Though the Covid-19 pandemic has impacted the Spanish real estate market, Spain is still one of the most popular countries in Europe for real estate investing. Spain’s broad variety of asset types offer opportunities for every kind of real estate investor. Spain has so much more to offer than just holiday properties and beach houses!
But how should foreign investors tackle Spain’s real estate transactions? How can you increase your knowledge of the Spain real estate market and of Spain’s legal system as applied to real estate?
Spanish real estate attorneys Mónica Regaño Aguirre, Janis Amort, and Fernando González Romero, from our affiliated Spain law firm, Monereo Meyer Abogados, and Harris Sliwoski real estate attorney Simon Malinowski as the moderator, discuss the most important steps for successfully investing in Spain’s real estate market.
Among other things, this free webinar covers the following topics:
- Real estate asset types in Spain
- How to transfer Spanish real estate
- Spain’s legal requirements for foreign real estate investors
- Spain real estate regulations and permits
- Spain real estate during the pandemic
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Simon Malinowski 00:02
Hello, everyone, I’m Simone Malinowski. Welcome to our Harris Sliwoski continued series of webinars on foreign real estate investment. I’m Simone Malinowski, managing attorney of Harris Sliwoski in New York office. For those of you who are joining us for the first time, Harris Sliwoski is an international full service law firm with offices in the number of places including New York, Los Angeles, Seattle, Beijing, and several other cities. This is a series of webinars that we are doing on information about investing in foreign real estate at our previous webinars. We’re investing in the US this webinar is investing in Spain real estate as a foreign investor. I just want to quickly start and ask that you make sure to you follow Harris Sliwoski on social media or on Twitter, Facebook, and LinkedIn. For today’s webinar, we are joined by Harris Sliwoski’s esteemed colleagues from Monereo Meyer Abogados which is a law firm based in Spain, established in 1989. Monereo Meyer Abogados is a full service law firm with a specialization on cross border business. They have close to 60 staff including 35 lawyers and offices in Barcelona, Madrid, and Palma de Majorca. They advise and assist foreign enterprises when conducting their business in Spain. In addition to being qualified in Spain, their attorneys are qualified in a number of other jurisdictions and really specialize in advising and cross border transactions. And they are actually affiliated with Harris Sliwoski. There is a partner in both firms, Nadia Vietz, based in Barcelona and Monereo Meyer is the product of strategic alliances we have they have a US desk. We share a common business philosophy, and it’s part of the reason why they are joining us today. In terms of their American desk, they guide companies and protect their economic interests in terms of investment and business activities in Spain, which we all view as an added value and competitive advantage from having a team of lawyers in Spain and connections in the US with extensive knowledge of US law. So with that, I wanted to introduce each of the actual colleagues from Monereo Meyer, who will be speaking today. First Monica, maybe would you like to introduce yourself to our listeners?
Mónica Regaño Aguirre 02:59
Hello, everyone. I’m very happy to have this opportunity to hold this webinar with you. I was born in Northern Spain in Bilbao and went to the German school. And then I decided to study law in Germany and after obtaining my degree there I joined our firm and have spent more than 15 years practicing international law here at Monereo Meyer. My specialty is real estate. We’ve participated in important operations such as sales and purchases of industrial and logistic warehouses, shopping centers and retail parks. And I am involved usually in the acquisition process and also later in the asset management this way I have specialized in consulting lessors, as well as lessees regarding leases of commercial premises and offices. I mean, this time I have experience the ups and downs of the Spanish real estate market of the last years and have gathered, I think valuable experiences regarding this acquisitions and legal lease agreements. For the setting up and negotiation of new lease agreements and resignation record. CNA renegotiating the conditions what is now very important now because of the pandemic, for example.
Simon Malinowski 04:36
Thank you, Monica. Janis?
Janis Amort 04:38
Yeah. Hi, my name is Janis Amort. I’m a partner at our Madrid office in the department’s of real estate and finance. I myself, I’m not Spanish, I’m originally from Germany. I took the bar exam in Germany, and after that, I decided to move to Spain for private reasons that was more or less 11 years ago. And I also took the bar exam here in Spain. So now I’m a German and Spanish lawyer. And being a German lawyer naturally, I advise many German clients but also other international clients in the context of their business activities here in Spain. My clients are both institutional investors, but also private individuals. And yeah, I would say is Monica already said with that background that we have, we have quite a lot of experience on advising international clients and helping them with the problems and requirements their concerns are confronted with here with our business activities in Spain. And also, we’re very, very happy that you invited us. Happy to join. We’re happy to have you. Thank you, Janis. Fernando?
