We think that equity release in Spain in general and in particular Bare Ownership (Nuda propiedad in Spanish) is a wonderful option for many of our clients.
The concept involves institutional investors putting their own money on the table and freeing up money for seniors in Spain who are struggling with cash flow issues.
In exchange for a very discounted selling price, the new investor allows the previous owner to live there, rent free, forever. The term usufructo is common in Spain and soon will be amongst our ex-pat community too.
Clients, particularly sellers, have asked us to briefly describe the steps involved in selling your bare ownership home:
How the process of Equity Release in Spain works the property owner?
Start the Equity Release process
- Make the call or send an enquiry to Spanish Equity Release Solutions- the Spanish solutions department dealing with Equity Release in Spain. A qualified team member will go through the details with you.
- We email you a checklist with many details of the property
- Year you bought it
- The price
- Square meter
- Location of your property
- General condition, etc.
- The investor at this point wants to know:
- if there is more than one owner
- Are there any illegal extensions
- Mortgages or any concerns.
- We work with them to review the property, with your help.
- We ask you to:
- Send us photos
- Passport copy
- Short medical assessment
- Nota simple
- Description of any changes you made
- Address of your Spanish home and any information we’d need, just as if it was a regular listing.
If the investor likes the property
- Assuming the investor is happy to do so, (depending on whether or not we’ve received the information requested). We employ a valuation company at a cost of 300 euro or so. This is paid for by the investor, you pay absolutely nothing.
- The company we most commonly work with is Tinsa. They contact you to arrange a viewing of the property.
- They take photos.
- Make sure everything on the deeds compares to what they see in front of them.
- They compare the cost per m2 of similar properties, the trends in the market and other criteria to come up with a valuation.
- Tinsa works with the Spanish government, town halls and banks (where their valuations are legally binding) so we know we can trust them.
If the investor makes you an offer
- A few days later they present their valuation to us, which we send to you and to the investment group. First we find out are the investors willing to make you an offer based on the information present to them. Generally, they cover your completion costs, notary, legal, translations, local taxes. They will make the offer to you in as accurate a bottom line figure as we can possibly have. Sometimes there are unexpected debts, mortgages or existing liens which we bring to your attention at this time.
- Investors are not buying every house they see. We can help you in advance to make the property more attractive. Keep your property tidy and well maintained, just like for a normal sale. Help us with paperwork. If there is a mortgage, you need to find out the details in advance, make sure that pool/garage/conservatory is properly registered etc.
- Study the offer on the table. There will be no hidden surprises. You need to decide if it’s a yes or a no. As things sit now, (Feb 2020) we have many interested sellers so we encourage clients, if they are interested, not to delay. Talk to the relevant parties. Speak to your children, your spouse or any heirs. If they need to get a meeting with Spanish Solutions to find out how the deal will impact them, we can do it by Skype or in person.
If the investor wants go ahead in the Equity Release
- Let’s assume you are happy, you say “yes” and sign the simple contract. It covers the exact price to you, completion dates etc.
- The investor will pay you a deposit of typically, 6,000 euro.
- Next stop is the spanish solutions conveyancing department who take over from our sales team. We try to get quick completions. If you have all your paperwork at hand, take it to one of our offices and the team move your deal closer to signing.
- They give you a completion date that suits you, the buyers, notary, the bank or anyone else who needs to be there.
- We attend the notary, sign the deeds and you get a cheque as promised.
- There is no change to your living arrangement in your home.
- Spanish Solutions aftersales make sure all the taxes have been paid for buyer and seller and smooth over any doubts anyone may have. This is our normal day to day job, making sure buyers and sellers in Spain pay the right tax, not too much tax and generally ensure everyone is happy with the deal.
It is that simple, quite a lot easier than a regular sale in fact. You’ll have a copy of the new deeds that clearly has a paragraph on there giving you permission to stay in that house rent free as an usufructuario.