the legality of a property.

-The vendor gave me a Town Hall certificate stating that there are NO FILES CONCERNING INFRINGEMENTS OF URBAN PLANNING. So, is my property 100% legal?

NO. When the owner asks for this certificate, the Town Hall simply checks whether there are any files in their computer records referring to that property. This means they never notice any illegalities, although of course there may be some. Also, if they discover any illegalities in the future they will open a file.
That is why it is strongly recommended not to buy any property without hiring an expert Real Estate Solicitor.

-Infractions are only in rural areas?

NO. infractions are also found in urban areas.

So, before you buy a property, make sure it’s 100% legal.


Don’t hesitate to contact me for free information.
Toni Marqués. Property Lawyer in  Mallorca.
toni@palmalawyers.com….WhatsApp: (+34)678216706