The Licence of First Occupation Explained

Raymundo Larraín Nesbitt - Lawbird Legal Services
29th of January 2009

In short, a Licence of First Occupation is a licence issued by the Town Hall which is granted once the building works have been completed, and allows purchasers to dwell in a property. If a long time has passed since the building works ended and the developer has failed to obtain this licence, it may be a sign of serious underlying legal problems. Although it is not illegal to complete at the notary without a Licence of First Occupation, not having one will prevent you from having access to water and electricity supplies for the property. It will also mean that no bank will be willing to grant you a mortgage, other than the developers’. It is always recommendable to complete with a valid Licence of First Occupation in place; however, there are special circumstances in which it may be advisable to complete without one, specifically if there’s no bank guarantee securing your down payments and the developer is in risk of going into administration, provided that there’s no ruling affecting the building licence due to planning issues.

Over the last years we have read in the press horror stories on those completing on off-plan properties which had not attained the necessary Licence of First Occupation and all the woes they are now facing as a result of it. But what really is a Licence of First Occupation and what importance does it have for a purchaser? In this article, structured as a Frequently Asked Questions list, we strive to deliver some insight onto this matter in a very simplified manner.

What is a Licence of First Occupation?

The Licence of First Occupation (also known as Habitation Licence or Certificate of Habitation, in Spanish Licencia de Primera Ocupación orCédula de Habitabilidad) is an Administrative licence granted by the Town Hall at the town/city in which the property is located, and enables the owner to dwell in it legally. The developer is responsible for applying for this licence once the Certificate of End of Construction has been issued. Each newly built dwelling will have an individual License of First Occupation (LFO) granted albeit in large developments the LFO are normally grouped for economies of scale. Resale properties will already have a LFO granted. In this article we will be referring mostly to off-plan properties.

What Does a Licence of First Occupation Document Look Like?

A Licence of First Occupancy document is basically a document consisting of one or more pages issued by the Town Hall and addressed to the developer who applied for the licence which states that the Licence of First Occupation has been granted for the property or group of properties in the application.

It normally has the following elements:

1. Logo of the Town Hall issuing the licence
2. Stamp with the date in which the document is issued and an accessions register number.
3. File Number
4. Plot of land planning reference
5. Developer’s name
6. Number and type of properties which are being granted licence
7. Date on which the licence was granted
8. Name and signature of the Town Hall secretary who grants the Licence and Town Hall’s Stamp

Figure 1: Anatomy of a Licence of First Occupation

Why is a First Occupancy Licence Needed?

The LFO is important for two reasons:

1. Its granting means the developer has built the dwelling complying fully with the original Town Hall’s Building Licence (BL) as well as complying with all Planning laws. The inspection to grant this Licence is carried out by Town Hall’s chartered technicians who certify that the dwelling complies fully with Health, Access, Security, Planning and Construction Laws and is deemed as apt for human habitation.
2. It is also required by the property’s owner to have access to the official utilities (water, electricity, gas and telecommunications). Spanish law requires the granting of the LFO to hook up the dwelling to the supply grid. Although in some parts of Spain there have been cases of supply companies waiving this and connecting you without the said licence. In such cases the only requirement was showing the application of having requested the LFO from the Town Hall.

Banks normally require the LFO before they consider granting a mortgage loan against the property. The only exception would be the developer’s bank which has already underwritten the whole development and is able to offer a mortgage loan without it because they are eager to spread the developer’s default risk. Also, taking on the mortgage offered by the developer’s bank has many advantages as it reduces the legal set-up expenses borne by the prospective purchaser.

How Long Does a LFO Take to be Granted?

This will depend on various factors. If the Town Hall’s technicians detect irregularities in the development or deviations from the original building licence then the Habitation Licence will be delayed until the developer fixes these problems. In a smaller town you can reasonably expect the LFO to be issued within a few months of the developer having submitted the Certificate of End of Construction providing the development has no major irregularities. In large cities the granting may be pulled back even eight months or more due to the work overload of the Town Hall.

No one can speed up the granting of the First Occupation Licence, neither the developer nor us the solicitors; its granting depends solely on the Spanish Town Hall’s civil servants. The Town Hall will allow time for the developer to mend any planning irregularity or pending communal work.

Is Every Off-plan Development Issued an Habitation Licence?

Yes. As previously written, each dwelling has its own individual LFO granted, although in large developments they are normally grouped for simplicities sake. A detached villa will have its own individual LFO whereas large developments consisting of various phases will have grouped LFOs issued. Each of these phases normally has its own LFO. So for example in a huge development of 300 units grouped in 4 phases there could be four different building licences and you would have one all-inclusive LFO granted for each individual phase grouping 75 dwellings at a time. This could well mean that even within the same finished development some properties may be legal (with a LFO granted) yet others are not legally deemed as habitable yet. You could only tell which are which by means of thorough legal analysis. Another matter being if the local authorities actually pursue those who live in, or let properties which lack the mandatory LFO, but I’ll reserve that for another occasion.

