Wills, wills, wills…

As one of the few Spanish lawyers living and practising in this country, I often come across international probate matters where the deceased had assets both in Spain and in the UK. In certain occasions, the deceased is a Spanish national who moved to the UK for work and ended up owning assets in this country but in the majority of cases the situation is the reverse; a British person moved to Spain (seeking sun and more gentle weather) and kept assets in both countries.

When the said person dies there is a probate procedure to be dealt in Spain but also in the UK. If there is a will for each country then great but quite often this is not the case and conflicts of international law start to arise. Last week I saw a case where an English national who died in Spain had a Spanish will, which was only applicable to the Spanish estate, but no English will at all. The Spanish will could not be applied to the UK assets as it clearly stated that it was solely restricted to Spain and therefore a partial intestacy procedure needs to be started in the UK in order to get what is called letters of administration.

The above scenario reminds me how convenient is to seek the advice of a professional who is qualified to deal with both jurisdictions or if this not possible, at least try to get separate advice from a Spanish lawyer and UK solicitor and, hopefully, get them to work together in order to ensure that both wills are in accordance and do not create any unnecessary problems in the future. In my opinion, many problems take place because there is no communication between the two different lawyers or because the wills are signed at different times and places. This can be avoided by appointing a law firm with solicitors of both jurisdictions or by simply asking the lawyers, if they are based in different countries, to liaise and work together.

As we say in Spain”más vale prevenir que curar” which means something like “it is better to be safe than sorry”.

More next week.

Photograph from www.dreamstime.com

 

To value or not to value? That is the question.

 

The other day a client was in the process of filing an Inheritance tax form and he asked me which value he had to give to a Spanish property he had just inherited. In England the answer is quite simple: you must use the open market value. This generally means getting the property valued. In Spain the situation is, as usual, quite different.

Spanish law states that it should be the “real value” but there is no clear definition as to what the real value is. There is some guidance as to what could be understood as “real value”. For instance, the price shown on the deeds when the property was purchased or the value used by the tax office the last time the property was assessed by the tax man. However, the most common practice is to use the fiscal value. This is obtained applying a specific multiple to the rateable value of the property, which is usually shown on the annual property tax receipt.  

In the end, what happens in most of the cases is that the beneficiaries give the values that they consider appropriate and then these values are assessed by the Tax office. If the Tax office believes that the property is worth more, the Tax office will issue a tax request for the difference and any interest accrued.

In my opinion, it is advisable to use the market value and ensure that this value is definitely higher than the fiscal value. However, each case needs to be looked separately as there could be many factors affecting the final decision i.e. was the property  purchased a few years before the death? is there an intention to sell the property in the short future, etc.

What is clear is that if you are an executor of the estate, both English and Spanish, then the best way to proceed is to get the property properly valued and use that value for tax purposes, both in England and Spain. Otherwise, there could be some personal liabilities for the executor.

Picture by www.dreamstime.com

To be, or not to be, that is the question:
Whether ’tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles,
And by opposing end them? To die, to sleep,
No more; and by a sleep to say we end
The heart-ache, and the thousand natural shocks
That flesh is heir to: ’tis a consummation
Devoutly to be wished. To die, to sleep;
To sleep, perchance to dream – ay, there’s the rub:
For in that sleep of death what dreams may come,
When we have shuffled off this mortal coil,
Must give us pause – there’s the respect
That makes calamity of so long life.
Hamlet by William Shakespeare

 Amazing monologue of the genius William Shakespeare. By the way, who do you think has best incarnated Hamlet on the silver screen? Many generations think of Laurence Olivier.  Personally, I really enjoyed Kenneth Brannagh’s take on Hamlet

The Neverending story

That’s it! I had enough of it this week. My colleague and I have been dealing with something that should be so simple but in the end can become a real nightmare. I am talking about changing the name in the utilities.

The change of name should be something simple, something like “hello I am the new owner and I will start to pay from this month. This is my bank account number” But the situation is very different in reality, at least  in  Spain.

The first challenge is that each company has its own procedures. This means that if you are dealing with clients who buy all around Spain  as  we  do, you will see that the procedure in one region has nothing to do with the procedure in another region.

In this particular region (no need to say names although I am really tempted to do it!) they need a lot of documentation: the deeds, the purchase agreement, the passport, NIE numbers, a DNA sample…. Well, the latter is not required yet but who knows. Looking at the current requirements this does not look that far fetched to me.

 Then, when it comes to documents, sometimes they require simple copies but in other occasions they want to see originals or certified copies. In some cases the company requires that the contract is signed in person and some gas or water companies require taking a meter-reading before changing the ownership and they want someone to be present at the property. Logically, the owners who live in  UK  will not fly to  Spain  in autumn just to open the door of their house to the gas technician or to sign a contract. That would be a waste of time.

Another typical problem is when they ask for a contact telephone number an address in  Spain. If you give them an English telephone number or an English address it is quite likely that they will reject it and demand a Spanish number and address. In the end the change of name can be achieved with more or less hassle but it is usually the lawyer who has to battle with the utility companies. I therefore wonder, would it not be nice if the Spanish utility companies could unify their procedures and make the process much easier to non-residents? That would make live much easier. At least mine!

 Picture by www.dreamstime.com

 

Some good news, for a change

 

 

 

 

 

 

 

 

This article was written with Alejandro Yufera, lawyer from Barcelona, during his stay in our Manchester office.

Dear bloggers:

We have good news fromSpain. A buyer has recovered the deposit paid to a developer when he didn’t get the mortgage.

This is the second resolution of the Civil First Instance Court of Logroño, La Rioja, that acquits a buyer from the lawsuit filed by the developer, cancelling the contract and sentencing the developer to return the deposit plus legal interest.

Pursuant to article 1,124 of the Spanish Civil Code when one of the contracting parties defaults, the other party can choose between two options: enforce the contract or terminate the contract with a compensation for damages.

The most common option, taken by the developers when a buyer defaults, was to terminate the contract so they could sell the house to another person. But nowadays, in the current economic climate the demand is nonexistent and therefore the developers are choosing the other option.

In this case the buyer signed a contract with the developer, he paid the deposit and after that he went to the bank to get a mortgage but the bank denied it. Because of the failure in getting a mortgage with the bank and the two-month delay in the delivery, he decided not completing on the purchase. The developer considered that it was a breach of the contract and decided to file a lawsuit.

The judgment says that the developer, as a professional in its sector, must know the difficulties of its activity and therefore has to anticipate the circumstances and has to make sure that he can comply with its obligations. In the point of view of the Judge of the Civil First Instance Court of Logroño, the developer breached the contract because it didn’t take the necessary steps to grant the “mortgage subrogation option” when this option was clearly stipulated in the contract. The Court considers that the financing was indispensable to fulfil the contract and the developer failed to identify the potential problem.

Apart from these two judgments of the Civil First Instance Court of Logroño, the trend of the Spanish courts is to rule in favour of developers in this type of scenarios and force the buyer to complete the contract so they have to pay the rest of the money or lose the deposit. It is therefore an interesting progress towards a more ethical justice where all factors are taken into consideration.

Pictured above  Monasterio of Valvanera in La Rioja