Spanish Property Purchase

We were recently engaged to act on a purchase of a property in Spain. Both the buyers and sellers involved were British and lived in the UK.

Due to the fact that both buyer (our client) and seller were resident in the UK we immediately made the suggestion that the transaction was done in Sterling. This approach suited both the circumstances and the financial positions of both sides. The parties had previously agreed the sale price in Euros, so we proceeded to draw up a contract which fixed the exchange rate in the contract and allowed the buyers to pay the sellers in Sterling. This meant that the parties avoided transferring the money from Sterling to Euros only for it to be transferred back again. The transfers were subsequently made in the UK which saved both the buyer and the seller money and time. The savings on this transaction went a long way towards covering our legal fees.

Problem identified

Whilst in the due diligence phase, and before we got to the stage of drafting up the contract, we identified that although the property (and the others around it) had been built legally, the planning permission was revoked by the local Town Hall in Spain after the property was built. This is a most unusual situation and one which caused the Town Hall issues as they did not have the money to deal with the consequence of that (such as paying for compensation or paying for the property to be demolished). The Town Hall was therefore “unofficially” waiting for the limitation period to expire so that the property could once again be considered legal. Essentially the property was in limbo where it was technically illegal, but it was highly unlikely that any enforcement proceedings would be taken.

Tailored solution provided

Having explained the situation to the clients they were happy to proceed with the purchase but naturally concerned that the situation may change before the limitation period expired and therefore wanted to make sure that they were protected. We therefore designed for them a specific twofold solution to the problem.

1. We incorporated into the contract that there would be a significant retention of the purchase price upon completion (i.e. the sellers would not get the full sales price at that stage). The balance of the price was then due to be paid when two conditions had been satisfied.
   1. When the Limitation Period had expired and a Certificate of No Infraction was obtained from the Town Hall. This would show that the Town Hall had not taken enforcement action before the Limitation Period had expired and the property could be “legalised” once more and
   2. The property had not been demolished or had received any notification of impending demolition.
2. By proceeding in this way, we managed to complete the purchase for our clients and secure for them the property that they wanted with as much protection as was possible in difficult circumstances.

By identifying the exact situation on the ground, and balancing up both the legal and practical risks, we assisted with executing a solution which significantly minimised the risks for our clients. The sellers were also very grateful for the solution as it meant they were also able to sell the property under circumstances whereby the majority of buyers would not have progressed.

In the end the limitation period passed as expected, the property was not demolished, and the property was able to be declared legal again.

Outcome

This matter was handled seamlessly from start to finish, enabling our client to finalize all related obligations without needing to travel to Spain.

This case exemplifies our firm’s ability to provide comprehensive, cross-border support in property transactions — combining deep local legal knowledge with a practical, client-focused approach.