What are the Risks of not Having a LFO Granted?

If the LFO has not been granted one year or more after the Certificate of End of Construction was submitted it usually means there is a serious underlying problem. The said problem can arise from a myriad of causes such as planning problems (e.g. the development had only been granted a building licence for two storeys and four have been built, the property has been built in an area zoned as green belt, or an archaeological site of interest has been uncovered), or could mean there might be a health hazard because there is a breach of Health laws (e.g. the sewage pipeline is incorrectly laid out).

One of the most recent cases has taken place in the peaceful town of Catral in Valencia, Costa Blanca, where several developments have been finished and the purchasers have completed on the properties without a LFO been granted. More than 1,000 houses are now deemed illegal. It turns out many of those dwellings were built within the perimeter of a national park zoned as green belt land. The Government has announced that it will pull down some of them.

Is it True that Completing without a LFO is Illegal?

This is a common misconception. Completion on a property, before a Spanish notary public without a LFO is legal in Spain and the property will be lodged under your name at the land registry. However, it is not legal to occupy/live in a property without the mandatory administrative LFO. So basically you legally own a dwelling which is uninhabitable legally until the LFO is granted by the Town Hall. Many off-plan purchasers on having waited for years on end until the granting of their LFO, or with no prospects of it ever being granted due to planning illegalities, have decided to litigate and obtain a full refund of their stage payments in fear of their developers going into receivership.

What is the Difference Between an Ordinary LFO and one Granted by Administrative Silence?

Both LFOs are equally valid. Under Law 30/92 if a Town Hall does not reply to a licence petition within a given period of time it is automatically considered granted by positive silence. This is called Administrative Silence Rule and is a special administrative procedure which enables licences to be obtained after a certain period of time (currently 3 months), if no response has been obtained from the Town Hall. If a LFO is obtained through Administrative Silence it is just as valid as an ordinary one obtained expressly through the Town Hall under Spanish Administrative Law. It is pointless to challenge a licence obtained by Administrative Silence as it is perfectly legal in our system, provided it wasn’t obtained breaching any laws.

What are the Associated Problems of Completing on a Property without a LFO?

Although it is legal to complete in such a case, it has numerous legal and practical drawbacks which ought to be highlighted by your lawyer to aid you in making an informed decision. To name a few:

• Primarily, you will not be able to take out a mortgage on the property or remortgage it - if needed be- by any bank other than the developer’s.
• You will not be able to benefit from the official utility supplies; only from the developer’s supplies (water and electricity) with all the associated problems this has, namely that you may be cut off at any time as it is the developer who is paying for it and if they go into receivership you will be shut off. Besides, the site supply electricity doesn’t have the same strength and power surges are fairly common on simultaneously turning on various electrical appliances such as air conditioning.
• Any future prospective purchaser, or their lawyer, will haggle with you and only pay a lower purchase price if you lack a LFO in a newly built resale. In a resale, the purchasers in turn will undergo the same problems to secure finance by means of a mortgage loan. A lack of a LFO implies that you are actually reducing the base of potential purchasers for your resale.
• If there are planning issues, the Town Hall can set a charge against the property and you as the new owner of an off-plan –and not the developer- may be held liable to pay the fine for the planning illegality.
• Needless to say, you cannot let a property legally without a LFO.
  

Should I Complete Without a Licence of First Occupation?

It is in general recommendable to complete in off-plans only if a LFO has been granted by the Town Hall. However there are exceptions to this general rule.

If the development complies fully with all the required planning permissions, you lack a bank guarantee, there’s no ruling affecting the building licence due to planning issues and there is a high risk of the developer going into administration in the near future, it would be advisable to complete. You would still have to wait until the LFO is granted before you can live in the property, but at least now there is no risk of you losing your funds if the developer becomes bankrupt.

It is very important to realise that until completion the property still belongs to the developer. So if you still have not closed and the developer becomes insolvent in the interim, the property lodged under its name may be seized by the developers’ bank or any other creditor that places a charge on it at the land registry. If you have no bank guarantee and the above happens, it is very likely you will forfeit your down payments. However, cases differ and require a case-by-case study by your appointed solicitor.

In any case, our recommendation, as always, is that you hire a lawyer with enough experience in Spanish property law to ensure your interests are fully protected.

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Lawbird Legal Services is a law firm with a broad experience in Litigation, and is specialized in representing clients affected by real estate and planning problems. More information about Lawbird.

Discuss this Article

• uhpuxexw Says:

  Wed, Feb 11th 2009, 22:25

• Conn Says:

  Wed, Feb 25th 2009, 00:00

  I feel you should also point out the dangers of not completing on the required date, specifically after the LFO was granted.

