This is the discussion thread for the article The Licence of First Occupation Explained
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This is the discussion thread for the article The Licence of First Occupation Explained
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I feel you should also point out the dangers of not completing on the required date, specifically after the LFO was granted.
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 LarraĆ*n Nesbitt
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?
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.
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.
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.
Do you need to apply for a licence of first occupation after restoring a tumbled down ruin?
Dear Sir,
Do you have permission from the Town Hall to restore the ruin and live in it?
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
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,
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
Dear Sir,
In some parts of Spain (i.e. Valencia region) a second Licence of First Occupation may be required, yes.
Surveyors normally charge 350ā¬, it's a fairly standard fee.
Yours faithfully,
Raymundo LarraĆ*n Nesbitt
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
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 MarbellaĀ“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 LarraĆ*n Nesbitt
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
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 LarraĆ*n Nesbitt
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
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 LarraĆ*n Nesbitt
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?
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 LarraĆ*n Nesbitt
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
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 LarraĆ*n Nesbitt
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?
Dear Mr Howard,
I'm sorry I do not understand what you are referring to by a "catastra".
Yours sincerely,
Raymundo LarraĆ*n Nesbitt
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.
Dear Sir,
Your query is unrelated to this thread's content.
A certificaciĆ³n 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,
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?
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 LarraĆ*n Nesbitt
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
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,
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.
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
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.Quote:
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.
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 LarraĆ*n Nesbitt
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
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 LarraĆ*n Nesbitt
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:
Yours faithfully,Quote:
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.
Raymundo LarraĆ*n Nesbitt
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.
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.