Buying the property or buying the company: the decision taken before negotiating the price
Nextica Law & Tax structures the acquisition of real estate assets and portfolios: choosing between buying the property or buying the company that holds it, with what each route carries —historic exposure when buying shares, transfer cost when buying the asset, and the anti-avoidance rule of art. 314 of the consolidated Securities Market Act where what is transferred are securities concealing real estate—; land registry, planning and tenancy due diligence; and translating each finding into a price reduction, a seller's warranty or a condition precedent.
Buying the company saves money at signing and brings with it everything the seller did for years.
What's included
1. Deciding beforehand between buying the property and buying the company that holds it, with the tax and liability consequences of each route put into numbers.
3. Land registry and cadastral review
title, charges, easements, area discrepancies and whether what is registered matches what is built.
4. Planning verification
land classification, buildable area used and remaining, licences granted and open enforcement files.
5. Reviewing the leases that come with the asset
rents, terms, pre-emption rights and deposited guarantees.
6. Structuring the price with holdbacks tied to planning and tax matters, and with the seller's warranties alive beyond completion.
7. Completion coordinated between notary, financing and registry, and execution of what was agreed for after signing.
BUYING THE COMPANY IS NOT BUYING THE PROPERTY
And the deal structured to save tax is exactly the one the anti-avoidance rule looks at first.
Acquiring shares in a company whose assets are mainly real estate
the rule provides that such transfers may be taxed as if the properties themselves were transferred where the aim is to avoid the tax due on them. The analysis is done before structuring the deal, not after the audit.
art. 314 of the consolidated Securities Market ActBuying without comparing what is registered against what is built
an area discrepancy, undeclared works and an unregistered easement do not prevent signing, but they do prevent financing, subdividing or selling later, and they surface precisely when liquidity is needed.
art. 199 of the Mortgage ActTreating the planning position as reviewed because the licence is in hand
what decides value is the buildable area that remains and whether an enforcement file is open, and neither of those appears in the deed.
Decret legislatiu 1/2010, consolidated Catalan Urban Planning ActFrequently asked questions
Should I buy the property or the company?
They are two different deals with opposite risks. Buying the property acquires a specific thing with no history attached: what there is are registered charges, planning status and tenancies, all verifiable. Buying the company also acquires its entire past —tax, employment, contractual and litigation— even though the asset is the same building. So the choice is not decided by transfer cost alone: it is decided by how much history the company has, whether that history can genuinely be audited, and what warranties the seller is willing to give about what cannot be seen.
Does buying the company avoid the property transfer tax?
Not automatically, and relying on that is one of the sector's most expensive mistakes. Art. 314 of the consolidated Securities Market Act contains an anti-avoidance rule: transfers of securities are exempt as a general rule, but stop being so where the transfer is used to avoid the tax that would have applied to the transfer of the underlying real estate. The rule sets out situations in which that intention is presumed, and the presumption admits evidence to the contrary. In practice, the deal is structured for genuine economic reasons and those are documented, not the other way round.
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