Fernando González Romero 05:56
Hello, good afternoon here in Spain. Thank you to invite us to this webinar. I am Fernando Gonzalez. I am a lawyer. I am a Spanish I was born in Calgary, but then I go the law here in Madrid at the University of San Paolo and then I I attend master degrees in legal practice and cooperate through a Executive Master Degree in urban planning. I am specialized in law and real estate. I have more than seven years of professional experience in these areas. Through these professional life I have dealt with international clients advising them on a wide range of issues related to Spanish town planning, which as we are going to see is one of the most complex due to the territory, territoriality, of this law.
Simon Malinowski 07:08
Thank you Fernando. I think one of the reasons why we’ve done this series is that in every jurisdiction real estate acquisition is just different. It’s a very local and specialized type of law where industry knowledge on a very basic and local level is important. And we thought that it really couldn’t have better people to talk about it than history view. And so I wanted to jump directly into kind of the topics that we were going to go over and some of the questions and got us this question is for you. How would you characterize the Spanish real estate market for a foreigner dealing with investing or acquiring real estate in Spain for the first time?
Janis Amort 07:56
Well, the Spanish real estate market is together with the markets in Germany, France and UK one of the biggest markets in Europe. However, Spain was not on the radar of international investors until 1986 was the year when Spain joined the European Union. And due to this massive pent up demand of the Spanish economy economy as a whole, especially in the in the late 90s. And the beginning of this century, the Spanish economy was just growing, growing, growing, and that applies, of course also to the real estate market. Then unfortunately around 2010 The Spanish market or Spanish economy in general suffered a setback due to the international financial crisis. But since 2013 2014, I would say the market is recovering and during the last years it has been it has been growing again. So to characterize the different asset classes or asset types in Spain, the most important one from a traditional point of view would be residential, retail and office with regard to residential you should know that there’s a really high ownership rate in Spain almost 80% ownership rate so that only a few people actually rent that accommodation. But that’s a situation that is probably going to change during the next years. As recently the prices are increasing quite a lot. And so especially for younger people, it is not possible or very difficult to acquire their own flats or houses. So new business models for example bill to rent are going to play a more important role in the in the next years. One sector that is especially for for international investors very important is the office market here especially the big business centers that are located in the in the greater Madrid area and the greater Barcelona area. Other reasons, regions in Spain are not that important because there’s just not such a high office demand. Then retail was a big success, especially at the beginning of the of the century. Again, foremost in Madrid and Barcelona because of their higher purchasing power. So many shopping centers, retail parks and other retail properties were built in this years. After the financial crisis, the sector suffered a bit more and it took more time to recover. But recently it was also growing again until the pandemic. Then, Spain as a typical tourist destination of course has a really strong hotel sector. This especially in the in the biggest cities, and then in the coastline of Spain, south of Spain, and on the islands, for example, the Balearic Islands in the Mediterranean and the Canary Islands in the Atlantic Ocean. And the last asset class that I would like to mention, suffered a bit of shadowy existence in the past but in recent years, was growing as well and was becoming more popular and that is logistics of course, again in Madrid in Barcelona with ever growing populations, but also in other regions. And here you could point out for example, Saragossa, which is located strategically between Madrid and Barcelona, but also the Kaabah regions. For example, the bow or Valencia and the south.
Simon Malinowski 12:00
So when you say logistics asset types are you referring to kind of warehouses or kind of more commercial facilities?
Janis Amort 12:11
Yeah, exactly. Especially warehouse as well. We’re growing a lot like in the in the circles of 30 kilometer radius around Madrid and Barcelona. Although nowadays what is becoming more attractive is also smaller logistic facilities facilities in the city centers to cover the last mile to the client.
