Among
foreign property buyers but particularly among the British, is
the habit of granting a lawyer power of attorney (Poder) in order
to be able to deal with the purchase of their property so as to
avoid as much inconvenience as possible. One
advantage is that the need to be present at the Notary's office
when the deeds are signed is obviated, saving the expense and
inconvenience of traveling to Spain.
In
giving your lawyer the power to act in your name in a variety
of ways, you need to understand just what it is that you are doing.
You also need to understand that one of the first principles of
Spanish law is that it requires you to be responsible and aware
of what you do. In other words, anything your lawyer does in your
name under a power of attorney you have granted, you are expected
to know about.
In
many cases, power of attorney is something suggested by estate
agents. It effectively keeps the buyer out of the way and makes the collection of black money or an illegal commission far easier to collect. The only advantage a power of attorney has is that it saves you from being in Spain on the day you sign for your property. If you don't mind being present to receive the keys to your new house then you don't need a power of attorney and good advice is to be present on the day your money exchanges hands. If you give your lawyer an open ended power of attorney he can virtually do anything in your name - including steal your money. You would not be able to complain because the attitude of the court would be simply that the power of attorney you gave was far to broad and you should not have given it. There is no point in questioning the logic because in Spain most things are illogical.
If you issue a power of attorney, make sure that it clearly states that it is limited to purchasing a house in your name and when you appear before the notary to sign the power, ask him to confirm that this is the case.
One
of the reasons why power of attorney is popular concerns the habit
of under declaring the value of property so as to evade tax on
the undeclared amount. Clients are told that this is a normal
event - not to be concerned and it will save them money. In fact,
under declaration is something which should not be carried out
and today pressure from Brussels in an attempt to see an end
to tax evasion is rapidly bringing this habit to an end.
When
and where under declaration happened, the element of black money
arising from the transaction was collected by the lawyer from
the clients account and passed to the builder. The client was
effectively evading tax at his own risk in order to be able to
provide tax free money for his builder, who in turn often paid
the estate agencies commissions in cash - hence the reason for
the popularity of a power of attorney. As an exercise it was dreadfully
flawed in that sooner or later the revenue seemed to catch up
with the evaders who would be made to make good the revenue's
losses. There are also other problems associated with under declaration
of the purchase price but these are covered elsewhere in this
web site.
There
have been many cases of lawyers abusing the power of attorney
granted by their clients but not many where the client has obtained
satisfaction or redress of grievance through the legal process.
As a principle, we have no objection to the power of attorney but it should only be granted if required and only for specifically named reasons.
Consider
the case of a UK businessman who purchased 45,000 square metres
of land upon which he wished to build a dozen or so houses. The
land, found by his lawyer cost in excess of 400,000 Euros and
he was told that he could build on this land following submission
of the appropriate planning applications.
A
power of attorney was given to the lawyer for the purchase and
the money transferred to Spain. As the story unfolded it was found
that no searches had been carried out and that there were others
involved in the ownership making the question of title unclear.
Further, the land which the lawyer claimed could be built upon
proved to be rustic, something the lawyer should have informed
the client of immediately but did not do so.
Despite
the fact that the client had been briefed to instruct his lawyer
in great detail in regard to what he expected by way of service
and he had done this, the fact remained that the power he had
granted to the lawyer had given him the right to do almost anything
in his name regardless of whether or not it was legal. In truth,
the lawyer had produced a power of attorney for signing which
was far from appropriate but it had been signed and under Spanish
law that was that.
With
such a wide ranging power of attorney, under Spanish law misrepresentation
is almost impossible to prove. If common sense were allowed to
play a part the situation could never exist. The more we learn
about Spanish law, the more we realise just how little we do know
and how unfair and sterile it seems when dealing with matters
which simply could not arise in the UK and other countries with
similar legal systems. This is no criticism of Spain or its people
- just a warning to be aware that Spanish law does not provide
the protection or safeguards which you may be used to in your
own country. Spain is a wonderful country in which to live but
parts of it are different and you need to know about them.
Most
lawyers will only use the appropriate power of attorney which
is adequate for purchasing a property but as the average person
will not be able to differentiate between that which is appropriate
and that which should be avoided, it follows that it is best not
to grant a power of attorney unless you know exactly what you
are doing. Further, before you visit a lawyer you should put in
writing exactly what it is that you require him to do, including
taking all steps necessary to protect your interests. To be absolutely
effective, it should be written in Spanish!