• Lawbird Lawyer Says:

  Wed, Feb 25th 2009, 15:02

  Dear Sir/Madam, It's a fair point. This article is really a F.A.Q. that picks up on all the legal queries related to LFO I've received over the years. I judged that writing on the dangers of not completing after its granting was slightly off the point as it had to do more with litigation and besides the article is already over 2,000 words long as it stands so I had to draw the line at some point or other. But I've thought about it too many times over. In any case in other sections of this website I've covered the topic already. Regards, Raymundo Larraín Nesbitt

• Philip Says:

  Thu, Jun 18th 2009, 08:52

  I have lost my LFO. Have lived here for 10 years. Have a catastral certificate and pay my IBI I am conected to all services etc. How can I get a duplicate and what will it cost?

• Lawbird Lawyer Says:

  Thu, Jun 18th 2009, 10:05

  Dear Sir, You can request a copy from the Town Hall where it was issued (Planning Department). All you need to bring along is your passport and a copy of the Title deed. It should be free if you do it on your own.

• mike Says:

  Tue, Jun 23rd 2009, 22:24

  The builder of our apartments walked away from the complex approx 4 years ago, since then we have completed all the work necessary to apply for the LOF. Now our application is in we have found out that a company who is owed money buy the builder has embargoed land that we have agreed to hand over to the Town Hall. Can the embargoing of the land prevent the Town Hall from issuing the LFO. They have said that the building is compliant.

• Lawbird Lawyer Says:

  Thu, Jun 25th 2009, 13:27

  Dear Sir, It's up to your Town Hall to reply on this issue, we cannot assist you, as the decision is only theirs. You've probably reached an agreement with them to legalise your development in exchange of a plot of land which is now in jeopardy. I'm sure you will both come to an agreement and your development will obtain the LFO eventually as it benefits the Town Hall as well.

• Steve Smith Says:

  Mon, Aug 3rd 2009, 18:30

  Do you need to apply for a licence of first occupation after restoring a tumbled down ruin?

• Lawbird Lawyer Says:

  Tue, Aug 4th 2009, 08:55

  Dear Sir, Do you have permission from the Town Hall to restore the ruin and live in it?

• Graham Jones Says:

  Sun, Nov 8th 2009, 15:09

  We had to complete on our apartment as the bank guarantee was worthless and the developer was bankrupt. The development has no First Occupation License and the Architect refuses to sign off the work as being complete unless the Community of Owners pays the fees owed by the developer. This runs in a considerable sum which the community cannot aford to pay. We have therefore secured the services of another architect to oversee the minimal amount of completion work. He will submit his project to the Colledge of Architects and submit the Completion Certificate in order to obtain the First Occupation License. One member has concerns that the Colledge will not accept another architects certificate. If they are correct then we may never get the project completion certificate unless we pay the first architect their "ransom money". I cannot believe that this is correct and we are preparing to pay the new architect a fair sum for finishing things off. Can you comment on this? Graham

• Lawbird Lawyer Says:

  Mon, Nov 9th 2009, 17:03

  Dear Sir, I suspect this could very well be the case, yes. It should be the same architect that signs it, not a different one. I believe that member you write will be right. As we always recommend on giving legal advice, one should in general not complete without a Licence of First Occupation issued by the Town Hall. There are a few exceptions in any case which are already highlighted in the article that starts this thread i.e. developer is teetering on filing for receivership and the buyer has no bank guarantees issued securing their stage payments. Yours faithfully,

• john Says:

  Sat, Jan 9th 2010, 16:59

  i am due to sign 4 a resale my solicitors says i need a 2nd habitation license is this true as i need a surveyor at 350 euros 4 this

• Lawbird Lawyer Says:

  Mon, Jan 11th 2010, 13:23

  Dear Sir, In some parts of Spain (i.e. Valencia region) a second Licence of First Occupation may be required, yes. Surveyors normally charge 350€, it's a fairly standard fee. Yours faithfully, Raymundo Larraín Nesbitt

• Jesper Says:

  Sat, Jan 16th 2010, 22:00

  Hello, We are about to buy a townhouse outside Marbella. It is a 10 years old townhouse. Our laywer was about to sign the contract yesterday but called us to inform us that there is no Licence of First Occupation. In the community there are three rows of townhouses but there is only licence for the first row. What is the "worst scenario" if we sign? Kind regards, Jesper

• Lawbird Lawyer Says:

  Mon, Jan 18th 2010, 11:08

  Dear Sir, It depends on the legal standing of your community. As you are probably aware in Marbella there were over 18,000 illegal properties. This has been reduced to less than 500 with the (ever) imminent approval of Marbella´s new Master Plan. Those dwellings to be demoslied are largely uninhabited, with the exception of the Banana Beach which remains as the symbol of Marbella's Gil corruption era. Please read my articles on the matter which has a list of those developments which had/have legal issues: Developers Forced to Compensate Marbella's Town Hall for Planning Irregularities - 1st October 2007 Marbella’s New Master Urban Plan to be Approved Provisionally - 28th October 2008 The legal situation has vastly improved since I wrote both articles. As I do not have details on your case it's hard for me to give you founded legal opinion. In any case one does not normally request a Licence of First Occupation for a resale property that is over ten years old. LFO are requested for new build or off plan property. In your case do you have official utility connections (water & electricity)? Do you have an individualised water and electrical meter? Does the landlord have a contract with the utility companies? Is he paying IBI tax? In your case, and taking for granted your property is not one of the 500 dwellings legally earmarked for demolition, the worst case scenario would be for you to pay a fine to the Town Hall to "regularise" the illegality. I know some developments in which a green belt area belonging to the Town Hall has been built upon by a front row ort else even a golf course, whereas the back rows where built in a proper building-designated area. Yours faithfully, Raymundo Larraín Nesbitt