Simon Malinowski 12:36
And it’s probably a pretty good transition. Obviously, we’re still in the midst of a pandemic and it’s had a significant impact on real estate, logistics really kind of every aspect of every economy in the light of the ongoing pandemic, what impact did it have on the various types of assets that you’ve gone, just gone through? And then kind of what’s your opinion in terms of what development that we can expect moving forward as we hopefully transition out? Of the pandemic?
Janis Amort 13:12
Yeah, of course, the impact of the pandemic has and continues to be quite strong. And one of the losers definitely is, is retail that suffered a lot because of the false closures that lasted for several months in the last year. Also, the unknown situation between landlords and lessees, for example, with regard to the rental obligations of the lessee if the shops were closed, did not really help to calm the situation. So last year, not many investments materialize in the sector and we are expecting that it will still take some time until the sector or this market recovers. On the other hand, as you said, Of course logistics I don’t want to say is a winner under the circumstances but yes, logistic was definitely growing due to the increase in E commerce. And in this regard, we are quite convinced that this growth will also continue after the pandemic has stopped because the Spanish consumer really have adapted the habits and that’s not going to change once once the pandemic is over. So logistic is going to play a more important role in the future. And as I said before, not only warehouses that are in the outskirts of the bigger cities, but also smaller solutions in the city centers to cover the last mile to the to the client. Then office, for example. Last year it was considered a loser because everybody was convinced that office spaces especially in the city, centers, were not that important anymore, will not be that important anymore, because we could all see that home office actually worked also on a big state of scale.
However, this perspective has changed again during the last month and especially by the by the employees. There were some surveys in Spain, and it results that more than 50% of the of the employees favor a mixed solution of two days of home office per week and the rest of the week. So three days office time. Of course, the usage of office space is going to change. It’s going to be adapted, having more and more spaces, common areas or shared areas, but the office the asset class itself, office is not going to disappear and it’s going to play an important role also in the future.
Simon Malinowski 16:01
We’ve also seen in on the US side and in New York in particular, which is it does seem like most employees favor kind of a hybrid model, because it’s really hard to replicate, being in the office with your colleagues and it does seem like people like that and it’s going to be interesting to see how office landlords kind of grow and change with with that need. Now, a lot of our clients of Harris Sliwoski are American and a lot of our viewers are American. And so one of the questions and Fernando This is for you, that that I think lots of people are wondering is right now, could an American investor buy property in Spain? And if so, are there any requirements from the Spanish authorities for direct investment by Americans into Spanish real estate?
Fernando González Romero 17:05
Yes, of course. Before analyzing this, from a legal point of view, I think it’s important to point out a series of very simple recommendations. That may seem obvious but it’s better not forget. First visit the property or take heat conditions and then go to the to the land ready to cluster and city halls and take it like legal and tone and Town Planning situation. Olympia be always in order to avoid answer timings, mistakes and possible surprise that may appear in the in the future. If you are not sure about the purchase. That is why it’s better to delegate all the task to an expert in the file who will analyze all the factors prior to approaching now? Yes, both natural and legal persons can own and exercise rights over real estate. The only essential requirement to buy a property in Spain is for Frank obtain the and IE therefore an identification number is a personal non unique number essential to carry out any transaction in the country from opening a business to buying a property. You can apply for it in your country or for really no and it’s funny Tim Busey or appy here, a diary in Spain to plenty you need to submit an official application form a justification of the application for for this Nia in the case of buying a flat in Spanish as a point, a private contract of committee of sale where a part of the price is already paid on account of the final price to be paid when the property is transferred to you or any other document that fishcake there was a patient of the property. You have the your valid passport and make a cash payment for a fee. In case of the application through Reference Center beef, you have to you have to need the original and copy of your identity documents of the owner or representative are also required, as well. The signed letter from the owner with the authorization this identity number does not a legal resident, here in Spain. It is not a compulsory to open a bank account in Spain, but it will facilitate the payment of taxes and fees and unknown crazy debating an investor in real estate as a locate in Spain. It total value of with excess 3,005,060 euros. I must file a declaration using pre established form at the electronic headquarters of the Secretary of State for trade and investment registry here. In Spain. The deadline for submitting the declaration is one month after the investment has been made. However, if the investment or deactivation, total or partial in such assets comes from our country or territory considered to be a tax haven, this declaration must be filed regardless regardless of the amount or litigate in addition a in such case a after your declaration to the Miss register offering investment investment mostly. So far a I have only referred to the case of investment in real estate that have never mentioned the possibility of residents in the state. However, a foreign investor from not a union European a country’s purchase of a property in Spain in which you invest more than 5000 may allow you to play a sorry 500,000 Yes, it may allow you to apply for a visa was a special present for me for investors and we call a golden visa with entities you have in personal visa for the purchase of property in Spain for at least 500,000 use. The application must be submitted no more than 90 days before the planned date of proper land allows the holder to receive and work through the national territory. I think the period of yes the period of validity of these visa is 365 days. If the purchase has already been formalized, or six months if the purchase has not been has not yet been a formalized barberries pre contract with Grant warranty or a push is meant by means of the proceeds or other men’s forum I’ve seen in public.
