Buying in Spain: how do you check a house is legal?

In the Netherlands you buy a house with your head and your heart. You find something on Funda, arrange a viewing, have a structural survey done and ring your mortgage adviser. Then the agent does their job, and once the sale is agreed the notary takes over. The notary checks ownership, debts and the zoning plan, and makes sure you can sign with peace of mind. You simply fall in love, and usually you have to bid well over the asking price before you can get your hands on the house. We do not find that bidding process very transparent. But still… in the Netherlands everything is so transparent and clear. You are really going to appreciate that.

Everyone has their role. Everything is neatly registered. And as a buyer you can actually look up a great deal yourself: the land registry, the zoning plan, the soil register. If you want to, you can put together an almost complete legal and structural picture of a property before you have even rung an agent.

And in Spain? A cowboy world. Property here. There is a lot of money to be made. Serving two masters at once, no problem at all here. An online move dossier? Never heard of it. A ‘part B’ questionnaire? Sorry, what? Is the gardener the estate agent as well? Could well be…

The reservation contract

Before we bought our first house we got a warning from friends of my mum and dad: ‘Careful, you keep paying reservation fees and then it turns out nothing adds up, and the amount is always too small to really kick up a fuss about’. They warned us about all the skeletons that come out of the cupboard. Half of it was illegal. You could not get to a house any more because the road was not legal… That kind of nonsense. And they warned us about agents who knew nothing about houses. Who only wanted their commission. For us it was clear: we had it written into the reservation contract that if any skeletons turned up, we would get our money back.

Sellers and the selling agent often push hard for the reservation contract. It takes the property off the market. In the Netherlands you do that simply by signing the purchase agreement, with its three days’ cooling-off period. But in Spain there is essentially no such thing as a subject-to-finance clause. So you sign the reservation contract and usually pay €5,000 or 1% of the purchase price. From that moment on you can start arranging everything. You sign the contract, because of course you do not want someone else buying the house.

We understand that. You feel that pressure quickly when you are taking in a lot of impressions in a short space of time. But let us go back to the beginning for a moment. Because in Spain a reservation contract is not without obligation. It is not an ‘intention to buy’ or a friendly handshake.

When you sign the reservation contract you pay a deposit, usually between €3,000 and €6,000, or 1%. If you pull out later, for whatever reason, that money is gone. Unless you have something else written into the contract.

There are even agents who make you pay this amount the moment you put in an offer. Your proposal then comes combined with a reservation contract. If that is the case and there are other buyers circling, you will have to weigh it up carefully. Do you wait for the legality check, or do you run the risk of losing the money? But is the money really gone? You can of course include a condition that you get your money back if the legality check shows there are serious risks attached to the property. We are happy to advise you on this.

In the Netherlands the notary checks, in Spain the notary registers

In the Netherlands the notary is the one who goes over everything one more time: is the ownership correct? Are there mortgages? Was the house built legally? Are there existing easements, overdue taxes, or other peculiarities?

In Spain that is not the notary’s role. Here the notary is mainly an administrative party. He or she draws up the deed, confirms the identity of buyer and seller, and registers the transfer. We still find this remarkable. To me it still feels like the gentleman (or lady, though I have yet to see one) who reads out a deed in poor English in a monotone voice, for a lot of money.

The notary does not actively check whether the property was built legally, whether all the permits are in place or whether there are debts. He only registers that you are the new owner.

You, or your lawyer, have to find that out yourselves. And preferably before you sign anything at all. Because you are responsible for the property. Including the debts and the claims. You really do want this checked. It is important to put in the contract that any debts and claims are deducted from the purchase price.

In the Netherlands you can find everything online. In Spain you have to have it looked up

Say you see a nice property in the Netherlands. You look up the land registry number, check the zoning plan to see whether the plot is agricultural or has a residential designation, and check the soil register to see whether an oil tank was ever buried there. Within half an hour you have a decent file. These days you can even request a fair amount of information about the most recent transaction data. And everything currently on the market is on Funda. Nice and clear. Viewing a property? Then you get a proper move.nl file with a ‘part B’ questionnaire, a list of fixtures and fittings and, for a flat, even the paperwork from the owners’ association. Usually you get the municipal tax bill as well. Before you have even been to look, you can have researched everything, and it is only a question of how it feels and outsmarting the competition.

In Spain? Forget it.

The catastro, the property register, the town hall, the tax office, all separate bodies. And often you have to go to an office in person. Many documents are not public. And when they are, they are not online. A cadastral map? A zoning plan? Good luck with that. We can at least now produce decent little reports with data on comparable properties

What are the risks of a house that is not legal or does not fit the current zoning plan?

The lawyer should be checking everything. But whether it is legal as it stands now, and stays that way? That is often forgotten. The zoning plan is not always checked. A lawyer often costs 1% of the purchase price. And if it turns out there are serious risks attached to a house? Then that money is gone, plus the cost of the reservation. We recommend having a legality check done before you sign the reservation contract. Once you know the risks, the lawyer can get on with the rest of the investigation. That way you do not keep losing thousands of euros and you have a sort of quick pre-check. We will explain how to request this. So what do they check?

