Separated with a Spanish Property?
If you had enough money to buy a second home abroad, where would it be? The results of our survey* are in. Scots choose Spain. So what happens with that house in Barcelona, Ibiza or Andalusia when you divorce?
If the divorce is in Scotland, we have to lean on Spanish colleagues to get input- finding out who owns the property, whether it can be sold, or how to get ownership transferred. Over the years I have found myself asking Alvaro Aznar, who is a dual qualified Spanish Abogado and English private client solicitor, essentially the same questions for clients, over and over again. So I asked him to let me do it once more, so that I could share his wisdom with you....
* OK, full disclosure, the survey was me. But I still maintain it’s true. Other family lawyers, fight me on this one.
- We have a house in Spain. I’m not sure if it’s in joint names or not, is there a way I can find out?
You or your Spanish Abogado will be able to carry out searches at the Land Registry. The extract from the Land Registry (nota simple) will confirm the names of the legal owners, their respective shares in the property, the matrimonial property regime their marriage is subject to, and the charges and encumbrances secured against the property.
Tip: give your lawyer your Spanish tax code for non-nationals (NIE or Número de Identificación de Extranjeros - often mistaken with the UK NI). Carrying a search using the NIE number speeds up the process. A search by address can be slow and often the Land Registry’s officers ask for additional details to complete the search. A search by name can be particularly difficult if the owners are foreign.
- What documents will my Abogado need, are there any things I should see if we have copies of?
The most useful document for your Abogado is the Deed of Conveyance or Escritura de Compraventa. This usually have the corresponding Land Registry entries annexed to it. The Deed would allow your Abogado to carry out a search and provide you with a report on the title, including the identification of any charges that you may have not been aware of.
In addition, it is essential to ascertain if there is a mortgage or any other kind of security registered against the property. If your divorce settlement includes a provision whereby the mortgage is to change hands, you will need to obtain prior consent from the lender. A recurring situation occurs where the bank refuses to release one of the mortgage holders from his obligations because the other spouse is not financially able to repay the loan, or simply less solvent. In these circumstances, the bank is likely to request that both spouses remain in the mortgage deeds, even after the divorce is decreed. This is clearly not ideal if the soon to be ex-spouses want to achieve a clean break. The best alternative will be either to sell the property or to allocate another unencumbered asset to the spouse.
- If I want to keep the house in Spain and buy my spouse out, what will it cost and how long will it take?
As I mentioned earlier, if there is a mortgage you will need to check with your lender that they are willing to let you take over the outstanding mortgage and release your spouse.
You will also be liable to pay stamp duty or Actos Jurídicos Documentados, which ranges from 0.5% to 2% depending on the Autonomous Community where the property is located. The transferor may be liable to pay Capital Gains Tax if the property has increased its value since it was purchased.
In addition, there will be Notario and Land Registry fees, to be charged in accordance with an official tariff based on the value of the property.
You will need to engage a Spanish sworn translator (registered with the Spanish Foreign Office) to translate the consent order and the divorce decree. In addition, these documents will have to be legalised with the Apostille of The Hague at the Legalisation Office.
The spouses or their legal representatives (by means of a Spanish power of attorney) will have to execute a Deed of Transfer before a Notario in Spain in order to formalise the transfer of ownership. Once the Deed is signed and the taxes are paid, the Deed can then be registered. It is very difficult to provide you with a timescale, but it can take from one to six months to complete the process.
- If we can’t agree about who is going to keep the house, can my spouse use Spanish law to sell it while the divorce is going on in Scotland?
Well, this is a tricky situation. The answer is, as it often happens in law, “it depends”.
If both spouses are the registered legal owners of the property, then both will need to simultaneously execute the Deed of Sale. On the other hand, if the property is legally held solely in the name of one of the spouses, the owner will able to sell the property freely, as long as there is no restriction in the Land Registry, such as an injunction or an embargo. Presumably, you could issue legal actions in Scotland if the spouse was in breach of the court order.
- If I get an order from the Scottish court, can I enforce that in Spain?
The enforcement will not be automatic given that orders dealing with distribution of property in divorce proceedings have been traditionally excluded from EC Regulations, particularly when dealing with immovable property, over which the courts of the country where the property is located have exclusive jurisdiction.
The EU Regulation 2016/1103 entered into force in January 2019 and has simplified the recognition and enforcement of court decisions about matrimonial property regimes, but the UK is not a party to this Regulation. It will therefore be necessary to file exequatur proceedings, which can be lengthy and costly. It is essential that the parties cooperate to implement the terms of the order and that advice on Spanish law is obtain prior to agreeing and drafting the provisions, otherwise the costs and timeframes skyrocket.
- What do I need to do if I have separated, but not yet divorced?
If one of the spouses dies before the divorce, the spouse’s share in the property will pass to their estate. It is therefore essential to have a comprehensive Will in place to deal with this scenario.