Simon Malinowski 23:34
One of the things that you just mentioned I was just curious about is when you when you apply for the government identification number if you’re going to make an investment, do you need to have a contract in place to purchase for example a flat before you apply?
Fernando González Romero 23:54
You have to need that you have to say that they you have a be on on a deal with our contract. You are part of this contract. So it’s better to have a private contract with with this thing to to suffocate this, these the application of the of this number, PC then the C number.
Janis Amort 24:27
Jump in just Just a second. It’s unnecessary to already have something signed. It’s just that at the moment of the application the authorities are going to ask okay, why do you do apply for this number? Do you want to be a permanent resident Do you want to invest something like that? And then you have to say something but actually nobody consulted? But it’s not it’s not important or necessary to already have a signed contract.
Simon Malinowski 24:58
Just generally broad justification for why you’re applying correctly.
Janis Amort 25:04
Many times for examples also if you as a private person are going to become the CEO of a Spanish company, then you also need to apply for that number and then of course you give this as a reason why you’re you apply for it.
Simon Malinowski 25:19
And I assume, like most government identifications it’s for tax collection purposes. Yeah, later. So from the very beginning one of the one of the things that you had mentioned Fernando is basically going and taking a look at land records prior to an acquisition. Monica is there a specific system for registration in terms of land recording or recording the actual transfer of a property and is that required as part of a transaction?
Mónica Regaño Aguirre 26:04
Yes, ownership and other specific rights in Spain are recorded usually at the property registry. The property registry corresponding to the exact location of the real estate, the object of our property registry is only enamel property. Other acts or contracts concerning personnel property cannot be registered and not this property registry these registries are legal registry. It reports facts or circumstances such as for example, the surface area or of the plot or of the building. But it has also legal effects. That is it adds force to the legal act that is being registered for example, a purchase that is not reduced it cannot be enforced against a purchase that has been registered. So it is very important to reduce the the the ownership and the transfer of the registry of the ownership. Registration is in many cases Merde for declaration purposes, and not mandatory. But there are important exceptions.
For instance, mortgages for example, they have to be registered to be legally valid, but there’s not the case for the purchase of ownership. The persons in charge of these registry offices are property registers. They examine the legality of the property transactions before recording them in the registry. And once these transactions have been entered in the registry, they will be protected by the state as an official truth. So, the property registry has been created to attest to the property owners identity and any existing encumbrances on the property. If you have fun, you get the information of the registry it will report single ownership for each piece of property and the state guarantees that the registered title holder is the true owner and there are no encumbrances or other charges than those that are disclosed in the registry. There is also a system of coordination between the notary offices and the registry.
Before the notary authorizes purchased it, he must first fax the property registrar and ask for the information of this property. Therefore, in our opinion, Spanish property titles are very secure as long as they are registered in the property registry, which is not necessarily generated parties may execute a verbal agreement concerning the transfer of the property and this would be sufficient and valid.
However, as we have seen, it is highly advisable to reduce this contract in the property registry. Recording recording the purchase contract that the property registry requires a notarial contract a private contract is not sufficient for this. This, we call the public key the escritura Publika. And as we have seen, it is very important to register this Public Read also in time to avoid any rights of third parties that they are registered before the property title.
Simon Malinowski 30:38
Very similar to this system we have which is time it’s for everyone. I think it’s good practice to record conveyance of ownership as soon as possible.
