Larraín Nesbitt Lawyers is a Marbella-based independent law firm specialized in property conveyancing, taxation, litigation, probate and succession. Expert native English-speaking lawyers and economists blend legal and practical advice providing tailored assistance on your matter. Our range of services cover the greater Marbella area, Sotogrande and Costa del Sol.

The firm focuses advising foreign investors on acquiring residential property in Spain both from a legal and fiscal point of view. Our no-nonsense approach to business coupled with our commitment to clients ensures easy-going transactions. We pride ourselves in putting our clients’ interests at the forefront of everything we do.

Larraín Nesbitt Lawyers, your legal partner in Spain.

Last Article:

How to discharge a mortgage loan in Spain

Raymundo Larraín Nesbitt, September, 11. 2023

Lawyer Raymundo Larraín outlines the procedure to cancel your mortgage loan in Spain attracting little to no tax.

How to discharge a mortgage loan in Spain

Marbella-based Larraín Nesbitt Abogados (LNA) has over 20 years’ taxation & conveyancing experience at your service. We offer a wide range of 50 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8^th of Septermber 2023

Introduction

The sharp rise of interest rates over the last 12 months, has prompted scores of borrowers to look into cancelling their Spanish mortgage loans. This is done to avoid servicing large monthly repayments.

Mortgages, besides their obvious purpose of financing a house purchase, have long been used by lawyers and accountants as a useful tool to reduce clients’ tax burden. With careful forward tax planning they prove extremely helpful to mitigate client’s overall taxes. It is for this very reason that even wealthy individuals (that do not really need them) actually apply for them to benefit from the lenient tax breaks available.

However, when an inflection point is reached of high interest rates – such as the one we are now in – clients are inclined to re-assess their tax planning strategy and lean to discharge them.

Additionally, on selling a property, a buyer, or his lawyer, will demand from the seller they cancel the existing mortgage loan. Properties need to be sold with a clean title.

With this in mind, in today’s article we give a brief overview on the procedure to fully discharge a mortgage loan in Spain. Unlike other countries, the conveyance procedure involved is not automatic and requires the input of a seasoned lawyer. You will need to instruct a lawyer to carry it out on your behalf (with a specific power of attorney, or POA). This is not a legal procedure that can be followed by laymen.

Preliminaries

Your lawyer, in use of a specific POA will contact your lender and start the procedure.

The bank needs to agree to it. The borrower is free to choose a notary of his choice to formalize the procedure. The legal representative will sign several documents with the lender. Almost every mortgage loan applies a small penalty for early redemption.

The borrower will finish paying off the balance presented by his lender, with penalty interests rolled on top.

Signing the deed

A bank’s representative will then attend the notary of choice and sign a deed fully discharging the mortgage loan.

In plain English, the property is now legally ‘freed’ from the encumbrance. But it doesn’t stop here.

Land registry

The notary deed then needs to be lodged. Once done, the property will appear as free of charges and encumbrances.

How long does it take?

Overall, you are looking at 2 to 3 months on average, always dependant on how fast a lender accommodates you.

Conclusion

Mortgage loans in Spain are not cancelled automatically when you finish paying them off.

Moreover, banks are perfectly content leaving a mortgage charge against a property indefinitely (as it improves their ratios in investor’s eyes), even when the mortgage was paid off long ago. Lenders are in no rush whatsoever to discharge them, and it takes the proactivity of a lawyer to gently nudge them time and again to cancel them over the course of several months. Without a shadow of a doubt, one of the most aggravating tasks that falls on lawyers, is precisely this; assisting borrowers to cancel them as there is a huge amount of red tape involved.

On paying off a mortgage loan, you ought to cancel your mortgage loan. Banks do not do this automatically.

On selling property in Spain, you need to cancel a mortgage loan. No buyer will acquire a property with an existing mortgage against it. A buyer cannot get a new mortgage on the property if there is already one showing up in the title, that is why it must be cancelled.

In a context of high interest rates, most financial advisors will recommend you to cancel them, avoiding hefty monthly repayments which in fact negate the tax benefit sought on the mid to long run.

Bottom line, whatever the reason for cancelling a mortgage loan, you need to hire a lawyer.

Larrain Nesbitt Abogados offers a competitively-priced conveyance service: Discharging a mortgage loan.

