In general is understood that when the current mortgage amount is paid, then the debt is canceled. And this is true.

But, owners of Spanish properties should remember that, when they bought their properties, and part of the price was paid with a mortgage, there were 2 actions completed in the same moment of the sale:

- The Purchase: this action created separated deeds in which the property was passed to the new owners.

This action created the payment of notary fees, land registry fees, and taxes (VAT or Transfer tax).

The purchase action was completed with the final inscription of the change of names in the registry inscription from the property in the new owner’s name.

This is widely known and accepted by the owners of Spanish properties.

- The Mortgage: This action represents the process from which, the buyers, receive from the bank the amount of the mortgage loan used to buy the property, and is passed to official deeds at the notary office.

These deeds could be a second part of the deeds of the purchase, or can be a separate deed just to consider the mortgage conditions.

Mortgage deeds reseume the conditions of the mortgage like:

• amount of mortgage (Capital)
•  interest
•  term of payment, etc.

This action, although connected to the sale, is totally independent from the Purchase. This action creates also notary fees, and land registry fees, and even a declaration of taxes, even no taxes are paid for this fact.

Usually, owners and creditors of Spanish mortgages, do not remember well how the mortgage process was done, because, when they bought their propertues,  the same banks use to deal with the preparation of the deeds, and the inscription of the mortgage in the land registry. So, the only the purchasers they were called to do when were completing the mortgage, was just sign more papers. That’s all.

This action, as well as the purchase one, results in a change in the registration records in the land registry. In this case, the inscription of the mortgage in the registry of the property is consdiered in the section “charges” of the same property.

Once this is considered, when owners of Spanish properties are selling them, they are confused with the way to cancel their mortgages. As we say, in the majority of the cases, they did not particpated in the mortgage process more than to signing another set of deeds. So, it is normal they do not know exactly how to deal with it.

In their defense, we have to say that, although banks are really helpful to facilitate the setting up of the mortgage, they are not so helpful when their clients ask them to cancel them.

As we say, when banks “give” the mortgages, they organize all the steps till the final inscription. So, their clients only need to sign the deeds on completion, and the bank makes the rest. The expenses derived for the inscription of the mortgage are directly reduced from the amount given as loan. So, they do everything.

But, when the client goes to the Spanish bank and asks to cancel the mortgage, the bank does not proceed in the same way. In the majority of the cases, bank’s staff does not advice in the right way to its customers explaining what we are explaining now, and, even worse, they do not assist their customers preparing the deeds of the mortgage cancelation, filling the tax declaration, and registering the cancelation in the land registry.

They, simply, leaves the client to organize this, and, save particulars exceptions, they do not collaborate with their clients in this way.

So, what to do when the owner of a Spanish property needs to cancel his/her mortgage?

In order to cancel the mortgage, you need the following:

• to contact directly with your bank office to instruct them to prepare the breakdown with the current mortgage debt.
• once you are supplied with the current debt, you have to transfer, or otherwise organize the payment, of the necessary amounts to cancel it.
• once the amount of the debt is paid, then you need to cancel it in the land registry. For this, you have to prepare the deeds of the cancellation of the mortgage in a notary, and then ask athe bank to go there to confirm the cancellation in front of the notary. You have to pay then the notary fees.
• once you have the deeds of the cancellation of the mortgage already signed by your bank, you have to make a declaration of taxes. This action does not pay taxes, but, the declaration must be done anyway, just declaring to pay “0″.
• after this, the deeds of the cancellation of the mortgage, plus the declaration of the taxes, must be presented to the land registry to complete the cancelation of the mortgage in the land registry inscription of your property. 

HIGH COURTS IN VALENCIA FORCES TOWN HALL TO GIVE CH IN RUSTIC LAND PROPERTY WITHOUT PROPER BUILDING LICENSE.

There are thousands of properties in rustic and urban  land in the Spanish market without CH.

The majority of them have being paying Council Tax, water and electric, the government and Town Hall has collected from the owners the taxes when they bought, and their personal taxes while they own the property (Income Tax and Wealth Tax), and the taxes when they sale (Capital Gains), water, electric, etc.

But, when the owners of these properties apply for the CH, then some Town Halls refuse to issue it.

Is this fair?

There are 2 different positions from the Town Hall in respect of CH:

- Those who gives the CH, always that there is not any construction fine affecting the property (or is now expired).  This is the position of Town Hall like:

• Elche – Alicante
• Dolores – Alicante
• San Fulgencio – Alicante
• Hondon Nieves - Alicante
• Hondon Frailes – Alicante
• La Romana – Alicante
• Callosa Segura – Alicante
• Albatera – Alicante (till May 2011)
• Ricote, Blanca, Cieza, Abarán, Abanilla, Fortuna – Murcia

Source: TLACORP database 2012

- Those which, despite of there are not any construction fines affecting the property, or, if there is any, is already expired, do not give the CH.