Mónica Regaño Aguirre 30:56
Is the date in the time of the presentation of the deed of the property registration. This happens in a way of a notification by the notary. This entry gives the purchase a rank of priority regarding a rights that could be presented after this entry or the means that the right registered first takes preference over any rights or decide later, for example, as a protection against the double sale of the property by the seller for example, or lions or enforcement measures that could be registered after the transfer of the ownership. These cannot be enforced against the buyer. The principle of priority is one of the most important effects of this registration system. And therefore it’s also our very important task for the lawyer and the military to control that this happens and this happens in time.
Simon Malinowski 32:14
So pretty good transition because you know I think for a lot of the people who are listening today we’re kind of talking about what the process is like investing for the first time in Spanish real estate. And so, you know, one of the things that we we regularly talk about on these webinars is kind of assembling the right group of people around you. So for someone who’s considering investing in real estate and span for the first time, you know what types of advisors or people should they bring together in terms of making the process as streamlined as possible and put them in the best position for the investment to be successful?
Mónica Regaño Aguirre 33:05
Usually investors consult estate agents if they’re searching for a property in Spain, anyone is able to work as high estate agent. Nevertheless, there are official estate agents with a quality seal. So this provides these professionals with a degree of respectability.
Simon Malinowski 33:34
Estate agent in Spain is I guess, the equivalent of a broker in the US sell real estate and be able to basically act as the middleman between buyer and seller.
Mónica Regaño Aguirre 33:47
Exactly, exactly. And this anyone can make this but there are official brokers they have like qualities here. They have have studied and they have knowledge and so you can rely a little better on them than other brokers. Then strongly recommended for us is to appoint a lawyer to guide the investor or through the process and to protect its interest. In our opinion, it is sensible to ensure that the lawyer has no financial connection with the estate agent with a broker or the developer of the building, for example, so that he will be neutral by negotiating and by making due diligence The lawyer will be able to carry out a legal due diligence for your to compete to the completion of the purchase and buyer legal power of attorney the lawyer can also act on behalf of the buyer, which can be interesting to reduce costs, for example, for international investors that they do not need to travel often to Spain. And the lawyer can get the tax identity number we have spoken about and for example, help also by opening a bank account the entire process of signing the public deed or a private contract and until the final registration if the property registry can be covered by a power of attorney. We as lawyers, legal aspects of real estate and inform of course the investors of possible risk we see. But we also call the United States assess with other professionals that may assess investor for example, technical technical teams or economic consultants. This is of course depending on the transaction we were studying very important in our opinion can be the assessment by a tax specialist in order to plan the investment and eventually save costs. In case the investor wants to finance the acquisition. We lawyers usually examine the loan contracts and the mortgage conditions. Often for example, international investors, they contact agents specialized loans to search for a good loan for them. Physical examination can also be very advisable it depends of course, in the interest of the investors in recitation of the property. And there we often collaborate with allergy techs also by small purchases because sometimes irregular irregularities are possible legalities of the building may arise in our due diligence, and they have to be taken into account technical issues that are often then too specialized for ourselves as lawyers. We have already mentioned them. And sometimes we lawyers also make decisions and get information directly from the city council or other state offices. Property for example. This would be for me the victim for the investor.
Simon Malinowski 38:17
So Janis when you were first talking about what the various asset types are in Spain, kind of emphasize things are somewhat different in Barcelona and Madrid than they would be in other places which is no different than it is in the US when talking about New York City versus upstate New York. So Fernando has a question for you regarding urban planning in Spain. Is there any particular legislation that applies in terms of urban planning, and does it depend on the location of the property?
