Dissolution of Joint Property Ownership in Spain combined with Equity Release
Dissolution of Joint Property Ownership and Equity Release.
There is a way to save a lot of money in Spain, and retain your property even when things go wrong. A Dissolution of Joint Property Ownership (or DJPO) allows joint owners, a couple or just two friends to rearrange their ownership of a Spanish property.
When done in the correct manner and in a tax-efficient way, it enables the outgoing joint owner to transfer his or her share to an existing co-owner. This means they can legally waive the normal Property Transfer Tax (8% and higher, depending on the region in Spain) and pay as little as 1.5% Stamp Duty.
Clients in a divorce can use it to save 85% off their Spanish tax bill. However, what happens if one of the owners doesn’t want to sell; they want to remain living in their home, but… the other party wants to return to the UK? In this case, you need to speak to us about an Equity Release and Dissolution of the Joint Property Ownership combo. Divorce in Spain is when this is most common and beneficial to the client. (and of course to the investor who can save the day and give everyone what they want)
A DJPO is suitable in Spain when there is:
- Divorce or separation. It happens and when it does, the clients do not need any more stress. Couples owning property jointly often decide to split up. We can structure a deal whereby one of them sells 50% to his ex-partner.
- Rearranging inheritances. Sometimes in an inheritance in Spain, the beneficiaries do not agree on whether or not to keep a property. We can ensure everyone gets what they need.
- Re-arranging property holdings. People, for the last 30 years, went into property deals in Spain with family, friends or investors. They assume these deals will last forever but what if one of the partners gets sick, suddenly needs the money or some other change of circumstances? We can help with a client needing to re-arrange their holdings in Spain.
Dissolution of joint property ownership in Spain: the law.
In Spanish Law, you can not be forced to continue a co-ownership against your will. If you are entering into a divorce, you cannot be made to remain in the arrangement.
If it goes to court, due to one party’s reluctance to sell or worse still due to a lack of funds, we have a problem. Court proceedings will take control and it is suddenly out of everyone’s hands. The property will in all likelihood be sold at a public auction by direction of the Court. Maybe, and we’ve seen this, the property will be sold at a lower price than its real value. Sometimes the sellers, even the one who doesn’t want to sell, can end up with debts, costs, stress and no house in Spain. Maybe the co-owner gets the property back, at the expense of the one who wanted to sell. It is not easy.
All the equity in the house can be lost as a result of the proceedings, which is not uncommon.
Getting to court.
Court proceedings in Spain are quite expensive. The solicitor’s fees will have to be paid, as do the fees of the Procurador. This person represents the plaintiff in the court in these kinds of proceedings. There will also be fees for the assessor that will value the property, fixing the price for the auction.
Dissolution of joint property ownership is a far more preferable route to take. We can help partners to reach an amicable agreement to sell the property. We will advise on how to divide the proceeds between the co-owners. This will help us all to avoid lengthy legal proceedings and attendant expenses.
The Problem is what if one partner, the one wanting to stay, cannot raise the cash?
That is where we really help. We can raise the equity in a Sell and Stay Equity Release deal and at the same time protect everyone from a legal perspective.
Let me say that in another way.
Here, and we think we are the only firm in Spain that offer this under one roof; We can broker a deal between the “warring partners”. We can raise the finance for the person who doesn’t want to move out, so that they legally buy out the ex-partner and have a right to live in their own house, forever. It can be done with ZERO cost to the sellers. You only pay us if we get the deal across the line.
Our team understand the specific proceedings in Court that function to provide the dissolution of joint property ownership in Spain. We will distribute proportionally the proceeds of its sale. Next, we ensure any pending debts between the owners can be claimed.
The property owner keeps their property in Spain and the Equity Release investor gets an incredible deal too.
Just before your lawyer says it’s too good to be true; It is correct if they say that DJPO may only be followed by existing joint property owners. A new deal will immediately be signed by that owner to sell the property in its entirety to the investor and the person remaining in the property will be protected by a legally binding Usufruct clause.
A non-contentious DJPO works best. It is just like any simple conveyancing operation for the “divorcing couple”. We will confirm that the new re-arranged ownership will then be noted at the Spanish Land Registry.
A DJPO neatly takes care of the financial side of warring factions’ ongoing disputes, legally saving them a great deal in time and taxes. Better still when combined with an Equity Release deal, the “divorcee” who wishes to keep the property can do so.
If you are having issues with a partner, a divorce or any situation whereby you need to raise money to buy out a partner’s share of your property in Spain, we are ready and very able to help.
Please just get on touch with our team today.
Send us some basic details (location, value, any debts, and heirs) and we’ll give you an idea of how we can assist everyone.