• Jesper Says:

  Tue, Jan 19th 2010, 15:26

  Thank you so much for your answer! Yes, the townhouse we are interested in buying (In a community called "Last Green") has individualised water and electrical meter. Does that make it safer for us to buy? We are ready to take the risk that a buyer in the future will try to pay less. But the worst scenario is to loose our investment or even worse, to loose our investment and be forced to tear it down...Could that happen.? Regards, Jesper

• Lawbird Lawyer Says:

  Tue, Jan 19th 2010, 16:28

  You're welcome. Last Green? Doesn't ring the bell, sorry. I'm writing now an article on property demolitions because everyone seems to be fretting over this issue as if buying in Spain was a legal gamble of sorts. Far from it. Let me clarify that demolition orders in the vast majority of cases are circumscribed to rural property. Obviously we have prime examples in developed land such as the Banana Beach always on the media spot light, but these are very rare let the truth be said. Your lawyer should be able to confirm on whether your property will be legalised or not within the next months. Even though the New Master Urban Plan for Marbella hasn't been approved yet lawyers are aware already of the developments which will obtain a LFO, even if provisional. It's not as if lawyers were in the dark on this issue. I know it sells newspapers to scare everyone off their shoes but in Marbella at least the damage extent is under control and we know which developments are earmarked as illegal or do not qualify for a regularisation procedure. As written previosuly they are under 500currently. With this I do not mean to condone the past era of corruption, juyst merely setting the record straight. Even well-known developments in Marbella East (i.e. Elviria area) will be legal in a few month's time once they obtain the provisional LFO or the new Master Plan is approved once and for all. The fact that your property has individualised water and electrical meters is legally reassuring, yes, because it means you are not under the builder's supply (which can be terminated without notice if they for example file for creditor protection) and have offical utility connections. But I cannot confirm, sorry. In any case let me just add that LFO are not normally requested for resales, unless the property is fairly new (i.e. under 5 years old). LFO are typically requested for off plan property, as per my article. I've even had a case in which someone wagged his finger at me accusingly at completion because I had failed to provide a LFO for a twenty year old property!!! Whatever. Yours faithfully, Raymundo Larraín Nesbitt

• Jesper Says:

  Thu, Jan 21st 2010, 22:12

  Thank, now I am a little more calm. The contract is now ready ti sign. The lawyers has made an appendix to the contract with the text: "La parte optante conoce el hecho que la finca carece de Licencia de Primera Ocupacion, conociendo y aceptando la actual situacion urbanistica de la finca, no teniendo nada que reclamar por este concepto a la concedente, incluso para futuras cargas y/o gravamenes que la finca pudiera ser objeto." Is this a proper appendix when the LFO i s missing? Regards, Jesper

• Lawbird Lawyer Says:

  Fri, Jan 22nd 2010, 09:16

  Dear Jesper, Further to your prior query the New Master Urban Plan of Marbella is foreseen to be finally approved in February 2010, next month. Source: REU. Even on final approval, it will be legally challenged by many lawyers on behalf of their clients. Regarding your question on the appendix, it means is you agree not to hold the vendor liable for any problems that may arise because of a lack of First Occupation Licence (LFO). You expressly acknowledge that you are fully aware of the Planning status of this dwelling (meaning if there are any illegalities you are claim that you are fully aware of them and accept them) and additionally you waive taking any legal action against the vendor should there be any future Planning problems such as any compensations necessary to have the property regularised. More on this here: Developers Forced to Compensate Marbella's Town Hall for Planning Irregularities - 1st October 2007 This is the kind of document I would not sign or have any of my clients sign unless I am positively certain of the Planning issues involving this real estate. Otherwise you are basically signing a blank cheque not holding liable the vendor for any event related to LFO and Planning issues allowing them to legally walk away clean. Should there be any kind of Planning problems, you will be held responsible. You expressly waive any legal redress against the vendor. So bottom line, it's not a "normal" appendix to sign on lacking a LFO by any stretch of the imagination. It is one-sided, biased and favours the vendor. In general you should only complete when a LFO has already been issued by a Town Hall (for off plan properties, resales do not normally require a LFO). There are however qualified exceptions to this golden rule which are clearly explained in my article on License of First Occupation that starts off this very thread and are related to the developer being close to filing for Creditor Protection or the buyer not having been provided with bank guarantees to secure their stage payments: The Licence of First Occupation Explained - 29th January 2009 Bank Guarantees in Spain - 12th November 2008 Yours faithfully, Raymundo Larraín Nesbitt

