Selling a Spanish property owned by a UK Limited company

In our legal practice, we often come across situations where a British Limited company owns a property in Spain. Very often, the Spanish property was bought more than 20 years ago when Spanish Tax numbers (CIF or NIE) were not compulsory for foreign companies nor for the directors of the same. Also, many purchasers thought that buying property in Spain through a UK Limited company would be tax-efficient in terms of Inheritance Tax, which in most cases is not correct. Furthermore, it is also equally frequent to see that the Directors who represented the company years ago and signed the title deeds on behalf of the company are no longer Directors of the company. This causes some difficulties for the British company when it decides to sell the property.

We were approached in a recent case by the new Director of a family-owned English company that owned some property in Spain. The family decided to sell the property and even found a buyer and committed to the sale without knowing what documentation would be required to complete the transfer. The new Director, who inherited the shares of the company from his father, thought that it would be as easy as it is in the UK. He then learnt that the Spanish Notary and Land Registrar needed to see certain documentation proving that (i) the company still existed (ii) that the new director was in fact authorised to represent the company and (iii) that the company and new Director had Spanish tax numbers in place.

After examining the documentation, we prepared a Spanish Power of Attorney that was signed by the new Director in the presence of an English Notary Public giving powers to our lawyers to:

1. Apply for tax numbers for the company (CIF) and the Director (NIE)
2. Sign the eventual deed of sale in Spain at the office of the Spanish Notary

As the Spanish Authorities have no knowledge of English law, we as dual-qualified English and Spanish Lawyers produced a Certificate of English Law to reassure the relevant Spanish Authorities that the company was still trading and that the new Director was entitled to represent the company and appoint lawyers to complete the paperwork in Spain. We also translated and legalised with the apostille of the Hague Convention the corporate documentation of the English company as this was needed in Spain. In the end, and in a race against the clock, the client managed to complete the sale of the property and avoided being in breach of the contract.

This is an example of how certain legal problems in Spain, especially when they involve a cross-border element, can be sorted. Knowing what to do, and more importantly, drafting the necessary Power of Attorney or Certificate of law can help to overcome any cultural and bureaucratic barriers faced by the authorities in Spain.

Also for information about the incorporation of Spanish companies by UK Ltd, click here.

For more information about this topic please contact Antonio Guillen.