Tourist rentals and homeowner associations

Posted on by
Reply

We’ve written before about the administrative requirements for renting properties to holidaymakers: https://blog.tarracoiuris.com/en/?p=380
Today we look at the legal issues that can arise with homeowner associations.

As we stated in our previous post, the government has established social, economic and tax controls in the tourist rental market. It did this because holiday letting can affect housing prices, the make-up of districts and the good relations between neighbours. Politically, these are highly sensitive issues. Recently, there have even been very divisive campaigns by neighbourhood and social groups against tourism, a phenomenon referred to as “tourism-phobia” by some in the media. These groups say that the boom in holiday letting has caused social problems, especially in the historic centres of cities and in communities in tourist areas.

Thus, the government now requires various things if you want to rent a property to tourists. First, the property must have a special registration number. This number, issued by the Tourism Register of Catalonia (Registre de Turisme de Catalunya, RTC), starts with the prefix HUT, which basically stands for “property for tourist use” in Catalan. Second, you must register the property with the regional police so you can register the details of the people who stay overnight in your property. Lastly, you need to pay the Catalan tourist tax (the IEET tax) on an ongoing basis.

As well as having to comply with these administrative requirements, you also need to take into account whether the property you want to let out is affected by a homeowner association. If you have an apartment in a building with common areas or a house or duplex on an estate with common services (pool, sport facilities, etc.), you and your property may be affected by the decisions of a homeowner association on what your property may be used for. Homeowner associations are increasingly voting to prohibit certain uses of properties. This often includes prohibiting owners from renting their properties to holidaymakers.

What can you do to protect your property rights in such cases? You need to seek professional advice to analyse exactly what options you have. We would be more than happy to provide you with this advice. Please contact us if you find yourself in this situation or have any questions.

Carlos Prieto Cid – Lawyer

Read this article in French
Read this article in Spanish
Read this article in Russian
Read this article in German

The advanced healthcare directive: help your family make the decisions you would want

Posted on by
Reply

If you become incapacitated, your loved ones may have to decide what medical treatment you should get and whether to turn off life-support. You can make these decisions easier for them by leaving an advanced healthcare directive, also known as a living will.

Who will decide for you if you become incapacitated owing to illness or injury? You can sign a document before a notary or witnesses that designates who will make decisions on your behalf and talk with the healthcare professionals who carry out these decisions. You can also state the personal criteria that should be taken into account for making these decisions, when, owing to your physical or mental state, you cannot directly express you will.

These personal criteria can refer to, for instance, your wishes regarding life quality in terms of your level of pain tolerance or functional independence. You can also specify where you want to spend your last days and in what health situations the personal criteria apply (dementia, irreversible illness, etc.).

Once you’ve specified who decides for you, the decision-making criteria, and when and why decisions should be made, you can give instructions on the health procedures you want carried out. For instance, you can request that your life not be uselessly prolonged by artificial means. In your living will, you can also state if you want spiritual care in your last moments and if you want to donate your organs.

In Catalonia, to facilitate the access of doctors to this personal information, the advanced healthcare directive can be registered in the Department of Health’s Register for Advanced Healthcare Directives. By registering the document, it is included in medical history shared with patients. This information can also be accessed by authorised professionals elsewhere in Spain.

Carlos Prieto Cid – Lawyer

Read this article in French
Read this article in Spanish
Read this article in Russian
Read this article in German

Why you should check that the details on your property in the Land Registry and the Cadaster match

Posted on by
Reply

As we have commented previously on this blog https://blog.tarracoiuris.com/en/?p=118, there are two systems for registering and guaranteeing titles on real property in Spain: the Land Registry and the Cadaster. Having two systems means inconsistencies in the data registered can arise.

The details registered can differ from one system to another because both the information source and purpose differ in each system. The Cadaster provides property details to the Spanish Tax Office for collecting tax. This information comes from tax declarations and inspections. In contrast, the purpose of the Land Registry is to guarantee and protect property titles. Titles can only be registered by submitting public instruments. The information in the Land Registry is therefore more rigorous than that contained in the Cadaster as the information source is subject to stiffer requirements.

