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Avoid the "traps" and invest safely: Spain Property Purchase Cases and Legal Advice (I)


Since the Spanish economic crisis, Spanish house prices have been falling, and in the last two years, the Spanish economy has improved and falling house prices since 2013 has been steadily and slowly rising. By the traditional Chinese "buy up not buy down" investment ideas, many Chinese have taken the opportunity to buy their first home in Spain, or to make a "bottom-up investment". On the other hand, as a result of Spain's investment immigration policy, a number of Chinese entrepreneurs and investors have also joined the Spanish investment community.
Many Chinese people are saying that there are fewer and fewer good quality homes in good locations at good prices. When they can go back, they have already been "seized by others"; many local Spanish or Chinese intermediaries take advantage of the rush and the lack of legal knowledge necessary of Chinese people to buy a property in Spain, urge the buyer to pay the deposit and sign the deposit contract as soon as possible. Examples are not uncommon, and many Chinese compatriots have suffered losses of as little as a few thousand euros or as much as hundreds of thousands of euros.

Case 1

Mr. Wu, a private owner in Guangzhou, came to Málaga in January 2016 because he liked the pleasant climate of the Spanish seaside city of Málaga. He visited a villa in Spain with a 2000 square meter manor house. At the time of signing the contract, Mr. Wu did not know Spanish, so the seller kindly invited a Chinese to translate for him. The company's main business was the sale of the property in Spain, and Mr. Wu, who has been trading for decades and has also purchased properties in other countries, thought the contract was all about the sale of the property. The usual elements of the contract were signed, and a deposit of 15% of the returned price was paid, amounting to €112,500. The parties agreed in the contract that by 1 April 2016, Mr. Wu would have to pay another 40% of the balance, with the final balance It will need to be paid in full by July 1, 2016.
By coincidence, Mr. Wu came to Spain again for business reasons in early March. During the chat, he and his Spanish business partner mentioned the beach house he was planning to buy. Mr. Wu said the seller of the house was very fond of gardening and had built a huge indoor flower room in his yard to house his collection of rare plants. His business partner reminded Mr. Wu that if Spain were to erect a very large structure in his yard, he would also have to apply for a permit from the government. If you don't have a permit, then the house is very problematic to buy. The next day, Mr. Wu quickly made an appointment with his friend and went to a local office to confirm. The lawyer checked with the city government based on the information in the contract and found that the seller had not submitted any applications to the city to build the house. Mr. Wu quickly pulled up the contract he had signed and asked his lawyer if he could terminate the contract and file a claim against the seller. Mr. Wu's partner translated the contents of the contract in English to Mr. Wu, who was dumbfounded: at the end of the second page of the contract, one paragraph clearly states that "The property contains a self-built indoor garden in the courtyard. After completion, the buyer can submit a "legalization" application to the city government, with the buyer and seller to bear the costs associated with the application 50-50.
Mr. Wu considers the other party's deceitful behavior so shameful that he refuses to honor the other party's payment of 40% of the purchase price that he was required to pay on April 1, and intends to find a local lawyer and seller to take legal action.
The two parties were at an impasse, but in early May Mr. Wu suddenly received an e-mail from the seller's lawyer, in which the seller argued that Mr. Wu had failed to comply with the law. The contract requires payment of the April payment, and now the seller wants to sue him for breach of contract and not return any deposit.

Lawyer Ji's Analysis
Mr. Wu did not investigate the irregularities of the private buildings on the estate before signing the contract. And he signed the contract that clearly stated the existence of the illegal building. Although Mr. Wu has shown that he was deceived by the interpreter hired by the other party, there is no conclusive evidence in law to support Mr. Wu's claim. Now, according to the contract, it is Mr. Wu's failure to make payments in accordance with the contract has constituted a breach of contract, and it is difficult to claim the deposit back from the other side. After the incident, Mr. Wu said he seriously questioned the integrity of the other party and would rather lose €110,000 to buy a lesson than spend another More than €600,000 to continue buying a house.

Case 2

It has been 5 years since he came to Madrid to work, and he was interested in a 2-bedroom, 1-bathroom apartment in Usera for his girlfriend's wedding. After paying a deposit of 5,000 Euros to the agent, Xiao Wang went to three banks to apply for a loan, but all of them refused. A kind bank clerk told him that the house he wanted to buy had problems, that's why his loan application was rejected and told him to consult a lawyer as soon as possible.
After Xiao Wang found a Chinese law firm in Spain, Mr. Ji analyzed the property that Xiao Wang wanted to buy and said: the property that Xiao Wang wanted to buy was a house that his sister had died in. A younger brother was left with all the formalities of inheritance completed. The problem arises in the case of an act of inheritance between non-first-degree relatives, such as a sister leaving her brother, which, once the inheritance becomes effective, is subject to a waiting period of two years during which the property cannot be bought or sold, in accordance with Spanish law. This provision prevents the emergence of a successor heir (e.g. an illegitimate son of a sister) who has a greater inheritance right than his brother to contest the inheritance of the property. Therefore, even if all the inheritance formalities have been completed, Xiao Wang still has to wait until the expiration of the two-year period before he can purchase a property.

Lawyer Ji's Analysis
Can Xiao Wang ask the agent to refund the 5,000 Euro deposit and double the compensation paid by the seller? The contract that the agent signed with Wang was a "problem contract" that favoured the seller. Because the seller can't sell the house, the seller wants to return the double deposit to Xiao Wang, but the contract doesn't stipulate that the housing transaction formalities should be done in how soon. In other words, if the seller insists that he is still willing to have Wang as his sole buyer and still sells the house to Wang after the two years are up, then Wang will not be able to sue for breach of contract. So the Lawyer Ji does not suggest that Wang for the lawsuit is not a high probability of winning again on the lawyer's fees and time but suggested that Wang try to find intermediaries. Negotiate and declare to take legal action against the other party to see if we can try to recover the €5,000 deposit with minimal cost.

This article is contributed by Juwai Columnist Lawyer Ji Yi-hong

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