• Crevillente – Alicante
• San Vicente – Alicante
• Aspe – Alicante
• Andalucian Region, including all the areas like Malaga, Granada, Almería, etc.

Source: TLACORP database 2012

Regulation is confused in the market, and does not help too much. There is not an unique law regulator for all the country in construction. Each region has exclusivity of regulation for construction in their territories. They have to fulfill with the central government criteria, but the regions have too wide faculties to develop the Madrid-central laws.

Urbanistic and construction laws in Spain result in a very complicate net of laws, with  different sources of legislations, starting from the Central from Madrid, passing by the different Regions (Comunidades Autonomas), and arrving to a wide range of interpretations by the ones which must execute the laws: The local  Town Halls.

Mainly, there are construction laws which, coming from Madrid, leave a basic structure of consideration in construction which must be developed by each region. The most important is the Ley del Suelo from 2008. The problem of this law is that  it leaves the different regions a “wide range” of development for the own regionsal laws created to regulated the construction sector in their scope of influence.

As result, a determinate construction can be considered totally different from one region to another, depending in which territory is developed.

This must be joined to the fact that the Town Halls of the local areas have also functions of development and interpretation of the laws. As result, it leaves, cities, bordering one each other, where a determinate construction can be considered totally different from one to the other. This leaves the country in a really problematic picture of mixing, confusion, and insecurity regarding transactions in rustic.

So, at this moment, the interpretation of the Tribunals, and their jurisprudence (Cases of Law), are compulsories to give clarifications in this matter.

HIGH COURTS IN VALENCIA (Tribunal Superior de Justicia) and SUPERIOR COURTS IN MADRID (Tribunal Supremo) has  given the reason to the owners.

Supreme Court in Madrid decisions have been giving the reason to those owners who were applying for CH for these type of  houses, always that there was not any construction fine affecting the property (or they were expired), and the property was considered suitable for habitation.

But, as explained, each Comunidad has their own competences and faculties to regulate construction in their territories. So, in Valencia region, we were waiting for a definitive Sentence of the Valencian Tribunals to confirm the suitability from properties without building license to obtain CH, without valid or expired fines for construction.

This sentence arrived on October 2010, and confirmed the following:

The case: A villa built without building license. When declared in the land registry, the owners considered the finalization of building works with more than 5 years, and with a certification from an architect confirming the building fulfilled the all the habitation requirements.

The Town Hall from Xabia denies the CH when applied, arguing there was no building license applied.

The owners said building is older of 5 years, and any actions against it (like fines, demolition, etc.), are not possible, since the term of time to do it is now expired.

The Town Hall insists in their position to refuse to give the CH.

The owners claimed against the THall in first instance, and they lost.

They appealed to the High Courts in Valencia, and they WON.

The High Courts, by the Sentence TSJ de Valencia Sala de lo Contencioso-Administrativo, sec. 1ª, S 30-6-2010, nº 834/2010, rec. 1529/2008, says:

- That building is illegal, because there is not any building license to cover it.

- The Town Hall had 4-5 years to detect the illegal building and to fine for it, with the proper order of demolition.

- Town Hall did not make anything during that time.

- Any eventual fine neither order of demolition is now expired

- Property fulfills with habitation requirements as confirmed by independent architect

- Property needs CH to connect to mains supply of water

- Town Hall had the legal period of 4-5 years to demolish and fine the property. They left this time and did nothing, so, is unfair the TH keeps the property without CH as a punishment.

So, High Court of Valencia sentenced in favor of the owner, and forced the Town Hall from Xabia to give the CH to the owner.

Consequences of this Sentence: How important is this sentence in the Valencian Region?.

Extremely important.

As we say, there are some local Town Hall in the area which give CH to those properties built so long time ago that, for this reason, any legal action against them is expired.

In instance, there are other local Councils which do not distinguish between properties with a pending fine, or order of demolition, and others with any of these actions expired and legalized with the time, and deny the CH as general rule.

This Sentence opens the way to Valencian Lawyers and Solicitors to fight against the local Town Halls, and to obtain CH in those properties that:

• Are built without a valid building license
• Were built with 4-5 years before any action/inspection from the Town Hall
• Have not any fines, neither orders of demolition valid (all of them are expired)
• Fulfill with habitation requirements

Although this sentence is not a general rule, and cannot be used as a “Case of Law”, it could be the beginning of a change of consideration in the Spanish system to protect the ownership and those victims of the confused Spanish system.