To help make the data stored in each system consistent and so this data better reflects reality, the Spanish government introduced in 2015 a straightforward procedure for coordinating the data in both systems. This procedure has been further extended. You can now update the data registered to make it consistent in both systems and ensure it reflects reality. The procedure is quite automatic and gives rise to numerous advantages. If the data registered is coherent and faithfully reflects reality, selling your property or transferring it in any other way (by mortgage, gift, etc.) becomes far more straightforward. These advantages affect the property’s market value.

So I encourage you to check that the details on your property in the Cadaster and the Land Registry are the same and do reflect reality. If you find otherwise, get in touch. We can help you rectify the problem. By fixing the problem, you will have peace of mind that your property rights are fully protected by the Land Registry and that you are only paying the tax you lawfully owe.

Carlos Prieto Cid – Lawyer

Read this article in French
Read this article in Spanish
Read this article in Russian
Read this article in German

Tax obligations for owners of real estate in Spain

Posted on by
1

Owners of real estate in Spain must pay tax on their properties regardless of their place of residence. In practice, resident and non-resident property owners pay the same taxes in Spain, although the names and collection mechanisms of these taxes differ.

A real estate property can generate earnings, either through renting or because of sale. Also, under tax law, just owning a property generates a notional income that is taxable. All these incomes must be declared in Spain, and Spain is the competent state for collecting any tax due. This is according to all the double taxation treaties signed by Spain. These treaties follow the general OECD model under which income from real estate property can be collected in the country it is in, regardless of the country of tax residence of the taxpayer.

In addition to paying any income tax due to the national Spanish tax agency, the property owner must also pay all other taxes due to other agencies. This includes, for instance, the municipal property tax collected each year by the local council. And, when you sell your property, the capital gains tax you also should pay to the council.

Lastly, in Catalonia and some other autonomous communities, there is a further tax on an activity widespread among foreign investors in coastal properties: the short-term leasing to tourists. The tax is a small amount due per night for every person staying in the property, which must be registered for tourist use with the local council.

Carlos Prieto Cid – Lawyer

Read this article in French
Read this article in Spanish
Read this article in Russian
Read this article in German

The recognition of notarial documents overseas

Posted on by
Reply

Expats with financial or family interests in their home countries often have to go to local notaries to sign powers of attorney and other formal documents to handle legal matters in their home countries. Differences between the legal systems mean that these types of formalities generate more complications than we’d imagine possible.

The main problem arises when the law requires that a particular document be executed as a “public” notarial instrument for it to be valid. In Spain, for instance, legal transactions such as granting powers of attorney and transferring real estate are only valid if they are executed via a notarially-recorded “public document”. But there are countries, e.g., most common-law jurisdictions, where this type of “public document” does not exist.

What makes a document “public” in countries where this type of instrument does exist depends on the law in each country. In Spain, notarial documents are public documents, which guarantees that the facts stated in these documents are true in accordance with what the notary public has personally verified, and that, from a legal point of view, the statements of intent made in these instruments are authentic. Basically, all these characteristics give such documents privileged probative force.

We can only be sure that a notarial instrument will be recognised as such and, therefore, as a public document in the country where it is to be used, if the notary public who authorises it confirms in the document itself that all the legal requirements have been met, both in the jurisdiction it was executed and where it is to be used. In these cases, as a complement and guarantee to the service provided by the local notary, it is advisable to seek the advice of a lawyer who knows both legal systems.

Carlos Prieto Cid – Lawyer

Read this article in Russian
Read this article in German
Read this article in French
Read this article in Spanish

Avoid causing problems between your heirs over the inheritance you leave them

Posted on by
Reply

A common cause of family rifts is the distribution of inheritances. Before we die, it is our responsibility to take one of the many measures available to make sure such conflicts don’t happen.

