Property in Andorra
Property law applicable to foreigners The law on property applicable to foreigners is clear: an adult foreigner (foreign companies or entities are disqualified) may only acquire one dwelling within Andorra. The former restriction to one property per married couple has now fallen away. This may either be a dwelling registered under a Deed of Horizontal Division of Property (i.e. an apartment in a condominium block) or one plot of land for the purpose of building a dwelling (or with an existing individual dwelling on it - i.e. a detached house) of not more than 1000M2. Any other fixed property held by a foreigner is therefore, by definition, held 'unlawfully' and, in principle, one cannot look to the courts for protection in the case of difficulty. A foreigner officially registered as having lived in Andorra for more than 20 years has the same property rights as an Andorran and may freely acquire as many properties as he wishes under public title. The issue of a permission to a foreigner to acquire a property under public title is made by a certificate (edicte) issued by the Head of the Government (Cap de Govern) or the delegated Minister. The method of applying for this permission is by means of a plea known as a sol.licitud and the process will (normally) be handled by an estate agent (or a gestoria such as SERVISSIM) who may or may not pass on the cost of 102,77 € plus a possible preparation and handling fee, to the purchaser.Buying from a developer When considering buying a property 'off-plans' there is a certain danger, as there is anywhere. In other words: what happens if the developer goes bankrupt? By definition, an apartment building that does not exist or has not been fully completed cannot have an Escriptura Pública. In the case of a bankruptcy the purchaser would be second-degree creditors of a similar standing to shareholders - i.e. trade creditors and mortgage lenders would have priority. However, developers - unless hugely wealthy - need to sell in advance of completion and, given the uncertainty, there is a financial incentive for the purchaser to get in early and make the biggest profit for his risk. In such a case, therefore, it is more a question of making as many checks on the financial stability of the developer as possible and retaining as much as possible of the purchase price until the Escriptura Pública is duly delivered. Banks can often help - if only with a nod and a wink since discretion is a by-word in Andorra - but often a particular bank will be financing the developer. In this case if a bank is prepared to offer a loan this should be a pretty good indication that the development will go to term. The law now permits the signing of a private contract for the purchase of a property off-plans as long as there is a clear completion date to the transaction. If this is done formally in front of the notary, the acquisition tax is payable immediately. In the case where the development purely concerns the building of a detached house we have seen cases where the purchaser has been persuaded to sign a contract where he receives the title deed at the end of the construction process. This does not offer so much protection to the purchaser and we would strongly suggest that the purchase of the land and the construction project be treated separately. In other words, first buy the land under public title and then deal with the construction contract. Legally this is much stronger in the case of a bankruptcy or a payment dispute.
The act of sale All transactions should take place in front of the notary with all parties to the transaction present. It is quite common for either the purchaser or the vendor, or both, to be represented under powers of attorney (poders notarials). As long as the wording of such documents is carefully checked, we see no great disadvantage in not being present personally at the notary's office. Contracts can be established in any acceptable currency, and it should be noted that any foreign currency exchange risk between the time of the original offer and the final sale will have been a matter for the contracting parties to negotiate at the outset. At the notary's office, bank guaranteed cheques are the order of the day and are passed over in the presence of the notary.
Habitability Certificates The law now requires that a Certificat d'Habitabilitat be in force whenever a property is sold or rented out. These are issued by a qualified person such as a surveyor or architect, cost around €90 and last for 10 years. The certificates confirm that the property is suitable for habitation and are issued under strict criteria.
Wills It is strongly recommended that anyone, who has property or assets of any kind in Andorra, should make a local Will or Codicil to an existing Will, even where bank accounts or property are held in joint names. There is no automatic right of inheritance for spouses. SERVISSIM has a great deal of experience in these matters and we urge you to consult us.
Source: Samoa News
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