• Joolz Says:

  Sat, Feb 27th 2010, 17:57

  We completed purchase of town house in Jan 2008 and got Bank G'Tee for 12000 euros as no Habitation Cert. Our house is completed and habitable and was on builders elec untll this was disconnected last summer. The developer has stopped working on site (11 houses - 4 completely finished) Our solicitors have now executed the bank g'tee and the builders bank have agreed to release the funds as the 2 year period has passed and we have no Habcn Cert. Can we connect to our own elec supply yet or can we apply independently to the local council for a HAbcn Cert?

• Lawbird Lawyer Says:

  Tue, Mar 2nd 2010, 11:43

  Dear Sir or Madam, Until a LFO is issued by the Town Hall you will not be allowed, normally, to be on official supplies. As my article mentions, exceptionally there are regions of Spain which allow you to connect to the official utilities providing only a receipt of having requested the LFO (which may or may not be granted). You can hire your own electrical device if you wish. But as per the article that starts off this very thread, it is ILLEGAL to live in a property which lacks the mandatory LFO. Although it is legal to complete on such a property if you wish to. You can all group together and request from the Town Hall the Habitation Certificate if you wish if the developer has gone bankrupt. But you will then be expected to finish off any pending communal works or remedial work as well as paying the associated Town Hall fees for issuing the First Occupancy Licence. Because the issuance of this licence has associated a fee. Normally it is developers themselves who request and pay for the LFO. Yours sincerely, Raymundo Larraín Nesbitt

• Ramani Hopgood Says:

  Mon, Mar 8th 2010, 16:57

  My parents in law have lived in Spain for 4 years. The purchased a proprty with 100% mortgage from the bank. Recently they leanred that their house has been built illegally. Although they have been told they wont pull it down, they have been told that they will have no electricity to the property and of course they cannot sell the house. The builder is "missing" How can it be that a bank gae them 100% mortgage without checking that it was legal or not? I am desperately trying to find out what to do, please help. Their house is in Buggara/Pedralba Valencia

• Lawbird Lawyer Says:

  Thu, Mar 11th 2010, 09:44

  Dear Sir, This is a common blunder foreigners make on buying property in Spain. The logic behind this is that if a bank has to give you a mortgage on a property then, even if it's for their own sake, they will make all the legal checks on the property verifying it is legal. In fact, why bother using a lawyer at all if the bank checks everything? The mistake underlying this flawed logic is that it's not the bank's job to check the legalities of a property and they simply don't do it; it is your duty, as a buyer, to check them out. Which is why I always advise foreigners to hire a Spanish registered lawyer on buying either an off-the-plan property or a re-sale. Please read my article on the matter: Buying Property In Spain Part I. Buying Resale: Avoiding the Pitfalls - 31st January 2010 The lawyer you hire will make sure the property you are buying is fully legal and complies with both local, regional and national laws. Yours faithfully, Raymundo Larraín Nesbitt

• Philip Howard Says:

  Thu, Mar 18th 2010, 23:53

  My friends bought a house and it does not have a first occupancy certificate. They have an escritura but want a catastra. They are not paying IBI. They have lived in the house for five years and pay electricity, water and the charge for waste. How can they get a catastra?

• Lawbird Lawyer Says:

  Fri, Mar 19th 2010, 11:40

  Dear Mr Howard, I'm sorry I do not understand what you are referring to by a "catastra". Yours sincerely, Raymundo Larraín Nesbitt

• Philip Howard Says:

  Fri, Mar 19th 2010, 12:40

  They have no certificate catastral. Their local authority has checked the computer and although there is a record of the property the record is limited and a certificacion catastral has not been produced.

• Lawbird Lawyer Says:

  Thu, Mar 25th 2010, 15:20

  Dear Sir, Your query is unrelated to this thread's content. A certificación catastral is not the same as Licence of First Occupation (LFO). Maybe the confusion stems from the fact that a LFO is also known as a "Habitation Certificate". Your friends may be confusing both. Yours sincerely,

• Angel Says:

  Mon, Apr 5th 2010, 16:12

  How many years do the certificate of first occupation lasts for? 5,10, 15 years? When do you need the second certificate of occupation and how long do they last for, 5,10,or 15 years?

