Among foreign property buyers but particularly among the British, is the habit of granting a lawyer power of attorney (Poder) in order to be able to deal with the purchase of their property so as to involve themselves in as little inconvenience as possible. One advantage is that the need to be present at the Notary's office when the deeds are signed is obviated, saving the expense and inconvenience of traveling to Spain.
In giving your lawyer the power to act in your name in a variety of ways, you need to understand just what it is that you are doing. You also need to understand that one of the first principles of Spanish law is that it requires you to be responsible and aware of what you do. In other words, anything your lawyer does in your name under a power of attorney you have granted, you are expected to know about.
In many cases, power of attorney is something suggested by estate agents. This keeps from the client any indication that things may not be going well with the purchase of their property, with the lawyer acting for them quite content to leave things to turn out as best they can. With most lawyers not replying to emails, telephone calls or faxes, the average client soon tires of trying to find out the situation with their property and settles for waiting for as long as it takes. This is quite effective in reducing requests for contracts to be cancelled for one reason or another.
One of the reasons why power of attorney is popular concerns the habit of under declaring the value of property so as to evade tax on the undeclared amount. Clients are told that this is a normal event - not to be concerned and it will save them money. In fact, under declaration is something which should not be carried out and today pressure from Brussels in an attempt to see and end to tax evasion is rapidly bringing this habit to an end.
When and where under declaration happened, the element of black money arising from the transaction
was collected by the lawyer from the clients account and passed to the builder. The client was effectively evading tax at his own risk in order to be able to provide tax free money for his builder, who in turn often paid the estate agencies commissions in cash - hence the reason for the popularity of a power of attorney. As an exercise it was dreadfully flawed in that sooner or later the revenue seemed to catch up with the evaders who would be made to make good the revenue's losses. There are also other problems associated with under declaration of the purchase price but these are covered elsewhere in this web site.
There have been many cases of lawyers abusing the power of attorney granted by their clients but not many where the client has obtained satisfaction or redress of grievance through the legal process. As a principle, we have no objection to the power of attorney but it should only be granted for specifically named reasons. Further, anyone granting a power of attorney should ask the Notary to confirm to him exactly what the power of attorney is for. If it's not for what you were led to believe it was for, cancel it.
Consider the case of a UK businessman who purchased 45,000 square metres of land upon which he wished to build a dozen or so houses. The land, found by his lawyer cost in excess of 400,000 Euros and he was told that he could build on this land following submission of the appropriate planning applications.
A power of attorney was given to the lawyer for the purchase and the money transferred to Spain. As the story unfolded it was found that no searches had been carried out and that there were others involved in the ownership making the question of title unclear. Further, the land which the lawyer claimed could be built upon proved to be rustic, something the lawyer should have informed the client of immediately but did not do so.
Despite the fact that the client had been briefed to instruct his lawyer in great detail in regard to what he expected by way of service and he had done this, the fact remained that the power he had granted to the lawyer had given him the right to do almost anything in his name regardless of whether or not it was legal. In truth, the lawyer had produced a power of attorney for signing which was far from appropriate but it had been signed and under Spanish law that was that.
With such a wide ranging power of attorney, under Spanish law misrepresentation is almost impossible to prove. If common sense were allowed to play a part the situation could never exist. The more we learn about Spanish law, the more we realise just how little we do know and how unfair and sterile it seems when dealing with matters which simply could not arise in the UK and other countries with similar legal systems. This is no criticism of Spain or its people - just a warning to be aware that Spanish law does not provide the protection or safeguards which you may be used to in your own country. Spain is a wonderful country in which to live but parts of it are different and you need to know about them.
Most lawyers will only use the appropriate power of attorney which is adequate for purchasing a property but as the average person will not be able to differentiate between that which is appropriate and that which should be avoided, it follows that it is best not to grant a power of attorney unless you know exactly what you are doing. Further, before you visit a lawyer you should put in writing exactly what it is that you require him to do, including taking all steps necessary to protect your interests. To be absolutely effective, it should be written in Spanish!