Author: María Gracia Moreno Vegas
The inheritance and donation of real estate in Spain, with the legislative complexity that it entails, has experienced an upward trend in recent years that merits a brief but exhaustive analysis of the regulatory situation of these situations, the guarantees or legal uncertainty that exist around them, and the series of procedures necessary for the succession or donation of real estate to be effective.
EXPONENTIAL INCREASE IN THE NUMBER OF PROPERTIES ACQUIRED BY INHERITANCE
The real estate news in Spain points out that, according to INE data, during the 2021 financial year, 198,939 residential properties were transferred through inheritance, the highest figure in the historical series that the statistics body began to compile in 2007, accounting for around 545 inherited properties per day.
Likewise, of the approximately 200,000 homes that were transmitted mortis causa in 2021, they were concentrated in greater volume in the communities of Andalusia, Catalonia, Valencia and Madrid, accumulating 59.5% of the national total, followed at a distance by Castile and Leon and the Basque Country. In the other regions, the number of inherited homes was less than 10,000 units during 2021, according to the statistics agency.
Now, what is the reason for this increase in the number of properties acquired by inheritance?
According to the experts, who point to both structural and cyclical factors, in Spain this post-pandemic phenomenon coincides with a demographic trend that generates a regressive population pyramid, which means a low birth rate (7.19 births per 1000 inhabitants) and an almost equivalent death rate (9.49 deaths per 1000 inhabitants), although this is tempered by a long life expectancy (83 years from birth).
On the other hand, this growing trend in home ownership may be closely related to the “culture of ownership” that is evident in Spain, where between 2020 and 2021, 75% of the population owned a home, and about 22% owned a second home.
This, when studying in detail the succession of real estate destined for housing from 2020 onwards, may lead to the conclusion that the trend of favoring ownership over renting implied an increase in the inclusion of housing in the inheritance masses.
Increase, also, in the sale of inherited properties
In relation to this situation, the sale of inherited properties has also increased notably.
Since the repeal, effective from September 3, 2021, of Article 28 of the Mortgage Law, which made it considerably more difficult for non-direct heirs to sell the inherited property, since a waiting period of at least two years had to be given in case other legitimate heirs could appear to claim the estate.
As we commented in our article on the matter, this difficulty arose especially because, although it was possible to register the purchase and sale of a property by non-forced heirs before the two years, it was necessary to include a preventive annotation.
This registration, according to the experts, prevented in many cases that the operations with mortgage guarantee were made, since the financial entities did not have full certainty that the property was the guarantee of the operation as such until after those two years had elapsed.
For this reason, the banks were reluctant to grant this type of operation and, on the other hand, the owner of the property who bought without financing or putting another property as a guarantee did not have the full peace of mind that the property was theirs until this period had elapsed.
However, the ambiguity that has arisen around this change of legislation has led to a certain degree of legal uncertainty, which calls into question the retroactivity of the repeal of the aforementioned article 28, with transfers of the same characteristics occurring in which this article is either applied or not applied without following a consistent jurisprudential criterion.
REGULATION OF THE SUCCESSION AND INHERITANCE OF REAL ESTATE ASSETS
After the death of the deceased, and the certification of his last will and testament (if any), the process of opening the succession, and partition, adjudication and acceptance of the inheritance or legacy of the deceased to their legitimate heirs or legatees begins.
This inheritance or legacy includes all the patrimonial assets, rights and obligations of the deceased that are not extinguished by their death.
These processes are not free of complexity: different legislation regulating the matter, especially in terms of taxation, and various formalities necessary for the transfer of assets to be carried out in accordance with the provisions of Spanish, common and foral law.
Liquidation of the community property or conjugal joint property:
Before the opening of the succession, in the event that the deceased was married under the marital regime of community of property, the liquidation of the community of property, regulated in art. 1344 of the Civil Code, will be carried out, by means of which an inventory of the assets and obligations will be made and the patrimonial mass will be separated in community of property between both spouses; proceeding to the succession of the patrimonial assets and liabilities, corresponding to the deceased, as well as of theirprivative assets, after this.
This liquidation may be by mutual agreement between the heirs or by contentious agreement following the provisions of art. 806 of the Civil Procedure Law.
Thus, the surviving spouse or widower will be entitled to the ownership of half of the real estate assets that have been patrimony of the community property liquidated with the death.
However, the spouse may be the holder of the universal usufruct for life of inherited real estate, such as his or her habitual residence.
The will and testament
According to art. 667 of the Civil Code, the will is the act by which a person disposes of all or part of his or her assets after his or her death.
It is characterized for being an act mortis causa, unilateral, “in principle” unipersonal and highly personalized, likewise, the following article of the Civil Code, provides that:
“The testator may dispose of his property by way of inheritance or legacy.
In doubt, even if the testator has not materially used the word heir, if his will is clear about this concept, the disposition will be valid as made by way of universal title or inheritance”.
Although there are several types of wills, such as open, closed, holographic and special types, we will focus on who are called to inherit, how this is legally determined, and the consequent formalities of the opening of the succession, especially from a real estate point of view.
It is worth remembering that, in Spain, despite the existence of a will, the law contemplates ascendants, descendants and spouses as “forced heirs” according to art. 807 et seq. of the Civil Code.
That is to say, persons who cannot be deprived of a portion of the inheritance, even if there are legatees.
In the case of the descendants, this corresponds to two thirds (legitimate and improvement), and in the case of the ascendants and the spouse, to half, depending on the concurrence of the heirs.
According to this principle, the ownership of the inherited property will be divided into three parts:
–The third of legitimate inheritance: of this third the testator will not be able to dispose and it is the one that will be fully destined to the mentioned “forced heirs”.