• Lawbird Lawyer Says:

  Mon, Apr 5th 2010, 16:38

  A Licence of First Occupation has, as a general rule, no expiry date (*). It is for off-plan property as the article that starts off this thread explains in detail. A LSO may be required by some Town Halls when the property: 1. is sold on 2. when there's a change of the legal classification of the property 3. the property has undertaken significant refurbishment/overhaul 4. a change of the utilities supplier etc. (*) in some parts of Spain there are expiry dates of the LFO i.e. 5 years for a LFO as per Valencia's regional Planning laws. And 10 years for a LSO as from the time the LFO was issued. But as I write, this is normally an exception. Spain is made up of 17 different regions, so besides the national legal administrative framework common to all of them you additionally have all the local and regional laws that rule further on the matter. Yours sincerely, Raymundo Larraín Nesbitt

• Diana Myers Says:

  Fri, Apr 16th 2010, 10:03

  We purchased as a resale from a builder who siad he livedin property for one year before granting of first licence of occupation. The licence does not include the outbuildings or swimming pool and only the house is on Escritura. Should we have received a separate licence for outbuilding and pool . We did use a solicitor but obviously all was not checked thoroughly. Help please

• Lawbird Lawyer Says:

  Fri, Apr 16th 2010, 10:36

  Please expand more on your query. From what I undertsand you've purchased a property (a detached villa) that in its land registry description does not have included otehr construction as well as your swimming pool? Is your property labelled as a rustic property in the campo? Yours faithfully,

• mark rhodes Says:

  Fri, May 7th 2010, 18:29

  looking to buy a villa in tenerife,on amarilla golf,the property is 15 years old but the owner has no LTO ,it is not registered at the land registry but has the documents to do this.The deeds (escritura)are not in his name ,the water and electric are independent suppliers in his name. The spanish/english solicitor says that its legal to buy but i am not sure ....any ideas.

• Lawbird Lawyer Says:

  Mon, May 10th 2010, 11:25

  Dear Mr Rhodes, This conveyance may potentially be fraught with legal problems. Is this villa built on rustic or in urban land? It is worrisome that the property is not lodged at the land regisrty and that it's not under the name of the vendor because it can potentially lead to claims on ownership from third parties which you may be unaware of. Old properties do not have a Licence of First Occupation, that's normally for off-plan properties. Exceptionally in some regions of Spain, i.e. Catalonia, they've passed new laws whereby LFO expire after 10 years and you must renew them if you plan on selling the property or making an extension to it. There's a huge outrage now with "illegal" rustic properties that are very old and are unable to obtain a LFO or renew it despite having being built 30, 50 or even more years ago. Please read carefully my article on the matter of buying unregistered properties; there are legal ways to overcome this problem: Quoting an excerpt, Buying Property In Spain Tips Part I. Buying Resale: Avoiding the Pitfalls - 31st January 2010 2. Has the Property Been Registered Properly? It is commonplace that extensions on properties are unregistered at the land registry. You will only find out on requesting a mortgage loan when the bank either turns you down or else offers significantly less money than what you were expecting because the extensions remain unregistered i.e. a 4 bedroom villa which has only 2 bedrooms registered at the Land Registry. This problem can be easily overcome by signing a New Build Deed at the Notary and paying the associated local tax levied by the Town Hall for the extension. This deed is then registered and the property description is amended accordingly adapting it to reality. This ought to be done by the vendor prior to the sale, unless agreed otherwise. This case is especially true of rural properties. Other cases, such as illegal rural properties, may be fraught with legal problems i.e. the property had only been given a licence to build a small tool hut of 3x3 m2 to plough the fields and yet a villa has been built instead. Rural properties can be a legal quagmire and it is essential you retain a lawyer to act on your behalf and best advice you on the matter, from the very beginning. In other cases, for perfectly legitimate reasons, properties remain unregistered or they lack the Title Deed (escritura). i.e. property inherited from one generation to another. There are different legal ways to overcome this minor problem: Acta de Notoriedad or else following an Expediente de Dominio. Reagrding a LFO some people may have become over obsessed with this issue. LFO are in the majority of cases devised for off-the-plan properties. If you are buying a re-sale property (urban) older than 10 years old it is highly unlikley it will have a Licence of First Occupation. However if the property is rustic it is highly advisable to double or even triple check a LFO has been granted or can be attained from the Town Hall where it's located. Foreigners keep making a mistake on buying rustic property in Spain as in many cases a house cannot be built on top of rustic land for legal reasons. Hence many of the problems featured on the press on properties being earmarked for demolition in Spain are, for the most part, illegal rustic properties, not urban properties. It is essential to take qualified legal advice prior to buying rustic property as it may be a legal minefield. Yours faithfully, Raymundo Larraín Nesbitt

• Martin Roe Says:

  Mon, May 10th 2010, 13:08

  My property was due to be completed in Sept 2006 with a 3 month extension taking me to 31st Dec 2006 i still have not been informed the property is completed should the Developer legally inform by Registered Mail? Apparently the F O L was issued in Nov 2007 kind regards

• Lawbird Lawyer Says:

  Mon, May 10th 2010, 13:28

  Dear Mr Roe, I'm surprised. Developers normally, on attaining the LFO from the Town Hall, send a registered letter almost on the same day to either the off-plan buyer or his legal representative with a copy of the LFO compelling them to complete. Maybe your lawyer has been notified by the developer of this unbeknown to yourself. Yours faithfully, Raymundo Larraín Nesbitt

