Investing In El Raval
barcelonahomehunter.com
September 13, 2024
Investing in El Raval I lived in El Raval for a year. Pretty normal during the day, a couple areas
- 1-336-355-4464
- +34 636 383 338
- info@barcelonahomehunter.com
- Barcelona, Spain
Common Pitfalls When Buying Property in Barcelona. Avoid these mistakes when you are buying a property in Barcelona. It is a very different.
Finally found the perfect property in Barcelona? That’s exciting! But before you sign any contracts or pay any deposits, it’s crucial to ensure everything about the property checks out. Unlike in the U.S., where the escrow company plays a more comprehensive role, in Spain, the buyer shoulders the responsibility for thoroughly investigating the property. The buyer is responsible for controlling the property throughout the purchase. A clause in the notarized purchase deed also stipulates that the buyer knows the legal and urban situation as well as the physical condition of the property. This clause makes it difficult to prove that the fault lies with the seller for hiding certain information if it arises. And the list of checks and verifications to be carried out by the buyer during the purchase is very, very long…
This includes legal, fiscal, financial, and physical aspects at the regional, and local levels. It’s imperative to hire a real estate attorney who can conduct these checks to protect your investment.
In Spain, notaries don’t function like their American counterparts. Their role is more similar to that of a title company. They step in at the final contract stage when you’ve already paid the deposit, usually 10% of the purchase price. At this point, your financial commitment is substantial, and if any issues arise, the responsibility lies with you, not the notary. This is why pre-contractual diligence is vital. I highly suggest that you hire a real estate atttorny to check the title work before making you your reservation deposit. We can recommend a few that speak English or you can search for one. They are not terribly expensive, and worth every cent if they find a problem.
The Reference Value and Its Impact on Taxes
As of January 1, 2022, Spain introduced a new reference value calculation method, potentially increasing the Property Transfer Tax (ITP) for buyers. Now, the ITP is based on the higher of two values: the purchase price or the tax reference value. If the reference value is higher than the purchase price, the tax will be based on this higher figure. This reference value is determined by the Directorate General of Cadastre, using transaction data from notaries and the Property Registry.
The “Nota Simple Informativa”
In Spain, debts are tied to the property, not the owner. Before signing any reservation contract (known as “contrato de reserva”), request the most recent “Nota Simple Informativa” from the seller or real estate agent. This document is crucial as it provides essential information, including the property’s legal description, ownership details, and any registered debts, mortgages, or easements. If the seller is hesitant to provide it, you can obtain it directly from the Property Registry.
The “Nota Simple” also reveals if other signatures are required to finalize the sale. For example, if the property is inherited, the deceased owner’s name might still be listed, requiring the inheritance to be settled before moving forward.
The Cadastral Extract
Spain maintains two main real estate registers: the Property Registry (“Registro de la Propiedad”) and the Cadastre (“Catastro”). The Cadastre serves as a basis for tax applications, including property tax (IBI), inheritance tax, and gift tax. Since 2023, it also provides the reference value used to calculate the minimum taxable value for property purchases.
The cadastral extract offers information on the property’s construction year, status, and share in co-ownership, if applicable. However, discrepancies between the Property Registry and Cadastre are not uncommon, particularly in surface area measurements. If the difference exceeds 10%, the Registry may halt the registration process until the issue is resolved. Ensure that any such discrepancies are addressed in the reservation and sales contracts, with the seller responsible for resolving them before signing.
Since June 2013, an energy certificate has been mandatory for selling or renting real estate in Spain. This certificate provides information on the property’s energy consumption and CO2 emissions, graded from A (most efficient) to G (least efficient). The seller is responsible for obtaining this certificate from a certified technician, and it must be included in the sales contract. If you’re renting out the property, a copy must be provided to the tenant. Note that the certificate is valid for 10 years unless rated G, in which case it’s only valid for 5 years.
