| Glossary |
ADMINISTRATION MANAGER:
Free professional who is legally authorised in negotiation or mortgage deed management, among other activities.
AENOR:
This is an organization recognised by the Ministry of Industry and Energy, whose objectives are to contribute to improving the quality of companies, products and services, and to protect the environment. These objectives are attained by the development of standardised operations and certification.
ALLOCATION OF FUNDS:
Sum of money paid in advance to a professional on account of the final settlement for the provision of his/her services.
ASSAY POWER:
The ability to execute a contract, from a legal point of view. |
BANCO DE ESPAÑA COMPLAINT SERVICE:
An organisation open to any client of any finance company, when they feel they have not received a sufficient answer to a complaint from the Company Complaints Department.
BANK MORTGAGE REFERENCE RATE:
A simple average of the normal interest rates of the main loan operators with a mortgage guarantee with a three year or more term. This is for purchasing a freehold property which has been started or renewed by the banks during the month stated in the reference.
BOND:
Contract by which a person (guarantor) personally guarantees or promises certain goods of their own to guarantee completion of another person’s obligation in front of a third party (creditor). In the case of the debtor defaulting the creditor can claim from the guarantor.
BORROWER:
Person who borrows money.
BRIDGING OFFER FOR MORTGAGE RELACEMENT BETWEEN FINANCE COMPANIES:
Document that the company involved in the mortgage replacement sends to the current lender with the new terms regarding the interest rates that will be applicable to the client after the change.
BRIDGING OFFER FOR NEW MORTGAGES:
Document which finance companies are obligated to give to the client, under the order of 5th May 1994 regarding mortgage clarity, which also fulfils all the financial conditions of the offered mortgage. The offer's validity is 10 days from its issue date. This bridging offer is obligatory for mortgages, especially those for properties with a capital equal to or less than 25,000,000 pesetas (150,253,02 euros). |
CALCULABLE AREA:
The developed area plus a proportional part of the porter’s lodge, stairs, roofs, garden, communal areas etc. which corresponds to an owner according to the co-property ratio.
CAPITAL GAINS:
Increase in value of a good for reasons other than work or productive activities carried out by the owner or possessor. This also includes the increase in value of land or buildings caused by work or investment made by the administration or by the owner.
CHARGES:
Limits on property control. These are detailed on public documents and are recorded in the Property Register, but do not always involve financial rights. Some examples of such charges are beneficial interest, conditions subsequent, ground rent etc.
COMMISSION:
Contract in which someone promises to do something on someone else’s behalf.
COMMISSION FOR NON PAYMENT CLAIM:
Fixed quantity to be paid in case of non-payment of a bill.
COMPREHENSIVE HOME INSURANCE:
Insurance that covers the possible damage that a property might suffer, both to the contents and dwelling.
CONDITION SUBSEQUENT:
Circumstance set out in a contract, which, if fulfilled, entails the cancellation of the main effects of the contract in question.
CONDOMINIUM DIVISION:
Documented act in public records, by which a building is divided into several private registered properties. Each one is assigned a co-ownership co-efficient or a share in the building as a whole. This is recorded in the Property Register.
CONSTITUTION OF A MORTGAGE LOAN:
This occurs when the corresponding deed is recorded in the Property Register.
CONTENTS:
All the goods within the property, in the dependent premises or in patios and gardens belonging to the property, apart from garages and communal areas. The contents include furniture, clothes, belongings, provisions, individual aerials, jewellery and electrical items. It does not include motor vehicles or motorcycles.
CONTRACT:
Juridical convention set out in a legal form, by means of which one or more people commit themselves to providing someone else with something, to performing an act or to not performing an act.
CONTRACT OF SALE:
Contract by which one of the parties makes a commitment to hand over a predetermined item and the other pays promises to pay a certain price for it, in money or equivalent.
CONTRACTOR:
Name given to a person who does work under contract.
COUNCIL HOUSING (V.P.O.):
Properties under official protection which comply with a set of conditions which benefit their buyers, whether it is financially or fiscally. On the other hand the buyers must also fulfil some established terms and conditions regarding property ownership, family income etc. in order to be able to take advantage of its benefits. |
DEDUCTIONS ON THE BILL:
In the Tax return, there are set amounts that are left over from payments fees for set circumstances which affect the personal aspects of the contributor; these are legally established.
DEED:
Public document that is signed and ratified by a solicitor. It is later added to the Property Register. The most important deeds are the contract of sale, the mortgage certificate and the declaration of new work.