NOTE: This report is written in  a very personal interpretation of the laws made by the company TLACORP lawyers.

As serious legal expert professionals, we summit our conclusions to other interpretations and proffesionals, which could be prevalent to our legal criteria, if better founded in law. So, this report is written in  strict terms of information to those , clients, or not, readers and followers of our site, and without any legal effect without the proper individualized study of the case.

o To confirm by the Town Hall that the property was built following the legal requirements of construction, building permits, licenses, etc.

o To connect the water and electric to main supply, or, for properties already connected, to change the names in contracts of supply.

The certificate of habitation is a document which is required to sell properties when they are new building. From 2008 (when a new law started), builders they cannot sell their new properties without the presentation at the notary office of this document. So, it is compulsory to have the CH for selling new properties.

But in resales, the notary does not require the CH to authorize the selling. It seems that buyers and vendors they can sign their deeds without the presentation of this document.

Why is a applied CH to resales?:

o To check that the Town Hall is happy with the construction. Alternatively, this can be also checked with a certification from the Town Hall confirming there are not fines or demolition orders on the property (also called “Certificado de No Infracción Urbanística”).

o To guaranty that the new owner of the property (buyers) will have their supplying contracts on their name. If CH is not supplied by the vendor, there could happen that the supplying companies refuse to change the contracts of supply into the new owner’s name without the presentation of the CH.

So, there are owners in the area that bought their properties without CH, and then, when they wanted to change the utility contracts, they were requested by the water & electric companies to present the CH. Then, if the property had any problem, or the Town Hall just refused to give the CH, these buyers could change the contracts of supply into their names, which remain in the vendor’s name.

o To guaranty that the supply of the water and electric is for a “house” and not for a “shed”, “albergue”, or “almacen”. Some properties in the area were declared when built not as a house, but as a “shed”, or “albergue”, or “almacen”. At time to get the connection of the water and the electric, they were provided with supply for these kind of constructions different than a house, which usually is lower power than the required for a house.

Then, it is really common to find in the area big houses with contracts of supply of “shed”, or “almacen”, which usually is not more power than 3,3 KW. Then, if buyers wanted to increase the power to normal supply of 5,5 KW, or 9,9 KW, they are requested by the companies to change the contract for a “house” use. To do this, is necessary the CH. Without the CH the use of the contract from “albergue” to “house” cannot be done. Subsequently, the power of connection cannot be increased accordingly.

Thus, although legally CH is not necessary to complete the sale of a property, is more than recommendable for buyers to have it, in order to avoid problems in the future.

To confirm if the CH is needed or not in a sale must be studied case by case, individually. It is not the same not to have the CH in Crevillente, or Catral, than not to have it Hondon Valley, or Albatera.

In fact, in Crevillente, not to have a CH is a problem since the water company cannot guaranty the supply of water without this document. So, special consideration must be in Crevillente properties.

In addition, depending on the area, the water and electric companies can make the changes of the supplying contracts even without the CH. So, each case can be different, and a particular study of the case must be made before to give a definite answer.

We  see that you and your husband had a property in Spain, inside our area of influence, that you owned 50 % each.

 We see also that you husband did not have any Spanish or UK Will to cover the inheritance disposal of the Spanish assets.

 In this case, we have to inform you that  the following step now is to start the intestacy process in Spain, in order to complete the changes of the ownership on your name only. This process must be done in consideration of the calculation, declaration, and payment Spanish Inheritance Tax, and must be done and complete before 6 months after the date of the decease (although an extension can be applied if necessary). After 6 months penalties and interest of delay will be derived.

 Now, what you have to do is contracting the services of an specialist to guide you and advice  you in this process.

 For this, and before quoting you the expenses of the process, we can give you a more approximate overview of the case if you provide us with the following information:

 - Copy of the deeds of the Spanish property

- Copy of the last Council Tax bill

- Copy of the NIE from both of you

- Copy of the Padron (if the case)

- Copy of the Certificate of Residence (if the case)

- Copy of the death certificate

In addition to this, we need to know the following:

 - Did your husband had any other assets like cars, bank accounts, etc, in Spain?. If the last case, indicate the amounts in banks account.

- Do you have children?, How many?, How old are they?

- Was your husband got married with you as first marriage, or had he any other previous marriages?, please, indicate if he had other children from other marriages? (apologies for these personal questions, but I am sure you will understand we need this information to deal with the case).

- Were you and your husband living in Spain or in UK? .