Fernando González Romero 39:00
Well, it’s a very complex matter involves many official bodies. I am wrong. I am going to talk first of all about the issue of Spain into territorial entities because it is the basic premise for understanding a urban planning law in Spain. We are going to consider three territorial levels. The first territorial level is the Spanish government. The second level is ready. Ready another government called here autonom autonomous communities on the third territorial level are the city’s municipal governments. Spain is made up of 17 aluminum news communities. An 8135 municipal governments and cinemas communities is a territory a territorial entity with within the Spanish Constitution because the legal system essendo EPA with autonomy with its own institutions and Representative third time, ladies Latif, executive and administrative power and this is the most important cause. The autonomous communities are organized into province, municipalities, cities from on organic search and all point of view the decision of government and administration of the municipality. These are the city halls. The city halls provide a series of basic service to their residents, such as Ryan, the town planning regulation for each municipality. The special planning try to achieve an appropriate thing appropriate relationship between populations, territory, activities and interests to construct sisters. Understanding this division is important because some planning is a matter of public function that is exercised by by the public administration by official bodies the competencies of the Spanish government and the autonomy autonomous communities is this area of planning can be exclusive, exclusive, exclusive for share. The municipality exercise competent competence in the planning and management execution and the supply of sound money in in the terms provided for in legislation of the spine. Government. autonomous communities. This means a the passage of sound planning are a framework within our legal system that includes legislation and autonomy use community legislation the Spanish government regulates the basic condition of land or ownership, both in terms of rights and these on has a power in certain methods that are called secretory secretarial was or octopus in the in the protection of certain specific areas of the territory, such as roads, railways, railways airports, airports of general interest insert the articles for all for all these reasons. The land law, legal shallow, is a Spanish NGO law that regulates the rights and obligations of random land owners in Spain. It is the cornerstone of reapplying law and it is a regulate the right to pile on the value of law. Then they autonomies communities for a part have lucid competence, over planning, partial planning and housing. In other words, a baby face a lot a regulation, planning, management and protection of urban legality itself. community has its own low. I have so that we have something a communities so we have 17 Different kinds of flow where depending on what part of Spain you are. So finally, the municipal corporations are to define the political activities behind any program planning policy. They are also responsive responsible for drafting directly or through technical assistance, municipal planning. They are also competent to approve development planning instruments. Here the most important is a municipal development plan to assume their execution in the case of public management or their control in the case of management by private initiative to ensure respect for legality in the execution of urbanization and bylaw change in land use.
Also grants granting of license, imposition of sanctions the basic regulatory instrument of the monetary power government to fulfill over planning competence is the this monetary policy plan which allows creation and organization of the identity of the interior municipality. Their municipal plan is a passing Tomita instrument of urban planning in with the territory, structure of the municipality he be establish. And we contain this strategy of faction that our time retooled in a model of organization grow awful run a space and the structuring of the land users of the of the municipally as a world therefore, a document of normative natural that disseminates the planning model that the global abilities for the for the sustainable development of the municipal territory to serve, protect land. The center of land uses a specific challenge because that must have according to the US our activities outside the city and on the streets. And so to have it all run on for receives the intervention of reform, renovation or aggregations on finally organize the programs. The management of it is crucial for all these reasons, the city where a property’s located located will be a fundamental issue. It is a a piece of land it will determinate it will run characteristics according to the municipal plan. And in a core land and possible protection law. That we have mentioned that we will be able to develop aid in a certain way for a person use with a with a specific characteristic. So if this property that has already been buy, we can see what use it can have and what activities can be developed.
Simon Malinowski 49:09
One of the things that I think is part of real estate investment in general is always a big issue is financing acquisitions. Is there anything in particular that need to be considered as part of financing a real estate acquisition in Spain particularly with respect to foreign investment?
Janis Amort 49:34
Well, in general, I would like to point out that there are no Express limitations as to who may provide financing in Spain, the providers have to comply with with specific regulation applicable to those providers. For example, bank entities have to comply, of course with the banking regulations and the supervision of the Bank of Spain. But apart from that, there are actually few restrictions. For example, it wouldn’t be possible for us investor to bring its own financing from you from a US Bank, purchase the property in Spain with that loan that was taken out in the United States and under US law and then maybe secure this foreign financing agreement by establishing a mortgage over the poverty in Spain that’s that’s no problem at all. And the what should be taken into account what financing provider or a bank would always ask in the context of financing or property acquisition is they will always ask for mortgage because it gives them a direct instrument to enforce their loan in case of non fulfilment by the borrower by means of foreclosure or forced administration of the property. As Monica already mentioned before, a purchase contract for example, it’s not necessary to sign it in a public deed, verbal contract or private document is sufficient. But the mortgage is actually one of the few legal documents in Spain that has to be formalized in a public deed and to be valid and registered with the property registry in order to be enforceable. In addition to mortgages banks usually asked for for additional security such as pledges over shares or bank accounts or if it is a private person, then a personal guarantee. But the mortgage definitely is is the most important guarantee and security.