DEED OF CONTRACT OF SALE:
Document executed in the presence of a solicitor by means of which something is transferred in exchange for a price.
DEED OF OWNERSHIP:
Public document by which ownership of a property is acquired, involving recording in the Property Register.
DEFINITIVE CLASSIFICATION DOCUMENT:
Certificate issued by the various property commissions in the corresponding autonomous.
DEPOSIT:
Advance amount arising from a contract of sale from the buyer to the seller. This payment on account underlines the firmness of the contract of sale. If the buyer decides not to buy, the deposit is lost and if it is the seller who decides not to go through with the sale, he/she must return the deposit, along with the same amount again should this have been agreed.
DEVELOPED AREA:
The squared area of the property including the width of the walls, and sometimes patios and ventilation conduits.communities, which contains details of Council Properties and their maximum sale and leasing prices.
DIFFERENTIAL:
Percentage that is added to the reference rate in order to obtain a new interest rate to apply at every revision.
DUTIES:
Commission scales, brokerage or fees that members of a professional body charge their clients. |
EARLY CANCELLATION:
Total, early repayment of a loan. This is normally subject to commission, which varies depending on the loan’s interest rate. In general, commission is higher for a fixed interest rate than a variable interest rate.
EARLY SETTLEMENT:
This is the total or partial repayment of credit before the set date. Normally, this is subject to commission, which varies according to the interest rate: commission is higher when the interest rate is fixed than when it is variable.
ESTATE AGENT:
A professional office, whose principal activity is to mediate in the sale and letting of all types of properties.
EURIBOR:
Average interest rate at which the largest European finance companies in the monetary market lend money.
EURIBOR REFERENCE RATE:
Measurement of interbank rate for all the central banks of the European Union which is applied as a reference rate for credit and loan deals.
EXECUTION PLAN:
Stage of work which develops the basic plan, with the complete determination of details and specifications regarding materials, elements, construction systems and equipment. This stage may be totally finished before work starts or can be partially finished and then completed while work is being carried out. Its statutory content is sufficient to obtain the licence needed to start work.
EXECUTION PROCEDURE:
The way in which the finance company can cash the unpaid debt if the borrower does not pay. |
FEES FOR WHICH THE BORROWER IS RESPONSIBLE WITH REGARD TO A MORTGAGE LOAN:
Amounts which must be paid as a consequence of fulfilling set necessary procedures such as taxation, public deed entry, tax payments etc.
FILE A DOCUMENT:
The incorporation of a private document into a solicitor’s files.
FINANCING COMPANY:
Bank, Savings Bank or any other company that works in the financial sector.
FIRE INSURANCE:
Obligatory insurance for mortgaged properties. Its aim is to insure against the risks that may arise in the mortgaged house during the mortgage term.
FIXED INTEREST RATE:
Interest rate that does not vary during the length of the operation.
FRENCH REPAYMENT SYSTEM:
System which consists of repaying a loan in such a way that payments made in each period are constant. The periods may be annual, bi-annual, quarterly or monthly. Given that the fee is fixed and is made up of the original loan and interest, the first payments primarily pay off the interest due to the fact that the debt is greater, while with later payments, the largest amount will go towards repayment of capital. |
GRANTS:
Amounts paid by the State to buyers of Council Houses, as part payment for them.
GUARANTEE:
Action of guaranteeing that a good being sold will work well during a set time, and also of its free repair in case of breakdown. |
There are no terms beginning with the letter H
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INTEREST:
Percentage applicable to the remaining capital of a loan to calculate interest to be paid by the borrower which makes up part of the charges.
INTEREST FOR DELAY:
Sums paid by the borrower for the time that payment is delayed on a payable debt. It is always higher than normal interest
INTEREST RATE:
The percentage which is applied to the remaining capital of a loan in order to calculate the interest to be paid by the borrower and which forms part of the payment.
INTERNATIONAL ISO-9002 STANDARD:
Quality control system which serves as a model to ensure production, installation and after sales service quality of a specific service or product. |
JOINT INSTITUTIONS’ MORTGAGE LOAN REFERENCE RATES:
A simple average of the normal interest rates of the main loan operators with a mortgage guarantee with a three year or more term. This is for purchasing a freehold property which has been started or renewed by banks, savings banks and mortgage companies during the month that the reference involves.
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There are no terms beginning with the letter K
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LAND REGISTRY:
Ground rent and statistical register of urban and rural property.
LAND VALUE:
Value which appears in the land registry for a particular property.
