Legal issues to sell a rented property

By IbizaSol

As specialists, we talked a lot about the process of buying and selling properties in Mallorca, but it is possible that sometimes an owner wants to sell a rented property.

The first thing to consider in this situation is that it is a completely legal operation, although we must consider a number of limitations depending on the regulatory regime to which the lease was clamped, depending on the date of signature. This determines the obligation of the purchaser to respect the new lease, depending on the regime to which they are subject:

LAU de 1964 (signed before January 1, 1995). In this case, the lessee has the right to continue occupying the property until the death.

LAU 1994 (signed between January 1, 1995 and June 5, 2013) Case in which the lessee is entitled to be in the house until it comply with the 5 years of the contract.

LAU 1994, following the reform introduced by Law 4/2013 (since June 6, 2013). The lessee is entitled to continue in the house until it comply with the 3 years of the contract when the lease is registered in the Land Registry or for three months if the lease is not registered. Regarding this last point, should be noted that once a renter occupies a rented flat, if the contract is not recorded in the Land Registry, the owner is entitled to put the property on sale.

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If the rental agreement is registered in the Land Registry, it will remain in effect even if the owner decides to sell the property. This is based on the Reform of the Urban Leases Act 2013, which came into effect as the measure to promote flexibility and development of rental housing market. In this case the tenant must not leave the building until the contract expires not although can be transfer the ownership of it to the new buyer.

In the case that a rental contract was not registered in the Land Registry, must check whether it is specified in the renunciation of preferential purchase. If this clause was signed, the owner can sell the property to the tenant communicating the eviction with 30 days in advance. If there is the case that the owner does not communicate the sale to the renter, this last can exercise the right to repurchase, purchase the property at the same price that is being sold to third, having 30 days to do it. One last case, if the contract is less than 3 years and is not being communicated the intent to sell before the end of the agreed period, this is automatically renewed up to three years, which prevents the sale to the owner until this deadline is exceeded not.

As a specialist in Real Estate Law in Mallorca, we offer comprehensive advice in the process of buying and selling property. The presence of a lawyer is essential to be responsible for providing obligatory advice to clients on legal, tax and legal liabilities acquired during the action of sale.  We’ll attend you with no obligation.

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News about the Law of Tourism, judgment of TSJIB

By AdmSolJM16

The High Court of Justice of the Balearic Islands (TSJIB) has declared null a part of the decree of general principles and guidelines for coordination in tourism which was approved by the Government of the Balearic Islands in 2015 as it believes that invades own competencies of the Insular Councils.

The initiative part of the appeal presented by the Consell de Formentera against the decree that developed the Balearic Islands Law of Tourism, and the Court of the province has declared null its Section II.

Among the elements on which legislates the above mentioned title are the regulation of the the begin of a tourism activity, the inspection of activities in the sector, Intervention Plans in Tourist Areas (PIAT), the processing and effects of the statement of touristic interest and the processing of the sale of tourist places.

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To understand this sentence, we must take into account that the authority of the Government of the Balearics regarding Tourism covers the following aspects:

– Management and planning of the tourism sector.

– Management of promotion bureaux overseas

– Regulation and classification of tourism companies and establishments

– Regulation of public lines of support and promotion of tourism.

As for the Insular Councils, their regulatory authority is limited to the competencies of information, management and tourism promotion.

The Court says in the sentence that the government is not allowing the Insular Councils to regulate on matters of own powers, claiming that the regulation of various tourism issues including Title II of decree questioned by the Consell de Formentera “violates Articles 58.3 and 72.1 of the Statute of Autonomy of 2007, in conjunction with Article 70.3 and therefore incurs the defect of nullity “. It adds that the management, promotion and tourist information are “binding powers” of Insular Councils and, since 2007, “can no longer be understood that attach to the control of the Government”.

If you are thinking of to enjoy your vacation time in a holiday rental home or has a property in Mallorca and want to get a rental, please contact us. Our specialist team will advise and report on the Law of Tourism and the situation of holiday rental homes in Balearic Islands.

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Conditions to donate or inherit a property in Spain and Balearics

By AdmSolJM16

This is a question that many people ask, how to pass a property before death and the donation is usually an option to consider. While it should be noted that in Spain the number of inherited housing is much greater than donations, according to the National Statistics Institute. The main factor that tips the balance is the fiscal cost, which is different in each region.

Taxation is another important point to consider. In some regions (with jurisdiction over the inheritance and gift tax) gifts tend to be more burdensome for the purposes of inheritance taxation. These include bonuses, rebates and regional tax credits. In contrast, the donation are only some of these tax advantages. The beneficiary of the donation is who will have to pay, as in the case of inheritance, although with harder conditions. In addition, the donor must pay the income tax for the donation, since it is considered a lucrative transmission that can produce capital gains or losses.

In the case of acquisition of residence by inheritance, state law provides for a 95% reduction in the tax base on which the tax is calculated, up to a maximum amount of 122,606 euros. The Autonomous Communities may, in turn, increase this percentage, modify the limit and apply bonuses to the fee payable out. In the case of donations of residence, state law does not provide specific reductions, each region sets its rules. Are applied reductions in the tax base when it comes to regular housing or money is donated to the sons to buy their first home.

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Each region has its own rules regarding inheritance and gift although in general, donations are “more burdensome for the purposes of taxation” that inheritances. The fact that donations prove generally more expensive than inheritances is that many regions do not include any bonus for this legal form, or submit its application only to certain situations and to certain amounts. In the case of the Balearic Islands, there is a reduction of 100% of the value of inherited property, with the limit of 180,000 euros per taxpayer. In the case of a donated house there is also reduction for children under 36 years old and with less equity to 400,000 euros: the reduction is 57% of the property value provided it does not exceed 180,000 euros and doesn’t have an area of over 120 m2.

Contact us if you need advice about this issue, our team offers judicial and extrajudicial representation and advice on matters relating to movable and/or immovable property, as well as specific areas of civil law as real estate law, family and inheritance law.

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