As an investor in European real estate, it is vital to consider how your partial payment or deposit will be held. Escrow services provide a neutral third party which holds the funds in compliance with both parties, and neither party may access the money until all obligations of both parties are satisfied.
Neither Spanish lawyers nor real estate agents are certified by a government authority, and they can not legally hold funds “in trust.” Spain does not have the escrow services which are available internationally. In Spain, funds will be held in the realtor, developer or lawyer’s bank account, the account is uninsured and susceptible to seizure or liens. Although the broker or lawyer will hold your funds with good intention, their creditors and tax authorities have access to these accounts. The accounts are not protected as they are internationally.
To secure your deposit on your Spanish real estate purchase, you must use an escrow service which is insured and held in an offshore bank in a segregated account. Suarez Alberan is a trustworthy law firm authorized to provide escrow services internationally.
When purchasing pre-construction Spanish real estate from the developer, it is not uncommon or illegal for the developer to use your deposit to finance the project. The buyer should insist on a fully insured escrow service, which will receive the funds “ in trust” in a segregated account held in an offshore bank.
Protects the builder as well as the buyer/owner during construction or renovations. The funds are held in escrow and will be released as the construction progresses. The escrow helps the builder stay on budget, complete all conditions and ensure that expenses for the building are paid on time and in full. Funds held in escrow protects the owner by guaranteeing a construction company does not leave town with their money.
Beware of closing companies who claim that they can receive and hold the funds in their escrow account because one of their members is an European realtor and therefore the money will be deposited into their trust account and held until the closing. They claim your funds will be protected by the realtor’s board of which they are a member. This claim is not accurate.
The realtor’s board in each Area will only permit funds to be deposited in trust for transactions taking place in the state of which the realtor is an active member – representing the buyer of the seller.
Foreigners investing in Spanish real estate are advised not to use closing company trust accounts.
At Suarez Aleman we provide fully insured escrow services by receiving the funds “in trust” in a segregated account held in an offshore bank. These funds are insured by our professional organization for €1,000,000 per transaction.