Is it a good idea to buy unregistered property in Spain? Depends on many factors, though property registration and certification is a basic.
It is not uncommon for property purchasers in Spain to come across the situation where the property that they are interested in purchasing does not appear to be registered in the Land Registry. So, is it a good idea to buy property in Spain when you don’t have all of the expected certification?
Ultimately it depends on the specific situation – one scenario might be where the person they are buying from had previously acquired the land and then built the property themselves from scratch, and is still waiting for the registration process to be completed.
So, how can the purchasers be certain that they will acquire good title, without any possibility of having problems selling the property in the future?
New Build Notice Deed
In the first place, in order that the new build property may be added to the registry, the vendor of the property must draft a document before a Public Notary, called the ‘New Build Notice Deed’ (escritura de declaración de obra nueva).
To be legally protected, it is recommended that the buyer insists that the seller ensures that the actual situation is reflected in the Land Registry, ie that a property has been constructed on the land. Where the seller is an individual, it is additionally vital to arrange deeds for the new build construction in order for the purchaser to register the title in the Land Registry.
Finalised Project Certificate
Thus, the vendor, once they have obtained the ‘Finalised Project’ certificate, ought to visit the Public Notary with the requisite municipal licences to demonstrate that this new build construction conforms to the planning permission previously granted and, therefore, to the local urban planning Acts. They must also present a certificate issued by a registered architect that shall include the surface area and other relevant measurements of the construction.
In Mallorca (and by extension, Ibiza) it is also obligatory for the vendor to provide a ‘habitability certificate’ (cédula de habitabilidad) or ‘first occupation certificate’ (primera ocupación), whichever is relevant, as well as the Energy Certificate, the latter as a result of the applicable European Union directives.
Finally, the vendor is obliged to declare in the property deeds a price or value for the new build construction, which will effectively be the same as the sales price, with the former perhaps slightly lower. Once the new build construction has been processed by the Notary, the property deeds may be inscribed at the Land Registry.
In summary, the purchaser must be very sure that – even before signing a private agreement to purchase or option to purchase – that the new build construction has been registered at the Land Registry. If it hasn’t, there is every possibility that the operation could fail or be delayed interminably. By arranging a ‘basic land certificate’ or ‘nota simple’ of the property from the Land Registry we are able to verify the regulatory status of a new build construction.
With regard to the Notary and Registry costs relating to the filing and registration of the new construction, typically these are met by the vendor of the property. This point however, can be freely negotiated between the parties to the purchase therefore, it is highly recommended ensure that in the private purchase contract (ie from the get-go) those costs are explicitly assigned to the relevant party.
Finally, it is important to bear in mind that it is possible for the vendor to arrange for the issue of the property deeds relating to the new build construction simultaneously with the signing of the purchase deeds by the purchaser (of course in a separate document), if it is convenient to get everything arranged in advance, in writing, since until the Registry proceeds to inscribe the the new build deeds, it is not possible to register the new title to the property.