At Larrain Nesbitt Abogados (LNA) we have over 20 years’ experience assisting clients buying, selling, or renting properties. We can also offer you a competitively priced accounting service to file your landlord taxes every tax quarter nationwide. We are also specialized in taxation, immigration & residency visas. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88, or by completing our contact form to book an appointment.

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. Ní neart go cur le chéile. VOV.

Larraín Nesbitt Abogados, small on fees, BIG on service.

...

Read more

Last Blog Entry:

Spanish Congress and the Tower of Babel

Raymundo Larraín Nesbitt, September, 21. 2023

21^st September 2023

One step forward, two steps back.

Spain’s Congress approves the use of regional languages in its sessions. Spain, the only country in the world to approve such a daft measure, will now be using four official languages during its plenary sessions. Congressmen will now be required to use translator devices to understand each other!

You really couldn’t make it up.

Whilst the rest of the planet is busy studying Spanish (the fourth most spoken language, and the second in importance worldwide trailing only after English, spoken by 22 countries, or half a billion people), Spanish politicians are busy approving new divisive laws that marginalize the language of Cervantes.

This deluded measure is a political concession the incumbent President has agreed with nationalists (read separatists) to secure being re-elected into office another 4 years.

In effect, Pedro Sanchez is leading the country down a dark path of balkanization, erecting new artificial walls, sowing dissension, and in general bending over backwards to undermine the country’s cohesion and union. And he’s doing a great job at that!

A country’s language is a cultural heritage that needs protection, it enriches and unites its nationals, meshing them together into one.

Perhaps I’m being hopelessly naïve and idealistic, but one would imagine the priority of this president is to rally the country behind him, as one, in these difficult times. Curbing down its (over)reliance on (over)public spending, decreasing unemployment levels (the highest in all of the EU and out of the OECD), diversifying the economy so it doesn’t rely as much on tourism, allowing easier access to homes for first-time buyers, reducing taxes, vastly improving public education by allocating more resources towards it, paying teachers (much) higher wages, etc.

Nope, not a chance. Silly me.

His priority is power. And if that means balkanizing the country, so be it. He will approve a general amnesty and basically duck his head in the sand in the face of a financial tsunami that quickly approaches Spain (in the shape of high interest rates) that threatens to swallow the country whole in a sea of darkness.

Truly, we have the worst president at the worst of times.

“A house divided against itself cannot stand.” – Abraham Lincoln

Abraham Lincoln (1809 – 1865). From an impoverished humble background of corn farmers, this self-taught American lawyer, strategist and politician would rise to serve as the 16th US President. He resolutely ensured a pro-Union victory, strengthened the federal government, modernized the economy, brought about the emancipation of slaves and preserved the Union. During his tenure, he held presidential elections in 1864 to be re-elected, amid a devastating Civil War that threatened to tear his country apart and engulf it in a sea of darkness; yet he gave example in the face of adversity, holding steadfast to his ideals, steering the ship safely into port and acting as a beacon of Democracy which light shone with a fierce intensity the likes of which the world has never witnessed, before or since. Never again would a country hold presidential elections amidst a bloody civil war in what constitutes one of History’s greatest democratic feats to date. But most importantly, he went into great lengths to ensure the festering wounds left open during the fratricidal Civil War were healed; generously reconciling both sides in equal terms, as one nation, indivisible, under God. It is for this very reason, that more than two centuries on, he is widely regarded as the greatest American President to grace the White House; likely the greatest American of all time, towering above the rest. Through his courage and sacrifice, which ultimately claimed his own life, he laid the groundwork of what was to become the greatest and most powerful nation on earth over the next two centuries. A true statesman that would always put ahead of any consideration the best interests of his people, by tearing down divisive walls, and fostering at every opportunity union.

Larraín Nesbitt Abogados, small on fees, BIG on service.

...

Read more

Last Press Entry:

Andalusia suppresses Wealth Tax

MSN, September, 21. 2023

Microsoft Start is a mobile app that features news headlines and articles that MSN editors have chosen. The app includes sections for top stories, regional events, international events, politics, money, technology, entertainment, opinion, sports, and crime, along with other miscellaneous stories.

MSN kindly published our article: Andalusia suppresses Wealth Tax

...

Read more