Limitations to Foreigners

1. Are there in your national system any limitations to foreigner citizens or foreign companies/companies controlled by foreign citizens regarding the acquisition of immovable properties? If yes:

Yes: some transfers/constitution of burdens needs to obtain a military authorization in order to be done.

1.1. Which legal regulations regulate in your country the prohibitions or limitations for foreigners’ acquisitions in case of transfer of property? Please specify the legal regulation and/or the range of the regulation that contains the prohibition.

• Law 8/1975, of March 12, on areas and facilities of interest to National Defense.
• Royal Decree 689/1978, of February 10, which approves the Regulation of areas and facilities of interest to National Defense, which the Law develops 8/1975, of March 12, on areas and facilities of interest to National Defense.

1.2. What do these limitations consist of?

These limitations limit or condition the acquisition of assets and other real rights over real estate by natural or legal persons of foreign nationality or under foreign control.

The limitations only exist in certain areas of Spanish territory. In these areas, the total extension of real estate belonging to ownership or encumbered with real rights in favor of foreign natural or legal persons will be set for each area, without in any case exceeding 15% of its surface.

1.3. Do these limitations apply to any foreign citizen, regardless their nationality, or only to non-EU Members national citizens?

These limitations only apply to non-EU citizens. Neither applies to citizens of the Economic European Area.

1.4. Do these limitations have?

• A defensive/protective purpose
• An economic purpose
• Both economic and defensive/protective purposes
• Other purposes (please specify)

«Exclusively a defensive purpose and the free exercise of the sovereign powers of the State.»

2. To which kind of land registry unit do these limitations apply? (Example: only land plots, only rural areas, only foreign borders, dwellings and homes, other buildings?

These limitations apply to rural or urban properties, with or without buildings.

There are exceptions:
• The centers and areas that are declared of national tourist interest.
• Urban units, urbanized areas as long as they are not border towns. Border areas are considered to be those that border another country, even if it is from the EU.

3. To which kind of transfers or burdens do these limitations apply? (Example: to every transfer, non-free transfers, differently in case of inheritance than in case of purchase, mortgages in favor of foreigners….)

The following transfers/constitution of burdens need to obtain a military authorization:

• Inter vivos:
– Acquisition of property on rural or urban properties, with or without buildings, or constructions of any kind (with the exceptions seen before).
– Constitution, transmission and modification of mortgages, censuses, easements and other rights in rem pertaining to immovable goods.
– Construction of works or buildings of any kind or acquisition of rights over authorizations granted and not executed.

• Mortis cause:
– It is required to obtain the military authorization within 3 months or proceed to disposal of assets within one year.
– The period is counted from when the acquirer was able to legally exercise his powers as owner of the domain or real right in question.
– After a period of one year has elapsed without it having been sold or since the authorization requested, the Ministry of the Army can proceed with forced expropriation.

• In case of loss of nationality or dissolution of the Company:
The same applies as for transmission mortis causa.

4. Apart from the previous limitation to acquisition of property by foreigners, are there any other measures at your country relevant for this topic? (Example: pre-emption rights in case of purchase un favor of a foreigner, social or residential measures bases on nationality and non in residential permits….)

No.

5. To what extent the land registrars’ controls in a deed of transfer the prohibitions imposed to foreigners to acquire land and buildings in your country?

5.1. Do you only check if the transfer administrative authorization requirement is met, or do you also confirm that the authorization is valid? For example, do you consider property type, like rural or forestry classification, which might limit foreign transfers? Or do you verify the percentage of foreign land ownership in a specific area, especially if there are restrictions on the number of buyers or land size?

We check if the transfer administrative authorization requirement is met and that the authority that issued it is competent. We do not have to verify the percentage of foreign land ownership in a specific area.

5.2. What would happen if an authorization were needed, and it does not come with the title submitted for registration?

The lack of registration of the acts and contracts by which the ownership right or other real rights over real estate located in the restricted areas are established, recognized, transmitted, justified or extinguished, in favor of foreign natural or legal persons, within the eighteen months following their respective dates, will determine the complete nullity of the aforementioned acts and concessions. In cases where, through no fault of the acquirer, the titles referred to are pending the settlement of the Transfer Tax or any other formality that prevents registration, the period referred to in the previous paragraph will be extended to twenty-four months.

5.3. What would happen in case a deed of inheritance in favor of a foreigner transfers property over land or buildings subject to limitations for foreigners’ acquisitions in your country?

When the acquisition of properties or the constitution of real rights over them in favor of foreigners is verified by universal or singular hereditary title, the interested parties must request the authorization required within a period of three months, or proceed to the alienation of the assets within a period of one year, both counted from the time the acquirer was able to legally exercise his powers as owner of the domain or property right in question. After the period of one year without having disposed of it, or the same period counted from the date on which the requested authorization was denied, the Ministry of the Army may proceed to forced expropriation.

5.4. If the states have preemption right in case of transfer, would you reject the registration if no notification to the state to enhanced it right is done?

The state does not have preemption right in case of transfer.

6. Do you expect any legal modifications on this issue?

We do not expect any legal modifications on this issue.