Joint ownership is by far what creates the most problems we encounter on a daily basis at our law firm. Joint ownership of real estate, bank accounts, vehicles, etc. can tangle the associated financial, administrative and fiscal red tape so much that the property loses just about all profitability and may even lose value.

People rarely enter joint ownership arrangements voluntarily, which shows how undesirable they are. They normally arise out of an unwanted event of legal significance: a divorce, a company winding up or someone passing away. In this post, we look at joint ownership arrangements arising from inheritances.

The most straightforward and economical way of distributing an inheritance is by making a will. To guarantee the effectiveness of the will, first you need to get your lawyer to check its content. Second, you need to execute it as a notarial instrument (done with a notary public).  In a will, an inheritance is usually distributed by means of “legacies”, i.e., the universal heir to the entire estate is required to distribute certain property to certain people. To ensure the heir complies with this obligation, an executor can be appointed.

Another way of sidestepping problems between successors is to make gifts while you are still alive. A similar amount of tax is paid when property is transferred as a gift to when it is inherited. The advantage is that you can finalise everything while you are still alive. The disadvantage is that, unlike with a will, if you change your mind, you can’t change the situation without the help of the beneficiary.

Either way, if we want our memory to live on in a harmonious family, it’s worth distributing our inheritance in the most impartial way possible prior to our death. Our heirs will thank us for it.

Carlos Prieto Cid – Lawyer

Read this article in Russian
Read this article in German
Read this article in French
Read this article in Spanish

The red tape involved in letting a holiday home in Catalonia

Posted on by
Reply

Renting out a coastal property to holidaymakers in summer has become quite complicated, although most foreigners are unaware of the many obligations involved.

In recent years, the Catalan regulations on letting tourist accommodation has become particularly strict. The main political reason for this toughening up of the legislation is a cracking down on tax evasion as many letters of holiday accommodation do not declare their rental earnings in Spain (which is required by law, regardless of whether the owner of the property is a resident in Spain for tax purposes).

However, there is an even more compelling reason for the Catalan government to want to control access to the holiday accommodation market. On the coast and in the old parts of the larger cities, particularly Barcelona, tourist flats have become a social problem, owing to the not always civil behaviour of the holidaymakers (who change from week to week), and also an economic problem, owing to the unfair competition such accommodation represents to the hotel sector.

Before you can let your property to tourists, you must register it in the local council’s register of tourist accommodation. Not doing so makes you liable for some very stiff fines (even for just advertising the accommodation online without anyone actually coming to stay). To be listed in the register, you need to certify that the dwelling complies with certain conditions of habitability and energy efficiency. You also need to register the property with the tax authorities so the corresponding tourist tax (paid per night by each tourist) and income tax can be collected.

Registering a property as tourist accommodation can result in unexpected complications (which may even make it impossible to let the property). If you have a flat or house you want to let to tourists, we offer services to assist you in registering the property with the local council, drafting the letting agreements and ensuring compliance with all the official and tax obligations for total peace of mind.

Carlos Prieto Cid – Lawyer

Read this article in Russian
Read this article in German
Read this article in French

Tarraco Iuris SL moves to new offices in Tarragona

Posted on by
1

As of the new year, Tarraco Iuris international law firm is now working out of new offices in Tarragona. The new premises allow incorporating the latest models of customer service tailored to our clients.

Our more than 20 years’ experience in advising foreign investors has taught us that the essence of our service is to be in direct and close contact with our clients. While our clients’ interests are mainly on the Costa Dorada, they themselves are usually located very far away in central and eastern Europe. But regardless of where they are based, we’ve always sought to be readily available and made sure our clients can easily contact us and that there are no technical, cultural or language barriers. We want our clients to be able to write to us, speak to us, visit us and even look over with us their documents without distance being an obstacle. For this reason, we strive to adapt to the latest technological advances in communications. Moving our offices is just one more step in this direction as we have equipped our new premises to make the most of all the opportunities the new technologies have to offer.