LAW REGARDING GENERAL LETTING CONDITIONS:
Law 7/98 of 13/4/98 published in the BOE of 14/4/98 whose aim is to protect the legitimate interests of consumers and users in relation to signed contractual documents.
LAW REGULATING THE MORTGAGE MARKET:
Law 2/81 of 25/3/81 published in the BOE of 15/4/81 which establishes a structure for financing set activities through the issuing of mortgages by finance companies.
LEGAL CLAIMS:
Demand or request made by one or more people to one or more other people through the courts and tribunals.
LEGAL NOTIFICATION:
Communication from a judge or court to the parties taking part in a process.
LEGAL REQUIREMENT:
Places on a person the responsibility of carrying out a specific declaration of will or other such action.
LETTING:
There are various types of letting, depending on what is involved: goods, works or services. In the letting of goods, one of the parties (the lessor) is obliged to give the other party (the lessee) possession or use of goods for a set time and at a fixed price. In the letting of work or services, one of the parties (the lessor) is obligated to carry out work or render the other party (the lessee) a service for a set price.
LIFE INSURANCE:
Life insurance which guarantees that in case of death, and optionally in case of permanent disability of the insuree, the loan will be cancelled.
LOCAL LAW SUBMISSION:
The competence of the tribunal which hears proceedings is covered by the law. The legal rules which regulate it must be applied but there may be exceptions, one of which is ‘local law submission’. It consists of the contracting parties showing their intentions in the event of disagreements between them that a specific legal body be competent. In any event, the submission can only be made in respect of territorial competence - hierarchy is not sufficient - and in respect of legal proceedings.
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MARRIAGE CONTRACT:
A contract that takes places between spouses, which regulates goods within a marriage.
MIBOR REFERENCE RATE:
Simple average of the daily interest rates involving transactions of a one-year term in the interbank deposit market during the working days of the corresponding financial month. From these those clearly non-normal for the normal market rates are excluded. During the working days when no one year transactions have taken place in the Spanish interbank deposit market, it will be taken from the average monthly rate for EURIBOR.
It lost its official function as the recommended rate by the Banco de España for the mortgage market for deals signed on 31st December 1999.
MONETARY MARKET:
The one in which both money and financial assets are interchangeable.
MORTGAGE:
True right of guarantee of an obligation, established on properties, with the goods remaining in the possession of their owners. The creditor can request the public sale of these goods and can recover their price if the obligation guaranteed is not fulfilled.
MORTGAGE:
Loan which, besides having the borrower’s personal guarantee, also carries the guarantee of a house, property or good. Together with the repayment of the borrowed capital, it also guarantees payment of the ordinary interest, deferred interest, costs and possible costs attributed to legal claims for non-payment. It is formalised in a public deed which is entered in the Property Register.
MORTGAGE ASSESSMENT AND FORMALISATION COSTS:
Costs incurred by the finance company when a mortgage is drawn up in order to put the mortgage into operation, which the client/borrower will pay back.
MORTGAGE CANCELLATION DEED:
Document executed in the presence of a solicitor, by which a mortgage is terminated as having completed the requirements so that it can be entered into the Property Register.
MORTGAGE DEED DRAFT:
Written project which contains the agreements reached by the parties of a loan.
MORTGAGE GUARANTEE:
Insurance affecting one or more properties on completion of certain obligations.
MORTGAGE LEGISLATION:
Collection of rules which regulate the acts and contracts relating to ownership and other true fees on property goods via the Property Register.
MORTGAGE MARKET:
The one where mortgages are issued guaranteed with mortgage loans.
MORTGAGE RESPONSIBILITY:
This is the maximum figure for each property mortgaged. It often includes the initial loan capital plus a quantity linked to ordinary interest, another to deferred interest and another to costs and expenditure. |
NEW WORK:
Public document which declares the existence of a building or the construction of a new one. Its inscription in the Property Register supposes that a registered piece of real estate has been created through deletion of previous real estate.
NOMINAL INTEREST RATE:
Interest on an operation which is expressed as a percentage and is for a set payment period.
NOTARIAL DOCUMENT:
All documents controlled by a solicitor. |
OFFICIAL PROPERTY PLAN:
Plan developed by the State to aid the purchase or restoration of specific properties for those people who fulfil specific economic and family conditions.
OFFICIAL PROPERTY PLAN:
Plan developed by the State to aid the purchase or restoration of specific properties for those people who fulfil specific economic and family conditions.
OPENING COMMISSION:
A percentage of the borrowed capital or the credit limit, which can only be subscribed to once. There is normally an agreed minimum value.
