When buying a Spanish place in the sun to relax and retire it is normal to have your mind filled with all of those balmy evenings nursing a relaxing glass of rioja. Certainly few would be thinking about what happens when we end-up booking into the great holiday home in the sky...however, in these days of long-term mortgages and falling property prices it becomes an issue when heirs-to-be have to calculate the cost of taking on a mortgage in the sun as well as the home!
The Spanish civil code (Article 9) states that the law relating to the inheritance of assets belonging to a foreign individual should be dealt with by the laws of the country of which that person is a national. So, upon the drawing-up of the will, the testator's wishes should be given effect to, even if they would be dealt with differently under Spanish law which, for example, only allows the testator complete freedom to determine the beneficiaries of one-third of the estate.
As a result of the enormous rise in property values in Spain, it has become more and more common to see longer term mortgages in an effort to reduce the monthly repayments. Accordingly it will become more common to see pensioners who have stopped working but still must make repayments towards the mortgage. Should the mortgagee die before having discharged the mortgage completely, then it will become the responsibility of their heirs to do so.
Upon the death of a mortgagee, Spanish law determines that the beneficiaries inherit both 'the good and the bad'. That is to say that both the assets as well as the liabilities or debts. In this way the financial institution that offered the mortgage is able to minimize the risks associated with offering loans over long periods.
After inheriting a property the a mortgage attached, a beneficiary may decide to accept the existing terms of the mortgage and discharge it accordingly or reject it if it is not considered to be on advantageous terms.
The beneficiary may decide to reject the inheritance under the doctrine of the 'indifferent inheritance'. Given the possibility that a beneficiary could reject the inheritance due to the cost of repaying the mortgage, the banks and building societies in Spain are increasingly insisting on the purchase of life insurance policies that provide for the payment of the mortgage in the event of the death of the mortgagee. In this way the lender has its loan repaid in full and the beneficiary takes possession of the property without the encumbrance of a potentially expensive mortgage to discharge.
If there is no insurance policy to pay off the remainder of the mortgage debt and a beneficiary decides that they do not wish to accept an inheritance because the repayments would be too onerous then Spanish law states that the inheritance automatically passes to the next person in line. If no-one accepts the liability of the mortgage then the property eventually passes to the hands of the State. That said, a clear option would be to sell the property and discharge the mortgage in this way and this is what typically happens.
Maintenance Payments upon Divorce in Spain
Few areas of the law are as diverse as family law given that this particular area is a reflection of the diversity of the world's legal jurisdictions. In Spain, for example, the family as a social unit is given particular importance.
Dealing with Poor Service in Spain
When faced with shoddy service in a shop or business we can often react by simply not returning. It may be however that the failure on the part of the company is so great that we feel the need to take the matter further. In Spain there are specific ways to make a formal complaint and the method chosen will depend on the specific situation you are in.
Inheritance law in Spain
Ths Spanish government has recently revised the rules regarding inheritance tax for spouses and family members. In particular the family residence hsa maintained its exemption from tax up to 95% of its value. However the maximum value of this ecemption has been incresaed to 500,000€. It is now more important than ever to determine which residence is the habitual residence and the courts have made judgment in this regard.
