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Our law firm Navas & Cusí with offices in Madrid and Barcelona has a multidisciplinary character and with an international vocation (based in Brussels), specializes in banking, financial and commercial law.
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One of the means of saving and investment for individual economies is real estate investment. Currently, the most common operations to undertake investments in this sector are the purchase and sale either off-plan, new or second-hand, rental of real estate properties in all its forms (seasonal, holiday, tourist and with option to buy) and real estate promotion either through self-promotion, through a developer or through a housing cooperative.

Advice on purchase and sale transactions

The sale and purchase of urban or rural properties is one of the most common real estate transactions that may require the advice of a legal expert. Among them, the off-plan sale is widely used today by individuals because it has a number of advantages over the purchase of new or second-hand housing, but also risks. As they are not built and their execution is encouraged through the delivery of funds to the developer, it is possible to obtain savings of up to 35% with respect to the other options mentioned above and comfortable monthly payments that do not require obtaining bank financing. Likewise, since the properties are not already built, it is possible to actively intervene in the finishes, in the distribution and to give the property the desired uniqueness. Finally, the advantage is that this type of housing is usually built in new areas of large cities, with large public facilities and excellent common areas. An expert legal advisor in the real estate area should analyze the possibilities of withdrawal from the contract in case of a change of unforeseen circumstances at the time of contracting, the existence of a surety insurance for the amounts delivered (amount and beneficiary) and the possible termination of the contract for serious breach of contract by the seller (delivery with disabling delay of the contract or with a different report of qualities).

In the case of the purchase and sale of already built properties, whether new or second hand, the real estate advice will be aimed at avoiding risks for the client: (i) risk in the purchase-sale of a certain body, obtaining and contrasting the registry and cadastral information of the property object of the purchase-sale; (ii) risk of assumption of debts, in case of existence of debts with the community of owners or with the town hall (IBI), they are going to be associated to the property and could be claimed to the new owners and; (iii) risk of breach of promise of sale, since it is normally necessary for the professional to take care of the drafting or review of a deposit contract prior to the deed of sale.

Advice on rental transactions

Currently, there are many types of property rental agreements that require the intervention of an expert real estate lawyer for their drafting or review. Examples of this type of contracts would be:

  • Rental contract for habitual residence. It is the most common in the market. For a dwelling to have this character, the tenant must have resided in it for the last two years or prove that it has been resided in it for most of the last year. The duration can be up to 5 years extendable for periods of up to 3 more if both parties so agree.
  • The duration of the tenancy can be up to 5 years extendable for periods of up to 3 more if both parties so agree.
  • Commercial lease. They usually include the activity license of the premises and the need to comply with local regulations regarding the same.
  • They usually include the activity license of the premises and the need to comply with local regulations regarding the same.
  • Old rental agreement. Less and less common but still existing in Spain. They have special aspects as to their termination, rent update, extension and transfer.
  • Rental contract for old rent.
  • Seasonal rental contracts. They are not the tenant’s usual residence and usually have a duration of less than one year. They do not accrue VAT and can be freely extended by agreement of both parties (they are usually for students or temporary residents in a locality for work reasons).
  • Tourist rental contracts. The property must be licensed and must have a duration of less than one month. They usually offer hotel services such as restaurant service and cleaning of the property.
  • Room rental contract. It requires that the owner shares the dwelling with the tenant and the contract determines which is the space to be occupied privately by each one and which is common for both (living room, kitchen, etc.).
  • Rental contract for rooms.
  • Rental contract with purchase option. In this case, the “option” is granted to the tenant to be able to apply the amounts paid as rent to discount them from the final purchase price. This option will have to be exercised, obligatorily, before a certain date.

Advice on real estate development activity

In this case and for the present article, we are going to focus on the client who acquires a solar on which he wishes to execute a construction of a building or single-family dwelling either for his own consumption or for commercialization.

In the first place, it is advisable the constitution of a mercantile society that has as object the execution of the work and that, therefore, can be liquidated once the work has been finished and delivered. The most important legal aspect is the one related to the plot of land and its urban, registry and cadastral adequacy for the intended purpose. In order to analyze this, a previous “due diligence” of all possible contingencies that may hinder or even prevent the desired construction would be necessary. Next, it is essential to draw up a construction contract with the builder, specifying the time and material milestones of the different phases of execution, the form of payment, the intervention of the property through the project management (architect) and compliance with legal, social and tax obligations in the case of subcontracting work for certain jobs (masonry, plumbing, carpentry, etc.).

At Navas & Cusi, we are lawyers expert advisors in real estate advice and we have extensive experience in the negotiation and preparation of the legal documents necessary to meet the needs of the client interested in the purchase, rental or development of real estate assets.

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Navas & Cusí Abogados
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