Real estate and business law - Mallorca & Ibiza  


Land Act of the Balearic Islands

Posted by ALEJANDRO GUILLEN VALLS on June 9, 2014 at 9:40 AM Comments comments (0)

A new Land Act (Ley 2/2014, de 25 de marzo, de ordenación y uso del suelo) has come into force in the Balearic Islands. Its aim is to regulate the three main areas that affect construction and real estate promotion: land management, planning and infringements.

The most controverted provision of this Law is that referred to ilegal constructions in rustic land. Under certain circumstances it will be possible within the next three years to legalize old ilegal constructions despite not meeting planning requirements. 

The Balearic Islands has been the last region in Spain to pass a law of this kind replacing the old National Land Act of 1976. Provisions affecting planning and construction were widely disperse in national and regional regulations. 

Floor and ceiling clause in loan contracts

Posted by ALEJANDRO GUILLEN VALLS on May 25, 2013 at 4:15 PM Comments comments (1)

On May 9th 2013 the Spanish Supreme Court has issued the first sentence regarding floor and ceiling clauses in loan contracts entered between Banks and individuals. 

Since 2007 most banks added a standard clause in loan contracts setting a minimum interest rate around 3,5% and a máximum around 12%. These minimum and maximum were limits to interest rate fluctuation, usually based on Euribor.

Due to the floor clause many householders have not taken advantadge of the Euribor at its historical mínimum in the last years.  

The Court considers such clause is null and void for several reasons: a) the claimants did not receive complete information from the bank when the contract was executed and b) floor is set around 3,5% while ceiling is set at 12%, which is not proportional.

According to this sentence and considering the certain security principle, banks do not have to correct the interest rate for payments due before May 9th because that would put in risk the whole financial system. 

Some banks such as BBVA or Caixanovagalicia have decided to cancel the floor and ceiling clause immediately. Other banks have decided to keep the controversial clause alleging their clients were correctly informed before excuting the loan. This second group of banks are playing with their reputation and are clearly exposed to numerous claims. It is said that BBVA will lose 35 milion euro per month due to the Supreme Court's decision.


Energy efficiency certificate to sell and rent real estate

Posted by ALEJANDRO GUILLEN VALLS on April 28, 2013 at 3:45 PM Comments comments (1)

On April 5th 2013 the Ministries' Council passed an Act regarding energy efficiency certificates of buildings. According to this law an energy certificate will have to be provided when selling or renting a property from June 1st 2013.

There is only one relevant exception in case of selling: properties with a surface of less than 50 sq meters.

In case of rentals there are two exceptions: a) rental agreements of less than 4 months and b) rental agreements of less than 12 months and more than 4 months but being the energy consumption less than 25% of the normal energy consumption in case of occupancy during the whole year. In this second case the owner has to make an statement.

The expected cost for obtaining this certificare depends on the surface of the property but estimations are between 150 and 300 euros for a standard flat. Certificates expire in 10 years.

In case of new buildings developers will have to take into account the energy consumption of the building since the drawings stage and it will be mandatory to recorg the construction in the Land Registry. 

Apparently Registrars will not refuse recording transactions in case the certificte be not provided by the parties to the deed. 

Fines will be set in the Law of "rehabilitación, regeneración y renovaciones urbana" expected to be passed in June 2013.

The Act of energy efficiency certificates is the implementation of the 2010/31/UE Directive.



How can I know the minimum value of my property for transfer tax purposes?

Posted by ALEJANDRO GUILLEN VALLS on April 15, 2013 at 3:25 PM Comments comments (0)

It is advisble to request in advance a valuation to the Regional Tax Agency (ATIB in the Balearic Islands). It usually takes between one and two months. There are two different forms depending on the location of the real estate (rustic or urban land). The Tax Agency will set a value so any price over that value declared in an official document (a purchase deed) will be usually accepted by the Regional tax Agency for transfer tax purposes (ITP). Please note that gain tax is State competition so this valuation by the Regional agency has very limited effects before the National Tax Agency.