Deed Value compared to house price

We have just had the breakdown of cost from our solicitors and the deed value is less than the price we are paying should this be the case or are the builders cheating

Janice thanks for that this is the breakdown

Conrad, have a good look around on various other threads, & other websites also, and you will learn plenty on this subject - it's been discussed a great deal. One of our regular "expert" contributors, Smiley, will no doubt reply in due course, as this is a particular bug-bear of his, and he has asked for a specific message board to be started, since it is such an important issue nowadays.

The overall general consensus of opinion now is to never under-declare when buying if you can avoid it. As JeanSis says, it is of course illegal, and you could run into problems later as a result.

I'm shocked at the "commission" you are being charged for a bankers draft, as well. Change your bank ASAP if possible. This charge is completely unnecessary.

You may also find that, when the deeds are issued, the local council may take umbrage at the valuation given.

We had the same problem 4 years ago with the builder declaring a lower price.  Now we are getting the deeds, the lawyers have told us the correct price has to be entered with the result that they have asked us for a further €4,000 in unpaid IVA .  They are trying not to pay the interest the council says is owed as this was a builder's scam, not ours.

I hope you 'll let us know the outcome, Bobaol. This is a relatively new situation in Spain, since until very recently it was considered perfectly normal and acceptable (indeed, virtually compulsory) practice to under-declare. Things are changing.

A couple of things I'm confused about your post: 4 years ago the builder under-declared, but you are only now getting the deeds? And the council are after interest? Do you mean Hacienda (tax department)?

Conrad, I hope my earlier post did not sound flippant. I understand if you are not resident or present in Spain to handle things like banking personally, you are at the mercy of you representative, who you can only hope will act in your best interest. I think if you search around the forum you will find threads relating to banking. Check out what other members have to say as well. Personally, I never pay a single cent for a bankers draft. It is, after all, just a computer printed bit of paper which costs the bank virtually nothing to produce, and certainly not a percentage of the face value. Bank fees here can be extortionate if you are not careful, but in my experience at least, are totally negotiable.

I hope the info here is useful.

Roberto, this is a very long story.  To cut things short, the developer used the money we paid to take out mortgages on other land and hasn't paid the mortgage he took out on our land.  When we signed in front of the notary, we thought we were getting the escritura.  We weren't, we were simply signing power of attorney to the solicitors which wasn't explained by the agents (a big company named after a book of maps!!)  This has dragged through the courts now for the last four years and we should be getting the escritura in the next month or two.

Yes, a nightmare.  Of course, we paid the "black" money as everyone did then.  Now the escritura is ready, the council are saying the value was incorrectly declared and must now have the correct value on them before they will be issued and we have to pay the IVA difference plus interest.  Although the property is safe (as it is all bought and paid for) we haven't been able to put it on the market in order to buy a larger place for retiring to.  Not from the same agents/developers/solicitors I might add.

Of course, then I didn't know any different and trusted everyone.  The sad thing is, now I trust no-one.  Everything is double checked with independent solicitors and the moral is, be very careful people.

Hi Janice, I'm very concerned now.  We are purchasing on Dream Hills II so the builder will probably pull that one with us.  What would you do now knowing what you know?  I could scream, I just booked and paid for our flights yesterday, together with the car park and cattery.  I have e-mailed my solicitor advising what I have just read and told her I will not complete if the deeds do not show the exact amount that I purchased my property for.  I have  stated that this is an illegal practice and expect her to have everything correct and in order.  I will post her reply on here.

Would appreciate your comments.

Thanks Janice.  Yes, I have been wishing we had purchased a re-sale.  My solicitors have been ok up to now, we will see what happens next.  I am going to dig my heels in, we've been messed around too much already.  I am prepared to pull out of the sale and take the develeoper to court for my deposit if it comes to it.  Not getting involved in corruption and lies.

I won't get a reply from my solicitors till Monday at the soonest now.  As soon as I hear any thing I will let you all know.

PLEASE JUSTIN CAN I HAVE A SEPARATE HEADING FOR BLACK MONEY PRETTY PLEASE _ PRETTY PRETTY PLEASE: I HAVE BEEN  A GOOD BOY AND BEEN EATING ALL MY VEG!

As of 18 months ago the Land Registry and Hacienda started talking to one another about under declaration. It has been the accepted practice in Spain since T Rex ruled the earth from the very top of the tree to the bottom - politicians, police lawyers et al all aconsidered it accepted practice to under declare and avoid tax. The problem now is that as hacienda realise how much unpaid tax they have missed out on they are exerting more control of property transactions and now things such as proof of deposits is being insisted upon at completion so that every cent of the money is documented. If the Land Reg suspect an under declaration has taken place they now send out their  own assessor to value the property and if he feels there is a discrepancy they are within their powers to insist that you prove the true price paid. IF one is unable to corroborate they can apply the CGT liability to the amoujnt they believe is queried and they will add a 20% penalty to that and the amount due should be paid within 28 days. If not they can slap an embargo on the property that supercedes the mortgage lenders first charge. If the debt still remains unpaid they can then start proceedings to possess. While it is feasible to get away with a modest amount of under declaration I would and could never recommend it as you are opening up a can of worms for yourself at a later date that can come back and haunt at any time. The outstanding tax is deemed to be your repsonsibility as the debt lies on the property - thus its you that has to pay it as the property is now yours.

Anyone encountering this situation should express to their lawyer with the utmost assertiveness that they will not countenance such a situation. If the lawyer wont act responsibly for you then tell them you will report both them and the developer to the tax office and the Spanish Law Society. Hopefully that should be enough to do the trick. Remember who is paying the lawyers bill so whose best interests  should they be representing.

As in all walks of life there are good and bad Notaries - many many people here are reluctant to upset developers for numerous reasons but mostly involving the scratch back culture that Spain most definitely is. A NOtary might conveniently leave the room when a bag full of cash changes hands or may drop his pen on the floor while the dosh is passed over. Tell your lawyer that you do not have liquid funds, everything is being done on mortgage and that your lender will only lend a % of declared price.

MAIN thing and I cannot emphasize this enough is to be assertive with your lawyer otherwise they will do just about anything for a quiet life.

Rgds

well our original contract signed by us and the builders Ocia Azul shows the purchase price has being 180.400 plus applicable vat or iva

The process being 3000 deposit then 36080 then balance on completion plus vat at 7% which all comes to a total of 180400 plus 7% plus legal etc