 Once I receive the above mentioned information we will be in the position to have a better knowledge of the case, and I will send you an individualized report of the case, showing you the different alternatives and the right process to complete the Spanish inheritance of your husband.

But, what’s the real position of the agents by the Spanish laws?.

AN EXAMPLE:  When the buyer pull out the sale without “reasonable arguments”, the seller can cancel the contract, keeping the amounts already handed over by the buyer.

 This amount is considered, and must be used, as a “compensation” for the damages caused to the vendor for the breach of contract from the buyer.

 In this case, one of the expenses the vendor has to pay, is the agent’s commission. In Spain, the agents have rights to collect their fees in the moment in which buyer and seller agrees in written the terms of the sale, in the proper contract.

We can say, out of the general  that their function is to get the “legal agreement” between both parts, and they are not responsible of the “good end” of the transaction. They complete their commercial function in the moment in which they find a property for the buyer, and a buyer for the vendor.

 But, is quite common that the agents are not paid, or are not totally paid, till completion. This is a common practice, but the thing is that their rights are acquired in the same moment of the signing of the contracts.

 If there is a breach of the contract from the buyer or the vendor, then this must be out of the commercial responsibility of the agent, and, for this, out of his control. As result, his commission must be paid. The way in which they collect their services is with the amount obtained by one of the parts as compensation of damages from the other part’s breach.

Being buyer, or seller, try to keep this into account when contracting the services of an Spanish agent.

Example: 

- You bought the property 10 years ago, and there was an exisiting house of 100 m2.

- You have built an extra room in your property 7 years ago, of 15m2,  and you did not declared it in Catastro.

During the 10 years you have been using the property, the Council Tax is calculated with the exisiting database in Catastro, whcih is a house of 100 m2. For example, 300 EUR / year

But now, due to the fact that you have decided to update the Catastro with the existing room (usually by the process of Declaracion de Obra Nueva, and with architect plans and certifications), the Catastro can make revision of the Council Tax in this way:

- For a construction of 100 m2, you paid 300 EUR/year.

- For a construction of 115 m2 (100 m2 house+15 m2 extra room) you had to pay 450 EUR / year.

Catastro can be then charge you 150 EUR difference of this estimation till the last 4 years after the declaration of the room.

The extra payment to Catastro can be then: 150 EUR x 4 years = 600 EUR.

Usually, these kind of updates in Catastro use to appear when the property is being to be sold or bought. So, please, pay attention being the seller or the purchaser to this very important matter.

In selling of properties, sellers use to leave update of the properties till completion. It is really common that owners of properties do not update their property records each time they make an extension in the property, like a garage, an extra room, etc. They leave the declaration of such extensions to the same moment of completion. And this is right.

The problem here is that, the buyers, when seller is not resident,  must make a retention to  vendors to cover the  eventual updates and revisions the Council Tax office could make on the previous 4 years before completion.

Is really normal that buyers they do not retain to sellers for this concept when sellers present the Council Tax receipts showing the current year is paid. But, buyers should pay attention incase the vendor has updated the deeds on completion declaring previous extensions in the property. In these cases, even if the vendor presents the Council Tax payment for the current year, there will be high possibilities to recieve an extra payment for the difference of valuations as explained above in the future.

Ask your Solicitor to organize the proper retentions to the seller to avoid these situations.

 Answer: In order to give permission to your brother to deal with your mother intestate (no Will), your brother needs a Power of Attorney from you to legally act on your behalf in this way.

 This Power of Attorney (POA) is a legal document that can be signed in:

 -       Any of the Spanish Consulates in UK

-       An UK notary (Solicitor is not valid).

 In this last case, the POA:

4.- Once the document has the Apostile, must be translated into Spanish by an official translator.

 If the POA is obtained in the Spanish Consulate, it will not be necessary to translate it, neither to get the Apostile, since it would be redacted and formalized in a public Spanish institution.

Also, if you contract our services, we will make all the translation service, Apostile and others, saving you expenses in this process, and the time to get all these requirements sorted.

 In addition to this, please, pay attention in that you and your brother must have the NIE number to complete the inheritance. This is a number which identifies you to the Spanish Tax Authorities. Is issued by the National Police . The number is necessary for practically any transaction in Spain, such as paying taxes, opening a Bank Account, buying a property or car, or the arrangement of a mortgage, or, as in this case, to form part of an inheritance and pay the Spanish Inheritance Tax.

You can obtain this number in one of the following ways:

-       In any of the Spanish Consulates in UK

-       Directly, and in person (POA is not valid), in a National Police Station in which the inheritance is being developed.

 Click in the following link for more info: http://www.spanishsolicitors.com/what-is-a-n-i-e-number/