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value of the underlying real estate assets at the time of the transfer. Transaction costs include notarial fees, requisition fees, legal and other fees relating to due diligence, and agency fees. In addition, it is very important to conduct a full due diligence of the entity you are willing to acquire in order to detect relevant contingencies and take those into account when negotiating the terms of the transaction, otherwise, the buyer might be exposed to several and relevant liabilities. The in rem right of usufruct grants the beneficiary with the legal right to use someone else's property temporarily and to keep any profit made from it, with the obligation to preserve its form and substance. This right may be temporal or absolute and it is common in Spain to grant usufructs, especially in inheritance situations. The existence of this in rem right narrows the owner´s faculties with respect to the property. Understanding the implications of usufruct rights requires familiarity with Spanish law, and missteps could lead to legal disputes or reduced control over the investment. Real estate property can be jointly owned by different natural/legal persons and under different legal figures. 10. Buyer’s Inspections A. The main aspect of the Buyer´s inspections, regardless acquiring commercial or residential real estate
shall carry out usually are already stablished in the Offer to Purchase. In fact, it is a common practice in Spain to condition the viability of the operation to the success of the Due Diligence carried out by the Buyer. So, if the Due Diligence leads to a different status of the property from the one stated by the seller, frustrating the transaction, the seller shall bear the cost of the Due Diligence carried out by the buyer. B. In the post-closing stage of the operation, in the event of unexpected liabilities that the acquirer shall assume, the Due Diligence clause of the purchase agreement is key. If this liability is a result of missed information that the seller should have provided for the Due Diligence to be complete, the buyer may claim the amount to which the liability consists. Therefore, the Due Diligence operates as a mechanism to exercise the Seller´s liability in the event of discrepancies between what was stated in the Due Diligence, as a result of the investigation of the real estate property, and the post- closing reality of the property. C. The Due Diligence process consists of several inspections performed by the buyer, including, but not limited to, analysing: the technical structure, the legal status, i.e. title, encumbrances, claims against the property, etc. or the tax situation of the property. Due to Spain´s abundant real estate regulation, it is crucial to analyse if the property complies with the local regulations and holds the necessary licenses,
property, is to set forth a Due Diligence process. As stated in point I, the basic terms and schedule of the Due Diligence that the Buyer
ILN Real Estate Group – Buying and Selling Real Estate Series
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