The new Law governing mortgages in Spain entered into force on June 16th 2019, and is applicable to all mortgages on residential properties signed from June 16th onwards.
One of the most significant amendments to the Law, is that the consumer or mortgage borrower shall choose the Notary where signature of the deeds will take place, and whom must be also be provided with (free) advice from the chosen Notary Public prior to signature of the mortgage deeds. This is an important factor affecting all Mortgage signees. However, it may cause particular inconvenience to foreign clients in terms of availability, given that it is necessary to attend a Notary on two separate days.
At MSG LEGAL, as a law firm specialised in the field of Property, we would like to provide you with clarification regarding the process to be followed for signature of a mortgage when purchasing a property in Spain.
The new Law was enacted with the primary purpose of aligning Spanish Regulations to the provisions laid down under EU Regulations, with the aim of increasing consumer protection.
Regarding the pre-contractual information that the mortgage consumer should receive, the Financial Entity must submit the following documentation:
- The European Standardised Information Sheet-ESIS (Ficha Europea de Información Normalizada-FEIN) a document constituting a binding offer for a minimum of 10 days, and that contains the personalised Loan terms
- The Standardised Warning Sheet (Ficha de Advertencia Estandarizada- FiAE) in which the specific clauses, expenses and most relevant data is contained
- The draft mortgage contract
- The terms and conditions of the insurance policy
- In the case of variable-interest mortgages, a simulation of the mortgage instalments payable
As explained previously, the signature process is divided into two appointments, or compulsory visits to the Notary:
First visit to the Notary (both mortgage holders and guarantors, if any)
During the ten-day period prior to signature of the Mortgage (the latter being the second visit to the Notary) and at least one day in advance of signing the Mortgage, the holder (and guarantors) must attend the Notary to seek prior free advice and take a test. The Notary Public shall explain the clauses contained in the mortgage contract and will carry out a Test to assure that the mortgage consumer has fully understood the terms and conditions, and will draw up the minutes or Notarial Act thereof (this process is free of charge).
Second visit to the Notary
Following signature of the Notarial Act described under the first visit, and not until the following day (consequently, signature of the Notarial Act and that of the mortgage cannot take place on the same day) the mortgage deeds and property purchase deeds shall be signed simultaneously.
The requirement to attend the Notary on two separate days may prove problematic in terms of availability for some clients. Likewise, given the personal nature of the first visit to the Notary, the question regarding whether or not it is possible grant Power of Attorney for this stage of the procedure, may initially arise.
The answer to this question is YES, it is possible for an appointed representative or attorney to carry out both the pre-contractual consultation, and signature of the mortgage deeds on behalf of a client. It is imperative that the Notarial or Consular Powers of Attorney are correctly drafted, this is to ensure that the appointed representative or attorney is also able to:
- Sign the binding loan offer together with any other financial documentation related to it (ESIS and Standardised Warning Sheet); and
- appear before the Notary on the First visit, respond to the Test and sign the Notarial Act as established by Law
At MSG LEGAL as a law firm with expertise in Property Law and Conveyancing, we can advise you on all of the necessary steps, and settle any doubts you may have regarding the formalisation of a loan for purchasing a property. Equally, we can act on your behalf by Power of Attorney during the entire process of formalising the loan.
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.