Many second property owners from Ireland and other countries have expressed concern and dismay following recent media reports that 100,000 illegal homes will be demolished in Spain. As a lawyer with many years’ experience in assisting Irish and UK investors buying property abroad, and in  particular in Spain, I would like to clarify the current situation.

 

Over the last 40 years tourism has been the major industry in Spain, but more recently the construction business in second homes for foreign nationals has become phenomenal. Inevitably, where there is big business involving large sums of money there will be corruption. There is no doubt that in Spain over the last number of years, particularly in certain regions, there has been rampant corruption with developers, estate agents and local officials deeply involved in backhanders and dodgy practices. It has become relatively common for developers to buy a large plot of land, proceed to construct a development and then seek licences retrospectively.

 

By way of background, it is important you should understand that Spain is made up of 17 autonomous regions, with each local government having significant powers to govern and administer their own areas with regard to planning. All the regions, however, are governed by the central government in Madrid.

 

From my investigations with highly reputable and professional people involved in the property industry in Spain, I believe that steps are being taken by the national government to “clean up” the construction industry. For example, “Operacion Malaya”, the local government in the Marbella area, has been suspended pending elections in May 2007. In the meantime, a board of experts has been appointed to administer the system. No licences are being granted at the moment and developers are being dealt with on a case by case basis. The general consensus from my Spanish colleagues is that this is the best thing to have happened to the area.

 

There is no doubt that steps were needed to be taken to eradicate the corruption in the Spanish system and I am convinced that this is now underway. However, it needs to be done in such a way that it doesn’t damage the very invaluable asset which Spain has in the tourism and investment industry. It is for this reason that I tend to agree with my colleagues that the number of 100,000 homes to be demolished is probably exaggerated.

 

 

Nevertheless, it is probable that a number of houses will be affected. How this will impinge on the Irish and UK home owner is unclear. Undoubtedly, the authorities will commence proceedings against particular home owners to seek an Order of Demolition, and if successful, this may give rise to the home owner taking action against the local authority. After all, if someone acts in good faith and pays over money to purchase a property, it would seem unfair that they should suffer a loss for a developer’s unscrupulous practices. Nevertheless, if the purchaser had instructed a lawyer to investigate Title on the property in the first instance, this would undoubtedly have alerted the parties to the risks involved.

 

Furthermore, it seems that some unscrupulous parties think little of building and selling properties in rustic or protected areas. Indeed, I heard of a case recently where a development was built on an area designated as a nature reserve. I understand that the purchasers involved did, in fact, have a lawyer but the lawyer was acting also for the development company. As I always say, this is totally unacceptable as clearly there is a conflict of interest. Purchasers should always have independent legal advice.

 

I have no doubt but that some properties will be demolished, particularly those that are in gross infringement of the legislation. Once this period comes to an end I am convinced, as indeed are my colleagues in Spain that the Spanish conveyance system will be one of the most effective and efficient throughout Europe.

 

We have extended our services over the last number of years to assist people to buy in many other countries. I always advise clients to take their time and deal with reputable developers and estate agents. There are many decent and honourable people out there. However, there are some who take shortcuts and lack scruples.

 

There have been many times over the last number of years where people have sat in our office in tears, having signed documentation or paid money over without having taken professional advice. Buying property is always a risky business. If you take your time and do your homework and deal with reputable people it can be a rewarding experience. You will agree that if you were purchasing property in Ireland or in the UK you would not dream of doing so without using a solicitor to look after your interests. Why would you do so in a foreign country where the language, tax system, possibly the currency and certainly the culture is different. Purchasers should always seek professional advice, instruct an independent lawyer and have everything checked out to ensure they get peace of mind at the end of the day.

 

Tom McGrath & Associates is a leading Irish legal practice that provides a comprehensive range of legal services to clients in both the business and private sectors in the purchase of property abroad. Tom McGrath & Associates Solicitors, 37 Upper Mount Street, Dublin 2 info@tmsolicitors.ie