You will see plenty of premises advertised privately via notices on the buildings themselves or, if you’ve been in Spain for some time, you may hear of premises by word of mouth, but this route is only for those hardy souls who have been around a while and know the area and the seller well. For most people, it’s advisable to use the services of a reputable commercial agent or an estate agent who deals in commercial properties. At this stage in your research, you should know the area fairly well and know which are the main (and most efficient) agents in the area. The next thing to do is to decide whether you want to lease, rent or buy your premises.
In Spain, the most common way of securing business premises is on a leasehold basis. You make a one-off payment to buy a lease, which includes fixtures and fittings as well as goodwill if it’s an existing business. You then continue to pay the landlord rent for the premises, but you can sell on the lease if you wish.
A lease in Spain has until recently been known as a traspaso (literally a transfer, as a lease is transferred from one person to another) but is now called a cesión. However, many people (including Spanish landlords) are unaware that the law has changed and that a traspaso no longer has any legal validity. You may therefore be offered a trapaso. Whether you’re offered a traspaso or a cesión, make sure you obtain legal advice on the terms of your lease and ensure that these are specified in as much detail as possible in the contract.
The rules governing a cesión are far more relaxed than those for a traspaso, which means that there’s more freedom for negotiation between the parties – but also more room for misunderstanding. Your lawyer should check that you aren’t simply being offered a rental agreement masquerading as a lease, which will mean that you won’t have any rights to sell the lease on to someone else. If you have a legal cesión, you’re free to sell it on, provided you give your landlord first refusal. He will normally take between 10 and 20 per cent commission on the sale.
When buying a lease, make sure (or ensure that your lawyer checks) that the seller has the right to sell it. This may sound unnecessary, but there are cases of people selling leases they don’t own.
In addition to paying an agreed amount for the lease, you must pay a monthly rent to the landlord for your use of the building. The contract should state clearly how much longer the lease has to run. Lease terms are normally between 5 and 20 years, but it’s advisable to ensure that your lawyer negotiates the longest possible term. This is because during the term of a lease the landlord can raise your rent only in line with the official rate of inflation (as published by the Spanish government). When your lease runs out, you can usually renew it automatically, but this gives your landlord the opportunity to impose a considerable rent increase, sometimes as much as 20 or 30 per cent.
There are opportunities to rent business premises, although it isn’t as common as leasing. Renting means you don’t have the large outlay of buying a lease and have the flexibility to move premises if required. On the other hand, a rental agreement won’t give you the same rights as a lease and, if you build up a thriving business in rented premises, there’s always the danger that the landlord will decide not to renew your contract or to sell the property. As long as your lawyer negotiates your rental contract properly, however, it isn’t easy for a landlord to ‘throw you out’, as tenants have considerable rights in Spain. If you opt for renting, it’s therefore essential that you have a watertight contract by getting professional legal advice and check the terms of the contract carefully, especially the terms under which either party can terminate the agreement. Your business could depend on it.
Your rental contract should contain your details, those of the landlord and a description of the property. You will be expected to pay a deposit equivalent to two months’ rent and pay one month’s rent in advance. Make sure you get a receipt or proof of payment for your rent. The usual rental period is a year, and this should be stipulated in the contract. A contract can be renewed annually along with your rent, which for the first five years can be increased (or decreased!) only in line with the official rate of inflation.
If your landlord decides to sell the property, as a long-term tenant you have the right of ‘first refusal’ ( tanteo y retracto) to purchase it. The landlord should offer it to you in writing, detailing the price and conditions of sale, before offering it for sale elsewhere. If you don’t reply or don’t wish to buy, he has the right to sell it to whoever he likes. However, if he sells without offering it to you first, you have the right to have the sale invalidated and buy the property yourself at the same price.
Freehold premises at reasonable prices are a rare thing in Spain, so if you’re offered one at a good price, you should consider it seriously (and take professional legal advice). As the name suggests, freehold offers you more freedom, especially in terms of altering the property for your business needs. It could also give you your own letting or leasing potential and, of course, after the one-off payment to buy the premises, there’s no rent to pay. The process of buying a commercial property is exactly the same as buying a residential property.
This article is an extract from Making a Living in Spain. Click here to get a copy now.