This is perhaps one of the most important questions to ask when buying a property in Tenerife. The answer is obviously YES! You are about to make what could be the second biggest investment of your life in a foreign country and in a foreign language, where bureaucracy and paperwork is notoriously complex and different.
Stories of people getting screwed over on property deals in Tenerife are the stuff of legend. Many things can and do go wrong. Sometimes the property isn’t in the name of the seller. Often there are debts registered against the property that nobody tells you about. Maybe the community fees aren’t paid up. Has the entire constructed building been properly registered, or has the property been enlarged or altered without proper planning consent? Is the land even designated as urbanistic or has somebody illegally built on rustic land? Are the water and electricity connections fully legal and paid up to date? Are there any planning restrictions or even demolition orders that the seller perhaps doesn’t want to alert you to? Does the seller actually know what you are paying for the property, or has the agent tagged on a huge commission behind the seller’s back by using double-contracts? Will the deposit you pay be secured and refunded if the transaction doesn’t go ahead due to the seller pulling out?
The truth is that there are a multitude of potential problems that can arise when purchasing a property. Many of those problems wouldn’t even crop up in the UK or many other European countries because lawyers are always involved in the transaction.
Not so in Tenerife. Here, the entire estate agency and conveyancing market is unregulated. That friendly chap you met in your local bar can (and will often try to) sell you a property, or at least try to manoeuvre himself into a commission share with the actual estate agent marketing the property). His equally unqualified friend may well offer to take care of the legal paperwork for you. After all, he says he has been here for years and knows everything there is to know about Tenerife. What could possibly go wrong?
In many instances, estate agents themselves will try to convince you that you don’t need to use a lawyer and some will offer to do the legal work for you, often for an additional price. They may tell you that using a lawyer is an expensive waste of money as the estate agent does all the checks and legal work anyway. They might tell you that using a lawyer will just complicate matters and slow down the transaction. So what’s wrong with this picture?
Well, the estate agent represents and works for the seller, not the buyer. If the property is sold, the seller pays the commission. How can a party acting for the seller who is financially dependent upon the sale going through also act independently for the buyer?
The possibility of a conflict of interests arising is huge. A more unscrupulous estate agent, faced with a potential legal problem, might be tempted to sweep it under the rug in order to finalise the deal and grab their commission. When the buyer discovers the problem in 1, 5 or 10 years down the road, the estate agent may well have closed up shop and left the island. If you sue them, they will probably just argue that they were not legally qualified to advise you and that you should rightly have consulted a lawyer. The Judge will probably agree with them!
Most qualified lawyers in Tenerife charge in the region of €1,500 plus IGIC VAT for handling the legal transaction for you. In many cases, there will be an additional charge for handling the all-important post-completion matters such as changing over utility bills and setting up your IBI Council tax etc. However, given that even the average property purchase in Tenerife is now over €150,000, spending 1% on proper legal advice is clearly a no-brainer! An added bonus is that the lawyer’s fees are also tax deductible against any future Capital Gains Tax liability when you sell.
As an alternative, some estate agents will recommend or urge you to use a particular lawyer of their choosing. This obviously has its pros and cons. Things might go smoothly due to the agent and lawyer already having an established working relationship. However, a lawyer who receives a substantial number of referrals from a particular estate agent might be reluctant to upset the agent and potentially jeopardise the transaction by scaring the buyer with a potential problem.
The post completion paperwork is almost as important as actually purchasing the property. Will the lawyer deal with transfer of electricity, water, IBI Council tax etc into your name? Will he or she promptly deal with the Land Registry paperwork and payment of applicable taxes? Failure to do so promptly could result in late payment penalties, disconnected utility supplies or even charges/embargoes registered against your new property.
At the end of the day, do your homework and choose a lawyer that you feel comfortable with and trust, who speaks fluent English and who is prepared to put things down in writing. Ask for receipts/invoices for all monies that you pay and make sure in advance that the lawyer is prepared to give you a detailed Completion Statement at the end, detailing all money movements in your case.
When it comes to conveyancing, Tenerife Guru recommends Tenerife Solicitors, Tenerife’s only registered English Solicitors & Spanish Abogados. The firm follows the same standards of practice, client care and professional indemnity insurance as you would expect from any other UK based solicitors. The firm offers highly competitive rates.
For more information on Tenerife Solicitors, click here