Local Taxes, Charges, and Invoices
Before closing the deal, request copies of the latest payment receipts for property tax (IBI), electricity, gas, and water. Ensuring all these bills are up to date is vital to avoid inheriting any outstanding debts.
Co-Ownership Documents
If the property is part of a co-ownership, obtain the statutes of the co-ownership. This is especially important if you plan to rent the apartment for short-term stays, as the statutes may prohibit such rentals. Also, request the latest minutes from the general co-owners’ meeting and the attached accounts. This will reveal if you’re on the hook for any upcoming rehabilitation work or other expenses.
*True story – My first property in Spain. Going through the minutes from the community meeting (HOA) I discovered they were going to levy my property €30,000 as my share of the improvements that needed to made to the facade. The seller somehow forgot to mention this…
Additionally, ensure that the property is free from any co-ownership charges as of the general meeting date and the notary signing date.
Previous Sale Acts
Ask for the previous deed of sale to confirm there have been no unauthorized modifications to the property. Significant changes, like adding a swimming pool or garage, must be registered with the Property Register. If not, you may be responsible for taxes or penalties associated with these changes.
The “Certificado de Aptitud”
For buildings over 45 years in Catalonia, a technical inspection (Inspección Técnica del Edificio – ITE) is required. The seller should provide you with the building’s “Certificado de Aptitud.” If the ITE has not been completed, the notary will note this in the sales contract, confirming your awareness of the situation.
The “Cédula de Habitabilidad”
In Catalonia, the “Cédula de Habitabilidad” (habitability certificate) or “Licencia de primera ocupación” (first occupancy license) is required. This document confirms that the property is intended for residential use and is habitable. Without it, the property might not be legally rentable. The “Cédula” is valid for 15 years, after which it needs renewal.
Tourist License Considerations
If you plan to rent the property to tourists, you’ll need a tourist license. However, many municipalities, including Barcelona, have strict limits or bans on new licenses. If the property already has a license, it is usually transferable, though some municipalities are considering ending this practice. Verify with the local authorities whether a new license can be obtained or if the existing one is transferable.
Rental Status of the Property
If the property is rented, find out when the current lease ends. According to the law, a new owner cannot terminate the lease before its expiration, which is typically five years. This applies even if the lease was registered with the Property Registry before March 2019.
Physical Condition of the Property
Conduct a thorough inspection of the property. Check for cracks, roof integrity, and the condition of common facilities like elevators and heating systems. Pay special attention to ceilings, floors, windows, doors, and the electrical, water, and gas systems. If anything seems off, consider hiring an architect to assess the property’s condition and estimate any necessary repairs.
Be Aware of Urban Projects and Local Issues
Check with the local municipality for any upcoming urban projects or public works that could affect the property’s value or livability. In Barcelona, be particularly cautious about the presence of “okupas” (squatters) in nearby buildings, as they can lead to financial and legal complications.
Financial Health of the Developer in New Buildings
If you’re buying a new property off-plan, research the developer’s financial health and visit their previous projects. Past economic crises, like in 2007-2008, saw many developers go bankrupt, leaving buyers without their properties and out of pocket.
Two Essential Tips for a Smooth Purchase
Buying property in Barcelona is a significant investment, by working with Barcelona Home Hunter, we will make sure the it is a smooth transaction. Contact us today to get started with our friendly team.
Investing in El Raval I lived in El Raval for a year. Pretty normal during the day, a couple areas
Investing in Camp de l’Arpa Camp de l’Arpa is where I live. Why did I choose this area? I was
Buying property in Sant Martí Sant Martí is rapidly gaining popularity among homebuyers in Barcelona, thanks to its blend of
Buying a home in La Sagrera: La Sagrera is quickly becoming one of Barcelona’s hidden gems for potential homebuyers. While
Everything You Need to Know About The Festa Major de Gràcia (Gràcia’s Main festival) The Festa Major de Gràcia is
Buying a Home in Eixample When it comes to buying a home in Eixample, few neighborhoods in Barcelona offer the
Get In Touch
Services
You cannot copy content of this page