• Unregistered Says:

  Tue, May 11th 2010, 12:21

  Dear Mr Roe, I'm surprised. Developers normally, on attaining the LFO from the Town Hall, send a registered letter almost on the same day to either the off-plan buyer or his legal representative with a copy of the LFO compelling them to complete. Maybe your lawyer has been notified by the developer of this unbeknown to yourself. Yours faithfully, Raymundo Larraín Nesbitt Dear Raymundo is it not the law that i must be informed by registered mail that the property is ready? Also is the 11 month delay in recieving the F O L is this period long enough to cancel the PPC? Yours faithfully Martin Roe

• Lawbird Lawyer Says:

  Tue, May 11th 2010, 12:31

  Dear Martin, If neither you nor your appointed legal representative have been sent a registered letter compelling you to complete ex Art 1504 of the Spanish Civil Code, you can legally withdraw from the Private Purchase Contract on grounds of late delivery in handing over the property and litigate for a ful lrefund of your stage payments. 11 months delay is more than enough. If however, either you or your lawyer have received this formal communication I do not advise pulling out and litigating. More on this in my article on buying off-the-plan property in Spain: Buying Property In Spain Tips Part II. Off-Plan Property - 18th April 2010 Quoting an excerpt: 5. Make Sure the Dwelling Attained a Licence of First Occupation (LFO) A Licence of First Occupation is issued by the Town Hall where the property is located and is granted once the building works have been duly completed (Certificate of End of Works or Certificado Final de Obras in Spanish). It allows off-plan purchasers to dwell in a property legally. The LFO is important mainly for two reasons: ◦It provides a check on the Planning Legality. Its granting means the developer has built the dwelling in compliance with the original Town Hall’s Building Licence as well as complying with all Planning laws. The inspection to grant this Licence is carried out by Town Hall’s chartered technicians who certify that the dwelling complies fully with Health, Access, Security, Planning and Construction Laws and is deemed apt for human habitation. ◦It is required by utility companies to have access to official supplies (water, electricity and gas). Spanish law requires the granting of the LFO to hook up the dwelling to the supply grid. Although in some parts of Spain there have been reported cases of supply companies waiving this and connecting you without the said licence. In such exceptional cases the only requirement was showing the application of having requested the LFO from the Town Hall. It is in general recommendable to complete only once a Licence of First Occupation has been attained; however completing without a LFO is legal in Spain and the property will be registered under your name at the Land Register. The following are just some of the drawbacks you may face if you happen to close on an off plan property lacking a LFO: ◦Primarily, you will not be able to take out a mortgage on the property or remortgage it - if needed be- by any bank other than the developer’s. ◦You will not be able to benefit from the official utility supplies; only from the developer’s supplies (water and electricity) with all the associated problems this has, namely that you may be cut off at any time as it is the developer who is paying for it and if they go into receivership you will be shut off. Besides, the site supply electricity doesn’t have the same strength and power surges are fairly common on simultaneously turning on various electrical appliances such as air conditioning. Until the LFO is attained, the developer has to pay, by law, for the utility supplies. ◦Any future prospective purchaser, or their lawyer, will haggle with you and only pay a lower purchase price if you lack a LFO in a newly built resale. In a resale, the purchasers in turn will undergo the same problems to secure finance by means of a mortgage loan. A lack of a LFO tacitly implies that you are actually reducing the pool of potential purchasers for your resale. ◦If there are Planning issues, the Town Hall can set a charge against the property and you as the new owner of an off-plan –and not the developer- may be held liable to pay the fine for the planning illegality. ◦Needless to say, you cannot rent a dwelling without a LFO. There may be nonetheless exceptional circumstances in which it may be advisable to complete without one. Specifically if there’s no bank guarantee securing your down payments and the developer is in risk of going into Administration, provided that there’s no ruling or legal procedure affecting the Building Licence due to planning issues (as explained above in point three). It is very important to realise that until completionthe property still belongs to the developer. So if you still have not closed and the developer becomes insolvent in the interim, the property lodged under his name may be seized by the developers’ lender or any other creditor that places a charge on it at the land registry. If you have no bank guarantee and the above happens, it is very likely you will forfeit your down payments. However, cases differ and require a case-by-case study by your appointed solicitor. The issuance of the LFO by a Town Hall is the major milestone in the off-plan procedure. In fact, from a legal point of view, it marks the turning point whereby the property is now deemed to have been delivered legally to the purchaser. Once the LFO has been attained and the developer has sent you a registered letter compelling you to complete within a deadline before a Notary public, you should no longer withdraw from the PPC and litigate (specifically read point three in the link supplied) for a refund as you are bound to lose at court. This is known as forced completion. Developers can actually pursue you abroad against your home country’s assets once they’ve obtained a favourable judgement from a Spanish court. Do not think for one moment you can walk away breaching an off plan contract and that there will be no legal consequences arising from it. Some developers will be happy just withholding the stage payments as compensation and yet others will sue you on top demanding fulfilment i.e. that you close on the property. Indulging in reckless litigation can leave you seriously out-of-pocket. Yours faithfully, Raymundo Larraín Nesbitt

• Steve Smith Says:

  Thu, Jul 8th 2010, 15:15

  I have asked Iberdrola if I can upgrade my electrical supply from a 3.3Kw to 5.5Kw but they have told me to do so I must have a new Cedula de Habilitidad, is this the same as an LFO and what is entailed in getting it renewed? My house is on an urbanisation and has a LFO from when it was first built 35 years ago.

