In the last three years, an enormous scandal has slowly developed in Spain. It's now led to the forced demolition, without compensation, of a home purchased by foreign retirees. And evidently, there's much more to come.
Spain is very popular with expats, especially from the United Kingdom. More than 800,000 U.K. expats now live in Spain. Naturally, this influx of Brits led to a property boom in the areas in which the settled—especially in the Costa del Sol region, on the southern coast of Spain.
Some developers purchased vacant land in areas of the the Costa del Sol (and elsewhere in Spain) not zoned for development. The developers paid enormous bribes to government officials to issue building permits for these properties. This greatly increased the value of the properties. Once the condos, townhomes, or villas were completed, expats purchased them, in many cases spending hundreds of thousands of euros.
Marbella, on the south Spanish coast in the province of Andalusia, was a prime target of such schemes. Both the mayor and deputy mayor have been arrested on charges of bribery, corruption, and receiving compensation for illegal building licenses.
But the officials involved in the corruption aren't the only ones suffering. Spanish authorities have vowed to demolish illegally constructed dwellings, especially those built in "green" spaces reserved for beach access or parks.
While there are at least 30,000 properties potentially at risk, only one building has apparently been demolished so far. On Jan. 2, 2008, bulldozers arrived at an Andalusian villa owned by British retirees Len and Helen Prior. They had lived there peacefully for five years, and paid £350,000 to purchase it.
The Priors won't receive compensation for the demolition. Under Spanish law, they may actually be required to pay for the cost of the demolition. They could even be subject to the criminal sanctions of the Spanish Penal Code (Article 319), which stipulates a prison term of six months to three years for building on land not officially designated for building.
When you purchase real estate in a foreign country, you should assume that everything you know about real estate in your home country is wrong. The property may not be zoned for residential construction, as the seller claims. It may be legal for someone to simply move in when you're not around, and then file a claim for legal ownership. You may also discover that you only have a right to live in the property you thought you owned. Someone else may actually own the building, and the land it sits on. Nor is it rare for shysters to sell you property they don't even own. Years later, the legitimate owner may file a lawsuit to reclaim the property "stolen" from him.
How could the Priors—or anyone else facing this nightmare—have avoided it?
Before you purchase any property outside your home country, obtain independent advice from a licensed attorney in that country experienced in real estate law. That attorney should thoroughly investigate the property: whether the seller actually has title to it, if it's in an area where squatters may legally take possession of it, and that the property is legally qualified for its intended use.
Like everything else offshore, when it comes to buying offshore real estate, it's caveat emptor. Let's be careful out there!
Copyright © 2008 by Mark Nestmann
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