ORDINARY INTEREST:
Sums received by a lender for the time that a quantity of money is borrowed.
OWNER:
Person who has the ownership of something, especially of property.
OWNERS’ ASSOCIATION:
Committee of joint owners of a building divided into flats. |
PAYMENT:
Each of the monthly, quarterly or half-yearly payments which are made during a loan’s lifetime. During the period where only interest is paid off, the payments consist of interest alone. However, if the loan is in its repayment period, the payments include interest and repayment of the original capital.
PENDING CAPITAL:
The part of a loan or credit that is outstanding.
PERIOD FREE FROM DEBT PAYMENT:
The period of a loan during which only interest is paid, rather than the initial amount being paid off. The maximum duration of such a period is two years.
PERSONAL GUARANTE:
Net worth of debtor made up of all goods, present and future, and it also guarantees completion of any obligation. This guarantee may also be made by a third party.
PRINCIPAL:
Value of a loan or credit. Also known as capital.
PRIVATE DOCUMENT:
In relation to a legal, commercial or administrative act, etc., this is a document that notes the will of the person who executes it. For example, in the case of a contract of sale, it notes the desire of the parties involved to transfer ownership of a piece of property.
PROPERTY:
Goods such as land, buildings, constructions and mines, and also the décor, artefacts or rights that the law does not consider furniture.
PROPERTY GOODS TAX (IBI):
Local tax levied on the ownership of a piece of real estate. This is paid yearly and is calculated on a percentage applicable to the land.
PROPERTY REGISTRATION COSTS:
Costs arising from entering the mortgage in the Property Register. These are calculated according to the mortgage and a legally established percentage rate.
PROPERTY REGISTRY:
Public office which holds all the official books recording any circumstances which may affect the properties in the demarcation corresponding to said Register.
PROPERTY TRANSFER TAX:
All property sales, whether pre-owned or new, are subject to this tax. It is currently in the region of 6% but some autonomous communities have their own rates and conditions.
PUBLIC AUCTION:
In the case of the execution of a mortgage, sale or disposal of goods which are awarded to the highest bidder out of those who bid. It can be legal (by court order) or extralegal (in the presence of a solicitor.)
PUBLIC DOCUMENT:
Private document authorised by a solicitor, enabling it to be recorded in the property register. It is commonly known as a deed. The most usual public documents are those related to mortgages, sales contracts, new construction projects, flats etc.
PUBLIC FAITH:
Conformity at administrative level and to all effects of truthfulness regarding the contents of a document.
PUPLIC DEBT REFERENCE RATE:
Average of the values issued by the State, coming from account notes and with an expiry date between two and six years.
PURCHASE DEED:
The document by virtue of which the property now being transferred was originally purchased by the seller.
PURCHASE OPTION:
Through payment of a set quantity of money between the seller and buyer, the latter acquires the right to buy a property under set conditions and during a pre-determined time. If they finally do not buy the property this money is generally lost. |
There are no terms beginning with the letter Q
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RATE:
The frequency at which the interest rate on variable rate loans changes. This periodicity normally varies between one and three years.
RATIFY:
Validate or confirm something as good or acceptable.
REAL ESTATE:
Country or town property which can be entered into the Property Register.
REFERENCE RATE:
Mortgage or financial market rate which is used for revisions of variable rate loans’ interest rates.
REGISTER CHECKING:
This is the early extinction of a loan for whatever reason established by law or in the corresponding contract.
REGISTERED CANCELLATION:
Cancellation of a mortgage must appear in the Property Register. For this purpose, a cancellation deed must be signed and tax on Documented Legal Acts must be paid. This deed is then entered into the Register, thus cancelling the mortgage.
REGISTERED CERTIFICATE:
Document defined and legitimated by the Property Register, in which the duty status of a property is explained.
RENEWAL:
Substitution of an obligation for a later one which supersedes the first.
REPAYMENT CAPITAL:
The part of a loan or credit already paid.
REPLACEMENT COMISSION:
Percentage applicable to outstanding capital in the case of the borrower changing credit company.
REPLACEMENT OR CESSATION AGREEMENTS:
This has special relevance for the borrower given that if you want to sell a piece of real estate it is not essential for you to cancel your loan, but that the buyer can take it over after discounting the amount remaining from the sale price. To do this the finance company must give their consent. |
SAVINGS BANK MORTGAGE RATE:
A simple average of the normal interest rates of the main loan operators with a mortgage guarantee with a three-year or more term. This is for purchasing a freehold properties which has been started or renewed by all the savings banks during the month stated in the reference.