• Was the property built according to the rules of the zoning plan? So: does the number of square metres add up? Is the building volume permitted? Is the house not too close to the boundary?
• Are the outbuildings, the pool and the terraces legal? Many properties have been ‘extended’ over the years without a permit. Sometimes that is not a problem. Sometimes it is. You need to know.
• May the property be rebuilt after fire, flooding or an earthquake? Not every property may be rebuilt. That depends on the zoning plan. Your insurer may then not pay out. Think back to the floods of last year and you know how important this is.
• Is living there permitted under the legal designation? An occupancy licence only says something about the minimum requirements for habitation (ventilation, sanitation). But it is the zoning plan that determines whether you may live there permanently.
• Are there fines, obligations or risks attached to earlier building work? If a previous owner built without a permit, you as the buyer can be held responsible for legalising it, or even for demolition.

So check everything first, and only then reserve.

Instead of handing €5,000 straight to the agent and then just hoping everything adds up, we arrange the legality check first. Within three working days you know where you stand. After that you can sit back with a glass of cava on the beach and enjoy it.

Is everything in order? Great. Then we can carry on. Are there risks attached? Then you can decide in good time whether you still want to go ahead or would be better off looking a bit further.

And what exactly does that lawyer and the architect check?

1. Checking ownership and the authority to sell

• What is checked? Whether the seller really is the owner, and whether he or she is authorised to sell.
• Document: Nota Simple (extract from the property register) Escritura de Compraventa (title deed)

2. Outstanding debts and charges

• What is checked? Whether there are mortgages, seizures or other debts resting on the property.
• Documents: Mortgage entry in the property register Proof of payment of: IBI (property tax) Water, electricity Municipal taxes Community fees (for flats or urbanisations)

3. Legality of the property and its outbuildings

• What is checked? Whether the property and all the outbuildings (such as pools, terraces, garages, extensions) were built and registered legally.
• Documents: Certificado catastral (cadastral certificate) Building permits Licencia de primera o segunda ocupación (habitation licence) Floor plans and architect’s drawings Possibly: certificates of regularisation or legalisation

4. Zoning plan and rights of use

• What is checked? Whether the property may be lived in permanently and what the official designation of the plot is (residential, agricultural, tourist, and so on). This is not always done by an architect, and it really does matter. A good lawyer checks this.
• Documents: Certificado urbanístico (zoning statement) Information from the town hall about rebuilding options and the granting of permits

5. Checking for outstanding fines or legal proceedings

• What is checked? Whether there are legal proceedings under way against the property or the owner, for example for illegal building work or overdue payments.
• Documents: Information from the town hall Data from the property register Any court documents

6. Checking the seller’s legal and tax status

• What is checked? Whether the seller has no outstanding tax debts and is not involved in legal claims.
• Documents: Seller’s proof of identity NIE number Tax certificate

7. Preparing and checking the purchase contracts

• What is done? The lawyer draws up the preliminary purchase contract (Contrato de Arras) or checks it thoroughly, including all the clauses.
• If everything is agreed, he or she also prepares the deed of transfer (Escritura de Compraventa), together with the notary.

8. Support at the notary and after completion

• What is done? The lawyer guides you through the signing at the notary. Arranges registration of the property at the property register (Registro de la Propiedad). Makes sure all the utilities are transferred. Keeps an eye on the payment of taxes (ITP or VAT, plus municipal charges such as plusvalía).

Why does this matter so much?

Because in Spain the notary does not have the same checking role as in the Netherlands. So without a lawyer you are taking a serious risk. Things like illegal building work, unclear ownership situations or outstanding debts can quite easily land on your plate. We as agents do not do that in Spain either. We help you find the right people, negotiate, find the gems, can help you with our network and give you insight into what properties are worth, and we look with you at the possibilities and at the structural condition. We give you an idea of what any renovation would cost and we ask the critical questions, so that you find the perfect house.

A good lawyer is your legal safety net. And preferably a lawyer who:

• Is independent of the selling party,
• Has experience with property transactions,
• Knows the local rules,
• And ideally speaks Dutch or English, so that you understand everything.

The Netherlands vs. Spain

But hang on, if that lawyer checks everything, why do I need an agent?

Good question. Because if a lawyer checks everything anyway, why would you also bring in a buying agent? Is it worth anything to you? And what does it cost?

We are there before you get to the lawyer. We try to make sure that all the lawyer still has to do is check that everything really does add up. We do not want you spending thousands of euros over and over on reservation contracts and lawyers. And besides, who should you go to? You can make use of our network. And not least, we help you make a good choice of house.

The lawyer only comes into the picture once you have already chosen. We help you make that choice well.

We look over your shoulder. We ask the questions you might not have thought of yet. We walk through properties with you, feel the sun on the terrace (where does the sun sit in winter?), smell whether there is damp in the walls, and tell you honestly whether it is smart to go ahead, or not.

We are your sparring partner, your filter, your level-headed view of a sometimes opaque market. We are that expert friend standing at your side. We literally let you taste and feel the area too. We know how the game is played, what to look out for and how to spot an opportunity. And better still, the seller pays us. So it does not even cost you anything. So what is stopping you from going out to look for your dream home with us?

Great! We would love to meet you, and then we will grill you thoroughly so we know what you are really looking for. Not slick talk about returns and success stories. Just an honest search for a lovely house or a solid investment (with calculations, including a worst-case scenario). Sharing knowledge and honest, genuine service matter to us, because we are bound to run into each other a lot here on the Costa Blanca.