In recent years, more Belgians have been buying property in Spain out of bank repossessions. Through bank repossession, you can buy property at interesting prices, but from a legal point of view, you need to consider a number of pitfalls. After all, bank repossession is not without danger. Therefore, in this article we will discuss some common issues In case of bank repossession in Spain.
Legal documentation missing
Spanish banks do not take into account the legal aspects and condition of the property, so you have no guarantee that you can make full use of your property. The previous owner usually does not cooperate with the bank and rarely provides the necessary or latest official documents.
It is also common that the land register was not updated. Sometimes the notarial deed of the previous owner is missing. Also, the planning permission may no longer be in order because of recent renovations, the property may have been declared uninhabitable, there may be an order to demolish (part of) the property etc. This is all possible without the knowledge of the bank.
Debts associated with the property
Indeed, some owners try to hide any debts towards the bank. There may then be debts or penalties for violations attached to the property. Think of tax debts, unpaid contributions to the co-owners' association, unpaid municipal taxes, unpaid utilities, etc. As a buyer, the creditors will sue you.
Ten-year-old new building
If the property was left unoccupied from bank repossession, it may qualify as new construction. As a result, you pay VAT as well as stamp duty on the purchase price.
In addition, the contractor's 10-year liability may have already expired. Indeed, during the 2009 crisis, several property developers went bankrupt, never being able to sell their properties. For instance, there are finished properties on the market dating back to 2006 that were never occupied.
The property may be disconnected from utilities, requiring you to enter into new contracts and installations. In case of non-payment, the electricity and water companies break their contracts with the property owner and disconnect the property. As the new owner, not only do you have to take over the unpaid bills, you also have to pay back all installation costs.
Avoiding bank seizures?
Buying a property out of bank foreclosure can certainly be a good deal. However, if a property out of bank foreclosure is priced particularly cheaply, it is legal advice always necessary. After all, there may be several hidden costs. A legal investigation will allow you to estimate the full cost and to make an informed purchasing decision.