In most cases, the advice relationship with foreign investors is virtual. It’s only towards the very end of a process that a client may be required to be physically present, although even in these cases this can usually be avoided through the granting of powers of attorney. Therefore, we have tailored our new offices to the real needs of our clients by improving our online services while maintaining the convenience and dignity we have always offered for those who prefer to visit us in person.

5-B, Macià Mallol i Bosch Street
Tarragona 43005 (Spain)

Phone +34.977.243.021

Read this article in Russian
Read this article in German
Read this article in French

When a loved one passes away, how do we know if we are beneficiaries of a life insurance policy taken out by them?

Posted on by
Reply

Many people aren’t sure of how many life insurance policies they have. And the beneficiaries of these policies are often even less likely to know about any benefit they may be entiled to. Therefore, there is a risk that a family member may spend years paying for life insurance with us as the beneficiaries for which we don’t receive the payout.

Because over our lifetime, we end up taking out a lot of life insurance. Not just with insurance companies but also banks and financial institutions, which, rather than offering it to us, require it for taking out loans. Sometimes life insurance is included free with other services, usually financial services.

In Spain, to safeguard against this risk, the Ministry of Justice created the Register of Life Insurance Coverage. This register provides information on whether a deceased person had any life insurance taken out and with which company so that possible beneficiaries can contact the insurance company in question to find out if they were designated as beneficiaries and claim any benefits they may be entitled to under the policy from the insurance company.
This public register is accessible to anyone wanting information on whether a deceased person had a life insurance contract and on the insurance company providing the policy. You can access the records of this register only after someone has died, from 15 days after the date of death, by providing proof of the death. The records are accessible for five years.

Carlos Prieto Cid – Lawyer

Read this article in Russian
Read this article in German

The importance of legal advice

Posted on by
Reply

If you have to go to court, you obviously need the services of a lawyer. You can’t usually bring any legal action or even defend yourself in court without a lawyer. However, the services of a lawyer are not limited solely to when you’re summoned to go to court. Indeed, in our experience, the main reason clients have to go to court is because they didn’t seek advice from a lawyer beforehand.

If many such clients had sought legal advice before entering into legal transactions, they probably would have avoided the courts altogether. Very worthwhile because a court case is always an unpleasant experience — even when you win!

Many people think they don’t need a lawyer. Perhaps they think they don’t require a doctor, a painter or a mechanic either. But when you’re seriously ill, you go to a doctor. Why, then, don’t you go to a lawyer when entering into an important transaction? How many times in life will you buy a house? How often will you receive an inheritance or make a will? Are such transactions not important enough to consider seeking advice from a lawyer?

Because the most important function of a lawyer in society is not to initiate legal proceedings. To the contrary, our job is to avoid court cases through providing help and legal advice. (In fact the Latin term for lawyer, ‘advocatus’ or ‘advocate’, refers to a person you go to for advice or turn to for assistance when entering into a contract or legal transaction.)

For example, during the sale of a house, both the buyer and the seller come into contact with a number of experts. At the very least when you buy, you come into contact with a real estate agent, perhaps even a developer and an architect if you’re building your own home. You will also need a notary.

Each of these professionals have their own function. The real estate agent finds a buyer for the property, the developer and the architect build the house, and the notary formalises the contract so you can prove ownership of the property and register it with the land registry.

None of these people, though, has an exclusive obligation to give you independent advice. Each has their own interests but none has a duty to look solely after your interests (as the buyer or seller). If the house is not sold, the estate agent receives no commission. If the contract is not notarised, the notary receives no fee.

However, you pay the lawyer to do nothing more than protect your interests. They are, therefore, the only person you can really trust in the whole process. They are the only person who can freely say to you — without it having any effect on his bank account, ‘you shouldn’t sign this contract!’

Many clients come to us after they’ve signed contracts and problems have arisen. At this late stage, all we can do is try to salvage the situation through an agreement or legal proceedings. Often in such circumstances, the client shouldn’t have signed the contract in the first place. But you can only know this — when to sign and when not to — if you have a lawyer, your advocatus, by your side when you sign.

Carlos Prieto Cid – Lawyer

Read this article in Russian
Read this article in German