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The Role of the Notary when Purchasing and Selling Property in Spain Barrie Mahoney's Blog

'Writing Inspired by an Island in the Atlantic'

The Role of the Notary when Purchasing and Selling Property in Spain

Alongside the priest and the doctor, the Notary is regarded as a very important person in Spain. Although they are public figures they obtain their fees from individuals and companies. They play an independent role in drafting and witnessing many types of legal contracts in Spain. Essentially, their job is to ensure that both parties to an agreement understand the terms of the contract and that the terms of the contract do not contravene any laws. Notaries also ensure that the appropriate taxes generated by the transaction are paid.

Property sales and purchase are generally very efficient in Spain and, unlike England and Wales, where long chains of purchasers can lead to many failed transactions, a commitment to purchase in Spain is taken very seriously, and can be completed well within one month, and often much quicker if it is a cash transaction.

If a purchaser is interested in buying a property the normal procedure is to place a ten per cent deposit with the agent to show commitment to purchase. A contract between the vendor and purchaser is then drawn up with a date of completion agreed by both parties to take place in the office of the Notary. In theory, this system works very well because, unless the property is seriously misrepresented, there are few opportunities to pull out of the deal.

There are no chains of purchasers to worry about or concerns that the sale may fall through. However, it is essential to have the remainder of the funds readily available to complete the transaction otherwise there is a real risk that the intended purchaser will forfeit the deposit to the vendor. At ten per cent of the deal, failure to complete represents a substantial penalty and one that rarely occurs. However, I did come across one case in the Costa Blanca where a purchaser, for a number of reasons, was unable to gather together sufficient funding to complete the purchase.

The vendor felt that he had been slighted and insisted upon claiming his legal right to the full deposit, which in this case, was seventy-five thousand euros – being ten per cent of a seven hundred and fifty thousand euros property. Ouch, that was a very painful lesson learned!

When a property is purchased in the UK, contracts are exchanged, the vendor is paid, and eventually you get the keys and the property is yours, after which you are free to register your title in the land register.

The process is different in Spain in that you cannot inscribe your title in the property register – Spain’s version of the land register – unless a Spanish Notary witnesses the deeds of sale. Under Spanish law, a Notary’s signature is required to enter a private contract into public deeds that can be inscribed in the land register.

Some Spanish, especially in rural areas, own property that is not inscribed in the register, thus saving on the hassle and expense (Notary fees, registry fees and taxes) of inscription although this can lead to difficulties when it comes to selling the property again in the future.

As a reporter in the Costa Blanca I often came across heartbreaking stories of where property purchased by British ‘expats’ had seriously backfired. Sometimes these properties would be advertised at an alarmingly low price – and for a good reason.

The usual reason was that the land was not registered or maybe the property itself had been built on agricultural land and not land designated for residential building. It was only when the water and electricity authorities refused to connect these properties to mains services that their new owners became aware that they were living in an illegal building.

At best, all the new owners could expect would be for the local Town Hall to eventually recognise and register the property, turn a ‘blind’ eye or in the worst case scenarios, the property would be designated for demolition with the new owners receiving little, if any, compensation. In these cases, the ‘bargain’ that was advertised so temptingly on the Internet would turn into a nightmare scenario, sometimes crippling the new owners and destroying the dreams of so many for a new life in the sun.

There were also very sad cases of many illegal beach and seashore properties being demolished by municipal authorities upon the instruction of central government, anxious to ensure that building policies were enforced. Much damage had been done by previous administrations at both national and local level in ‘turning a blind eye’ to some of the horrific developments in protected coastal areas.

As modern Spain grapples with fast moving and far reaching European legislation, a fair amount of corruption has been discovered leading to the prosecution, and in some cases imprisonment, of a number of municipal representatives, including a number mayors and local councillors. Indeed, we have had a number of cases of mayors and other local officials imprisoned in the Canary Islands for corruption.

Tragic stories of corruption ruining the lives of newly arrived ‘expats’ to Spain were not uncommon and although most had employed lawyers to check and verify their new properties, somehow many had slipped through the net.

For foreign buyers, in particular, it is essential to inscribe their title in the property register, as it is the only secure form of property ownership in Spain. The first person to inscribe title to a property gets to keep it, which is all the reason you need.

There are other advantages too: for instance, protection from the vendor’s creditors and the ability to take out a mortgage against the property. All buyers need to complete their purchase in the presence of a Notary if they are to enjoy the benefits of inscription in the property register.

