Legal restrictions affecting the purchase of inherited real estate

Buying a property is always a risky proposition. Especially when the seller inherited the property. This entails additional risks for the buyer, depending on the relationship the seller had with the former owner.

In a previous post, we spoke about the risks of buying real estate inherited by an immediate family member. These risks have to do with tax as the inheritor is entitled to fiscal benefits that place restrictions on the sale of the property. If these restrictions are not met, the tax office will make any claim against the current owner of the property.

In this post, we look at another type of risk that arises from a slightly different situation — when the seller acquires the property by inheritance from someone who is not an immediate family member. The most typical example is a single person or widow without children who, via a will or by law, ends up leaving their estate to a non-immediate family member (under Spanish law: a sibling, nephew/niece, cousin, etc.) or even someone with no family ties.

When the seller registers the inherited real estate in the land registry, a restriction is placed on their power to sell the property for a given period. This restriction exists so that if an heir with a preferential right to inherit appears (e.g., a child that had not previously been acknowledged), their rights are protected.

This restriction, which is often not taken into account, can lead to surprises as the banks may decline financing the property purchase in such cases. As always, we recommend seeking the assistance of a lawyer when you purchase a property to obtain the proper legal advice.

Carlos Prieto Cid – Lawyer

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