1. Notary – In Spain all important paperwork is notarised. This means that if you want anything written formally and legalised, then you need to go to a notary. You want to do a will – go to a notary, you want to make a private loan to a friend or family member – go to a notary…you want to buy or sell a property…you go to a notary. In essence a notary is higher than a lawyer a lower than a judge. They basically make sure that whatever you have in mind regarding registering something and making it formal, they will check it over and sign to say that what they have read is OK by them. In fact, you’ll go to the notary office and be very surprised at the long length of time that you’ll spend in the actual notary office getting paperwork copied and arranged and then the short length of time that you’ll spend in front of the notary in person…about 5 minutes if you’re lucky. The thing is, most of the paperwork is organised outside of his personal office so that only a quick meeting with the notary in his office is required. Click the following link for more information about the property buying process in Tenerife.
2. Deposit – In the UK, if you’re buying or selling a property, either party can pull out at any time and for any reason right up to exchange of contracts, after that there will be compensation cases, but up until that point, loads of work can be carried out causing legal costs and then if one side decides to pull out it can leave both buyers and sellers with potential bills and plenty of other problems and heartache. Here in Tenerife deposits of 10% of the agreed purchase are paid, and in my opinion should be lodged with a lawyer, and contracts are drawn up to protect both buyer and seller. If the buyer pulls out, they lose the 10% deposit that they have paid and that goes to the vendor as a form of compensation. If the vendor pulls out then the 10% deposit goes back to the buyer and the buyer can claim the same amount from the vendor as a form of compensation. This ruling has been in place in Spain for many years and is a great way of keeping purchases and sales together until the signing and completion at notary.
3. No exclusivity – Here in Tenerife, any vendor can choose to advertise their property with any estate agent that they choose. Generally speaking this is not really a bad idea until a buyer starts to search for property and sees that same property advertised at different prices with different agents or on the other hand contacts agents and keeps getting told that the property is sold. True, you have agents that leave properties on their websites as…let’s say, bait…to catch a potential buyer, but very often the story goes this way. A vendor puts their property on the market with 3 agents, it doesn’t sell for 4 months. They then put it on the market with another 4 agents at a lower price and remembers to tell 1 of the original 3 agents of the price change. 6 months later and a couple of price drops as well, the property sells, but the vendor only remembers to tell 2 of the other agents they put the property market with thus leaving the property “still for sale” with 4 agents…and all at different prices. I’m not saying this to remove from blame any agents that leave old properties at cheap prices intentionally to act as bait for potential buyers (in fact I think that most people guess that is what’s happening) but this is still going on in quite a few cases.
4. No addresses on properties for sale – Given that there is no, or at least, very little exclusivity in the Tenerife property market invariably no agents like to pin point a property exactly on a map nor do they like giving out apartment numbers within complexes unless they have sufficient information about the potential buyer and enough trust in the vendor. This has come about because over the years a number of unethical estate agents quite happily go around knocking on the doors of the properties that they know full well are being marketed by other agents, they use this as an easy way to get property for themselves to market, so as a result, there are very few agents that will give away any exact addresses of properties to potential buyers.
5. Purchase fees – In the UK when buying a property, there are lawyers fees to pay and depending upon the value of the property there is also Stamp Duty to pay. Here, in Spain, we have a land transfer tax, which is currently 6.5% on second hand properties, you need to pay for your lawyer, the notary and land registry fees. All of this usually adds up to about 10% of the purchase price of the property that you’re buying. In comparison to the UK, this is quite a major difference but of course if you know about this up front, you can budget for it.
6. The language – Pretty obvious but never-the-less it’s worth mentioning. In Tenerife – Spanish is the legal language. All of your paperwork will be in Spanish unless you ask for a translation, but even then, it probably will not be a written translation. When you’re at the notary and you’re signing paperwork there, everything will be translated either by your lawyer or more usually one of the members of staff within the notary itself but please ask questions if you are not happy with the translation, it’s important…whether you’re buying or selling property, you’re signing for something, so make sure you’re clear about what you’re signing.
7. Commission – Here in Tenerife, estate agent commission is usually 5% plus IGIC (Canarian VAT) whereas in the UK it is somewhere between 0.5% and 1.5% plus VAT. The main difference here is the fact that there are hardly any properties on an exclusive basis with agents and as such there are lots of property sales that get shared between agents and so each office ends up with 2.5% of the commission. Some will still say that 2.5% is a lot of money, but I have had many comments about the extra work that Tenerife estate agents do in comparison to their UK counterparts. Just as in the UK, the vendor pays the commission, along with other fees.
8. Tricky estate agents – “Oh come on”, I hear you say, “are there really still dodgy estate agents in Tenerife?” Look, everyone’s got a story to tell…poor service, no follow up during your purchase or sale so you’re unaware of what’s going on, missing deposits that were being held with agents, property not being put in the name of the new owners, problems or outstanding debt not being disclosed…the list goes on. There are no affiliations that estate agents belong to here. Even length of time being on the island is no indication of trustworthiness. You’re in a foreign country, you don’t speak the language – it becomes difficult. Just try and make sure that the agent you use to buy or sell your property is at least well known, not just a five minute wonder. If you’re selling, make sure they are happy to give you an invoice for their services, make sure they’ve got an office or at the very least somewhere you can find them regularly if you need to meet with them and always make sure you use a lawyer that is registered with the lawyers college of Santa Cruz de Tenerife…just be careful, it’s a jungle out there…!!!