Visiting the office of a Notary in either the Costa Blanca or the Canary Islands is always an entertaining experience. Far from being the sober place that it could potentially be, it is usually, in my experience, a place of much excited chatter and laughter.

Sales and purchase of property are just a few things that the Notary has to deal with, including the registration of wills and verifying documents in all of the many legal and necessary transactions of life and death passed across their desks. It is usual for everyone involved in the transaction – the vendors, buyers, and mortgage lenders – to be present in person or to be represented by powers of attorney at the signing of the ‘escritura’ or legal document.

When you arrive at the Notary’s office, you have to wait until all the parties arrive, and then the Notary starts the proceedings. The Notary confirms the identity and other personal details of the buyers and sellers present, and then reads the property deeds aloud.

Some Notaries like to use their English by giving a partial translation, although most will just read in Spanish. Whatever the case, the purchaser needs to be sure that the deeds are correct before signing them, which means having a translator present or relying upon your English speaking lawyer. Some Notaries will refuse to sign the deeds unless a foreign buyer has a lawyer or translator present.

I recall that on one occasion I had a frantic telephone call from a lawyer friend who had just been let down by his usual translator. Would I step into the breach? At that stage I knew very little Spanish, other than basic greetings and the ability to order a glass or two of wine, but I reluctantly agreed. I did not have a job at the time and so had plenty of time on my hands to help out a friend in distress, and ready cash was in short supply. I was well briefed by our friend beforehand.

Although I was the official translator, the client’s lawyer (an excellent linguist himself) would read out the English translation for me during the meeting. Most of the meeting went well, apart from a very embarrassing discussion with the purchaser of the property whilst waiting for the Notary to become available. He was a very friendly Irishman, complete with a strong smell of alcohol on his breath.

When Pat Murphy realised that I too had an Irish background he accepted me as part of the clan and entered into deep discussions, although most were monologues, about life in Ireland and Spain and, indeed, life in general. Pat’s questions about my life as a professional translator and interpreter were a little difficult to answer given the circumstances, but I seemed to ‘wing it’ to his complete satisfaction.

In any case, the alcohol was still having its influence upon Pat, and I doubt that he really cared about my professional skills anyway. My lawyer friend had made it very clear that all I had to do was to sit with him and his client around the table with the Notary and when the time came, I had to nod wisely and say, “Si,” with as much ‘gravitas’ as I could muster. Heart in mouth, I sat at the Notary’s table, seated importantly alongside Pat and his wife, the vendor, bank representatives and my lawyer friend and his assistant. Finally, my moment came and I was asked that all-important question by the Notary.

“Si,” I answered in my most professional manner.

It was exhausting work and I remember being paid fifty euros for my professional contribution. We were all happy and I had suddenly become a professional translator and interpreter, although I decided to retire shortly afterwards! Pat Murphy too was delighted and he shook my hand vigorously at the end of the meeting, promising to keep in touch.

The Notary makes certain legal checks, though these vary between autonomous regions. This leads some estate agents to claim that buyers are perfectly well protected by the Notary and do not need a lawyer.

However, in reality, the Notary gives clients little protection, so prospective purchasers do need to be accompanied by an experienced and qualified professional when signing the deeds. If no one objects to the content of the deeds, the Notary will pass them around for signing by all parties, and confirm the payment of any outstanding amounts by the buyer before the keys are handed over.

On the few occasions when I have visited the Notary’s office to complete a transaction, it was not uncommon for all the participants to sit around a table and physically hand over cash from one person to another.

In the past, it was common for ‘black money’ to change hands and this did not officially appear on the legal documentation. I gather that this was, in the past, a ruse to avoid paying certain taxes to local and central government.

It is a practice that is not to be recommended nowadays as it is an issue dealt with seriously by the authorities, and can have legal consequences when the time comes to resell the property. Overall, Notaries in Spain seem to do a good job although there have been instances in the Costa del Sol of several Notaries and local lawyers being recruited by the criminal element who paid them bribes to ‘turn a blind eye’ to certain illegal or ‘fringe’ transactions. Hopefully, this behaviour is not widespread and well qualified Notaries can continue to do their work with their usual impartiality.

From 'Letters from the Atlantic' by Barrie Mahoney

ISBN: 978-0992767136

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