Posts in Category Legal aspects of real estate

New Law of entrepenurs and its internacionalization- Spain

10 October, 2013 No Comments

Spain… a country at your fingertips.

As previously did Portugal and Greece, Spain invites foreigners to invest in the country, providing a number of advantages.

real estate in Spain

photo: T.B.Channel

We will do an analysis of the measures that autorize the grant of a residence permit in Spain to foreign investors upon request.

Following the adoption of the new law on entrepeneurs, last September (law 14/2013 ) appears among others, measures to encourage foreign and domestic investment. The aim of the law is to facilitate international mobility, as well as the entrance and stay of foreigners in Spain for economic reasons, by making a significant capital investment.

Non resident foreigners, buying real estate in Spain, with an investment same or higher than € 500.000 each, may apply for a residence visa ( which allows them to live in Spain for a year ). This period of residence may be extended, upon application for a residence permission for two years more. Being this last period of two years renewable for two more years, subject to maintain the same conditions  that allowed grant authorization.

This investment will be verified by one or more certificates evidencing the domain, issued by Real Estate Register, belonging tho this property. Must prove that they have the ownership of the property by continued certified information domain  and loads of the real estate Register that belongs to the property. The certification will include a verification e-code for the enquire on line.

If at the time of visa application, the acquisition of the property was still in process of registration in Real Estate Register, will be enough to submit the certification, stating current seat submission of the acquisition documentation, acompanied by taxes payment certification.

The applicant shall prove in this way, his investment of 500.000€ or more in real estate, free of charges. In the event that the investment exceeds € 500.000, the portion of this exceed may be subject to taxes.

There are several limitations to the grant of a residence permission for real estate investment:

* The person who does the investment must not be ilegally in Spain, or had any criminal record  in the country, or any other countries where he head lived for the last five years.

*Must have public or private health insurance, as well as enough personal economic resources.

* the property acquired by investor must be free of charges. In case it has a mortgage, the investor loses it’s right to have the residence.

In addition to the information concerned to real estate market, the purpose of this new regulation also includes stimulating foreign investment in several areas, while promoting business entrepeneurship development in the country, scientific and technological innovation, seeking to create employment .

 

2) FRACTIONAL PROPERTY: Shopping around the world

1 September, 2011 1 Comment

That is, to buy only part of the property, which is different than timeshare or right of use.

Fractional ownership allows the buyer to purchase only a portion, instead of owning the total property. This method was originally used in the purchase of yachts and planes, but for the last two decades has been applied also in the American real estate market, and also in areas of Europe that tend to have a year round occupancy, i.e. Golf Resorts Algarve (Portugal).

Buying a share of the property, usually between 1 / 4 (to use 13 weeks per year) and 1 / 12 (one month of use), carries a small down payment, which instead of buying an entire property, allows you to buy small fractions of different properties in different locations. Another advantage would be to buy a portion of a much larger house for the price a little one.

Keep in mind that if you buy a quarter of the property, the cost will be slightly more than one fourth of the property’s market price. This increase is to bear with administration costs, which involve the management of the estate by a company that will have the property always ready whenever there is a change in use (repair, maintenance, cleaning, gardening, etc) . These are monthly expenses, and therefore we must take into consideration this additional cost when choosing this type of purchase..

The idea of fractional property shall not be confused with the figure of timeshare property that was very popular in the 80’s. The differences are:

1. Buying a fractional property is similar to buying an entire property, the owner’s name appears in the documents that guarantee the ownership of a part of that property. It is called ” common tenancy” with other owners. The owner may sell, rent or take a mortgage on that part of the property during the time he has allotted for its use. On the other hand, timeshare property only sells time of use (right of use), instead of selling a property title. The value of this “time” will usually depreciate over time. Instead, fractional ownership on a property, if the market improves, will be appreciated as any other owned real estate.
2. With timeshare, if the managing company is dissolved, the person who bought a right of use, may be at risk. This does not happen in the purchase of a fractional property because shared ownership is independent of the management company.
3. In many type of timeshare, the time is bought in hotel rooms or apartments which may vary each time, because investors are only owners of the time. In fractional ownership, you get part of that home, it will not change.

To sell fractional ownership: If there is no special provision in the contract, the property can be sold at any time and recover the portion of the initial investment (or more if the property has appreciated over time), but usually there is some sort of extra charge. Depending on the terms of the contract, some companies may offer to repurchase the fraction, and others act as brokers and charge a fee in order to sell it privately.

Some fraction contracts are signed for a certain period of time, and after this period all the owners may sell the property, to be divided equally among all of them. It is also possible to start another period with the same conditions, or if a co-owner wants to buy the entire property, he will have preference over any external investor.

Sometimes doubts arise about the purchase of a property…  Why should I buy it if I will not get the most out of it? Here are the advantages of fractional purchase:

* Instead of assuming the total costs of owning a home, divide the cost of furnishing, maintenance, insurance, repairs, security, tax, among all co-owners ..
* The company that manages the property will take care of the maintenance problems, if any, that entails having a second residence ….. when you arrive everything is in perfect conditions ….. when you leave you don’t have to worry either, because the house will be in perfect condition.
* You do not need a large amount of capital invested in it, and you can allocate the rest in other investments.
* An empty house always carries a higher risk, but in this case will be inhabited most of the time
* Owners of second residences, often use as much of the 4-12 weeks per year. Fractional ownership makes the purchase price match with the use that is given to a holiday home.