-The improvement third: also destined exclusively to the forced heirs, it can be used to benefit some of them instead of others, increasing their portion of the estate. It must be done expressly, since in the absence of this, its partition will be carried out in the same sense as the third of the legitimate inheritance.
-Free disposition third: in which the testator lets their will be known expressly, without being obliged by law to dispose this third to any of his heirs.
Ways of partition of the inheritance:
Regarding the partition of the inheritance once the succession is opened, there are three ways:
–Voluntary partition of the property: carried out by mutual agreement of the heirs, with public deed before a notary and the valid signature of all those called to inherit. The percentages of the property that will be the property of each heir will be indicated.
–Partition made by an accountant: the partitioner or accountant appointed by the testator makes the partition of the inheritance and the real estate contained therein, and in case this figure has not been appointed by the deceased, it will be the judge who will do this and he will be appointed accountant-partidor dative.
-Judicial partition: in case there is no agreement among those called to inherit.
Types of successions and order
According to Title III of Book III of the Civil Code, “On Successions”, in its Article 658: “Succession is granted by the will of man manifested in a will and, in the absence thereof, by disposition of the law”.
Therefore, two types of succession are classified: testamentary succession and legitimate or intestate succession, which only exists in the absence of the former.
The testamentary succession: it is materialized as a declaration of will, which is the will, which constitutes the appointment of the heir, who succeeds to universal title. This will include the voluntary disposition of the testator’s estate among the successors, who may be either individuals or legal entities.
Legitimate or intestate succession
Legitimate or intestate succession: in the event that there is no will, or in the event that the will is legally null and void for reasons of incapacity of the testator (art. 662-663, Civil Code) or of the heirs (arts. 744-745, and 752-755 of the Civil Code) or for the reasons of nullity of art. 669 (wills of two or more persons jointly) and art. 673 (will vitiated by fraud, violence or fraud) of the Civil Code, the subjects determined by law are called to suceed, determined by reason of the kinship and degree in which they are related to “de cujus succesione agitur”, the person whose succession is involved.
This type of succession will also occur when:
- The testator has not disposed of all his assets, so this figure will fall on the assets that have no legal disposition respecting the rest of the estate according to his testamentary disposition.
- The heir to whom a condition has been imposed does not comply with it.
- In the absence of a substitute heir, either the heir or heirs die before the author of the succession, or the heir or heirs repudiate the inheritance.
Degrees of kinship
In case of legitimate succession, the law regulates the degrees of kinship in three divergent ways:
–Blood kinship: a legal bond existing between persons descended from the same parent.
–Civil kinship: derived from adoption.
–Kinship by affinity: derived from marriage. It should be clarified that kinship by affinity is not included within the kinship eligible to inherit, except for the right recognized between spouses.
Order of succession
Thus, in this same case, the order of succession will be:
–By the descendants: considered in equal parts among these, or in those cases where a descendant of ulterior degree inherits, the inheritance by lineage will be considered, or in those cases where the inheritance comes from the spouse, this person will have the same portion as one of the children.
–For the ascendants: given the condition that the author of the succession has died without descendants, or given the condition that the “de cujus” has died in marriage without having descendants. In the latter case, the ascendants will be entitled to one third of the estate, and the rest will go to the spouse of the deceased. Also, if the deceased died married without descendants, one half of his estate will correspond to his ascendants and the other half to his spouse.
–For the surviving spouse: the Law provides that the spouse, if there are descendants, will have the right to the usufruct for life of the third of improvement. If there are ascendants but no descendants, he/she will be entitled to the usufruct for life of half of the inheritance, and, if there are no descendants or ascendants, he/she will be entitled to the usufruct for life of two thirds of the inheritance.
–By collaterals: in the absence of descendants or ascendants of the “de cujus”, the law establishes that the collateral siblings or nephews will inherit up to the fourth degree of kinship, either by head or by lineage, excluding the closest relatives to the distant ones. If these collaterals concur in the application for inheritance rights with the spouse, the former will inherit one third of the estate and the latter the remaining two thirds of the estate.
Having explained the complex mechanics of succession and inheritance, what are the steps to be taken when the inherited estate includes real estate?
FORMALITIES NECESSARY TO FORMALIZE THE INHERITANCE OF REAL ESTATE:
Death, Last Will, and Insurance certificates must be requested:
–Death Certificate: it will be obtained at the Civil Registry of the locality where the deceased died, and it will show the last address of the deceased and his date of birth, essential data for the determination of the locality where the inheritance tax must be settled and the terms that are subject to this procedure.
–Certificate of Last Will: issued by the Ministry of Justice, it reflects the different wills that the “de cujus” has granted throughout his life, being valid for inheritance purposes the last will that meets the requirements of the Law.
–Insurance Certificate: this certificate is issued by the Ministry of Justice and contains the list of the different insurances that the deceased contracted during his life and which are susceptible to be collected by the survivors and heirs.
Inscription in the Land and Property Registry
With these three certificates, whether it is a testamentary or intestate succession, the next step will be to proceed with the preparation of the Public Deed of Adjudication of Inheritance (before a notary public or judicial notary), since the inclusion of real estate in the de cuju’s estate merits the elevation to public deed in order to be registered in the Land and Property Registry.
After the registration of the deed of adjudication of the inheritance in the Land Registry of the locality where the inherited property is located, which will require the presentation of the above mentioned certificates as well as the certification of the payment of the corresponding Successions and Donations Tax, this registry will have fifteen working days to answer. It will proceed either to effectively register the property in the Registry, or to communicate to the interested party the reasons for which this is not possible, as well as the deadlines to correct them.
In order to verify that this procedure has been carried out correctly, it will be possible to request the Nota Simple, in which the property is described and located, it is indicated who is the owner and if it has some type of charge, in addition to other notices, and the Certificate of Dominion, a certificate that proves the ownership of the property and the charges that this one can have.