Simon Malinowski 51:54
So we are quickly getting close to the hour mark, and I know we have a number of questions that we had on our topics but I did quickly want to get to a few of the questions that our listeners submitted one of them and we were discussing kind of the NIU registration, is it if a company rather than an individual is going to purchase real estate in Spain? Are they required to obtain an Nia in order to purchase the property?
Janis Amort 52:33
Yes, it’s the same obligation in case of a company it’s not an IE number but an AI F. But it’s actually the same system, the company before being able to bring out business open a bank account. Yeah, whatever action they want to take in Spain, they would need to apply for such a number as well.
Simon Malinowski 52:57
That makes sense. It’s similar to the system that we have here. Another question that we had come in which God all of us have had to deal with twitches, closing on real estate transaction in person versus remotely, particularly given the pandemic. In Spain, is it possible to purchase property remotely through a power of attorney or does it need to be done in person or typically with the individual who is acquiring the property?
Janis Amort 53:35
No, it’s It’s perfect, perfectly possible to carry out the whole transaction by a power of attorney just has to be granted before public notary in the country of origin and it needs to be it also needs the Hague Hypostyle otherwise it would not be recognized by the by the Spanish notary for example, but apart from that, there are no restrictions with regard to the usage of a power of attorney. And as Monica said before you can you can use it to sign private contracts to apply for the NEA or an IRF member to sign the public deed before a notary and to register later the public to the property registry.
Simon Malinowski 54:23
Speaking of registered, particularly because the majority of our audience is interested in investing foreigners are there any additional registration requirements for American or non EU citizens if they’re considering buying residential property as an investment, so you know, either as a short term or a long term rental?
Janis Amort 54:48
No in general, there are no additional restrictions or requirements. I think if the if the investment is higher than a certain amount of money, I think it’s about 3 million euros. Then you have to give notice to the to the Ministry of Industry or economy and Spain. But this is just a formal notice to inform authorities that you’re going to invest a certain amount of money in Spanish territory. No further requirements are set.
Simon Malinowski 55:22
When we’re kind of talking about, you know, obviously as part of a real estate transaction there’s the actual cost to acquire real estate. But then, as far as any sort of transaction, there’s always the additional expenses that someone has to incur. Like are there in terms of considering the real estate investment in Spain, any mandatory or compulsory expenses that investors have to take into account?
Mónica Regaño Aguirre 55:54
Yes, there are a range of expenses and of course taxes that must be taken into account. And they even before you can register the the acquisition in the property registry for example. One expense to consider when buying a property it’s it’s the notary fees. These fees are really good by the state. This means that that every notary charges the same fees for the same work. There’s only a little bit there that you can negotiate but the fees are principally the same. And the same applies to the costs for registering the property registry. These costs these fees, aren’t I that’s not the problem of of the whole acquisition costs. For example, as a notary, if the if the investor is doesn’t speak Spanish or the notary will prove if he can understand the public deed if that’s not the case, you can have if you have not a power of attorney or lawyer or someone acting for you, representing you, you can have a translator so that would be an additional cost of course. But this translation is also a work that we lawyers often I assume is normally the lawyer and of course the taxes this the taxes will depend whether the property is new or secondhand. But I think my colleague John is wanted to give more details in this regard. We are both known tax specialists in our firm, but maybe a little more information. I think what what we usually say in Spain, it’s you have to count with approximately a percentage of 10 to 12% of the purchase. Price for the expenses for notary registered wretchedly taxes. It will depend of course of the purchase price where their property is located in Spain, then different taxes would apply for example, but it’s of course, not big differences. So between 10 and 30%.
Simon Malinowski 58:54
Mark, we are unfortunately running into our hour, Mark. So there are a few questions that were still outstanding. And what we’ll do is, as a follow up to this webinar, put together some of those questions and publish a blog post that answers them as best we can. I want to thank all of you for joining us today. And participating. Yiannis Monica and Fernando this has been a fantastic a quick reminder to follow Harris Sliwoski on social media, Twitter, Facebook, and LinkedIn and also to subscribe to our blogs the China law blog, Canon Law blog and the Harris Sliwoski blog. And thank you all again for joining today and to all our listeners. Thank you for participating.