• Lawbird Lawyer Says:

  Thu, Jul 8th 2010, 15:21

  Dear Sir, Yes, it's the same thing. As I quote below from post 29 on this very thread, in some regions of spain the LFO has to be renewed after a given timeline or else when you have carried out works on the property or sold it on. A Licence of First Occupation has, as a general rule, no expiry date (*). It is for off-plan property as the article that starts off this thread explains in detail. A LSO may be required by some Town Halls when the property: 1. is sold on 2. when there's a change of the legal classification of the property 3. the property has undertaken significant refurbishment/overhaul 4. a change of the utilities supplier etc. (*) in some parts of Spain there are expiry dates of the LFO i.e. 5 years for a LFO as per Valencia's regional Planning laws. And 10 years for a LSO as from the time the LFO was issued. But as I write, this is normally an exception. Spain is made up of 17 different regions, so besides the national legal administrative framework common to all of them you additionally have all the local and regional laws that rule further on the matter. Yours sincerely, Raymundo Larraín Nesbitt

• Susana Isabel Says:

  Thu, Aug 12th 2010, 20:53

  Hello We are going to buy a villa in Costa Calida, (4 years old) and wanted to know if we have to change the existing LFO document from the previous owners name into our name. Thank you.

• marcia Says:

  Wed, Aug 25th 2010, 11:02

  How do I legalise a kitchen extension that is not on my escuturia built 8 years ago, before I sell my property.

• aflores Says:

  Wed, Aug 25th 2010, 19:19

  Hello, You are required to have an architect state that the works are more than 4 years old and that not administrative proceedings have been brough about by the Town Hall. With the above certificate you have to go the Notary request him to issue a declaration of news works, which will be signed by you, and have it then registered. Application taxes here are of 1% of the value you give to the kitchen, within reason (avoiding unrealistically high values).

• Ideal Country Property Says:

  Tue, Aug 31st 2010, 14:16

  We have several clients who wish to sell their fincas in Coín and Alhaurín el Grande; they are all having problems due to a lack of First Occupation Licence. As an example, the property is a detached villa built on rustic land within the municipality of Coín; there is a swimming pool and outbuildings which are all registered on the Nota Simple and appear on the escritura, the Catastro information is correct and the IBI has been paid up to date. As with 99% of rustic properties this house never had a LFO however the buyer's lawyer is insisting that the purchase could not go ahead without it. The only other possibility is to get a certificate from the town hall in Coín to state that they do not have any outstanding issues with the property. (certificado de inexistencia de epediente sancionador). Coin town hall are flatly refusing to issue any such certificate for this or any other property. The same problem arises in most of the inland towns, some town halls are still giving the certificate, some are charging up to 7,000 Euros for it but in this case the owner cannot sell and the buyer cannot get the house they want. Are you familiar with this problem and can you offer any solution?

• aflores Says:

  Thu, Sep 2nd 2010, 08:16

  Hello Ideal Country Homes, greetings from Marbella! You are right, if you have the property registered and you have a certificate proving that there is no disciplinary action taken against these properties, you dont need a license of occupancy. This is because the following concur: 1- Town Halls dont wish to sign papers on rural properties, even if these have become fully legal, because it is not required on these type of properties. Also, they have opted now for a minimum-as-possible intervention on rural properties. 2- License of occupancy is not applicable on properties that are registered and become legal by passing of time, that is, after 4 years have passed since construction was finished without the Town Hall having started disciplinary action. Town Halls HAVE to issue these certificates if indeed there have been no "expedientes" opened. 3- The above is not applicable where these properties are built on land of special protection. All the above is pursuant to the LOUA and the Reglamento de Disciplina Urbanistica. If your buyers have queries they can opt for one of the following: a- Get a lawyer to sign a document stating that nothing will happen to these properties, indicating the details of profesional indemnity insurance backing him/her, alongside a certificate from the Town Hall stating that no action was taken in the last 4 years (Certificado de Inexistencia de Expediente Sancionador AND Prescripcion Urbanistica). b- Go to the Andalusian Government to obtain a certificate stating that the properties are indeed legal (this may take very long). c- Ultimately buy somewhere else.

• Ideal Country Property Says:

  Thu, Sep 2nd 2010, 18:46

  Hi Antonio thanks for your reply. One question. How do we MAKE Coin town hall issue the certificate if thay are refusing to do so?