SETTLEABLE BOND:
This is the tax base minus any legally established reductions (e.g. pension plan payments or housing benefits).
SETTLEMENT:
Payment or discharge of a debt. Total or partial loan repayment.
SITUATION OF REGISTER:
State or current description of the piece of real estate in the Property Register, including its duties, taxes, limitations etc.
SOLICITOR:
Civil servant who is authorised by law to give reliable confidence in contracts, testimonies and other extralegal activities.
SPANISH CONFEDERATION OF SAVINGS BANK RATE:
This is the average, rounded to eighths, of personal loans. It is calculated monthly for terms of between a year and three years, and the mathematical measurement eliminates the extreme values coming from loans with mortgage guarantees from free-hold properties calculated monthly for terms of three years or more.
STANDARD FORM COMMISSION:
General or standardised contracts drawn up on the behalf of the service provider or seller, to be signed and taken up by the buyer.
STANDARD FORM CONTRACT:
General or standard contract drawn up on behalf of the seller or service provider, to be signed and taken up by the buyer.
SUBROGATION:
Action by which the buyer of a property assumes the duties and responsibilities of another person due to a previously issued mortgage on a property. It is a very common practice when buying a new house directly from a promoter who has obtained a mortgage to finance its construction. When buying the property, the buyer has the option of taking over the mortgage responsibilities, after deducting the value of the loan from the sale price. This is shown in the deed of sale. The legal fact of substitution of the mortgage creditor is also known as subrogation.
SUBSIDIES:
Sums paid by the State to Finance Companies as part of the interest payments on loans aimed at financing the buying of Council Houses.
SURROUNDINGS:
Group of main constructions and adjoining premises, with permanent facilities and other facilities needed for the building’s solidity, décor, hygiene or comfort. |
TAX:
Amount requested of individuals by the authorities, definitive and without return with the aim of covering public spending.
TAX BASE:
A taxable amount, expressed in terms of money or goods, which is used as a starting point to calculate the amount of tax that the contributor must pay.
TAX COMPANY:
Legally authorised company to value maximum and minimum prices of a good by means of expert evaluation (by a specialised person.)
TAX CONSULTANT:
An free professional who advises physical or legal persons on taxes and tax matters.
TAX ON DOCUMENTED LEGAL ACTS (IAJD):
Tax which is applicable to acts formalised in public documents. In the case of a mortgage, it is calculated on the mortgage amount which is 1.5 times the amount of the loan capital. This tax may vary according to the area.
TAX ON THE INCREASED VALUE OF THE PLOT:
Local tax which assesses the increase in the value of the plot. This is only applicable in the contract of sale. The law states that it is the seller who pays this tax. Any agreements otherwise must be shown in the public contract of sale deed. The value of this tax depends on the status of the property and the amount of time since the last liquidation. This tax used to be known as the discretionary local capital gains tax.
TRANSPARENCY:
Ministerial Order which came into force on 11/8/94, which regulates specific questions about contracts referring to mortgage transactions with property guarantees, when the borrower is a physical person and the value of the loan is 25,000,000 pesetas (150,253,03 euros) or less.
This ministry order and the circular of 5/94 from the Banco de España which developed it, aim to protect the interests of the finance companies’ clients, by providing the appropriate information and protection of people taking out mortgages.
TREASURY BILLS:
A State debt which matures in less than 18 months, issued at discount and to the bearer. |
USEFUL AREA:
The squared area including balconies, but not walls. The roofs and patios are indicated separately, although they are sometimes included as useful area.
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VALUATION:
The value of a property certified by the companies established for this aim. This certificate does not only state the true value of the property but also serves as a reference in order to obtain the necessary finance.
VALUE ADDED TAX (VAT):
Indirect tax imposed the value of the contract of sale. It is currently set at 7%.
VARIABLE INTEREST RATE:
Interest rate that changes throughout the length of the operation, according to a reference.
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WORKS PERMIT:
Local permit necessary to start work or architectural modifications on a building.
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There are no terms beginning with the letter X
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YEARLY EQUIVALENT RATE (T.A.E.):
The result of a financial/mathematical formula supervised by the Banco de España. It serves to compare the real cost against the various offers. Particularly in cases of variable interest rates, the TAE is calculated supposing that the successive interest will be those coming from the first revision, counted according to the last published reference rate value.
YIELD ON PERSONAL PROPERTY:
In the Tax Return, a taxpayer’s yield arising from ownership or letting of their property |
There are no terms beginning with the letter Z |
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