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sunshine
06-17-2009, 06:51 PM
Hi

I was wondering if you can give me some advice on a problem we have. We run a small rental business and we rented a property for one of our owners. The tenant was only in the property for 2 months when the community cut off the electric supply. The development was new and apparently the developers had not been receiving payment for the electric supply. We spoke with endesa about setting up an individual contract but we were told we could not do that at the moment due to the oustanding debt and licencing issues. The tenant was very patient but after 2 weeks he could no longer survive without the electric and said he would stay with friends until the matter was resolved. He stopped paying rent as he was not in the property permanently. This was 3 months ago now.

At the end of May the developers installed a generator however this only supplied electric for 6 hours in the evening so he did not move back in.

Last week the owner contacted us to say he had come to Spain and gone into the property (without advising us or the tenant) and believed that the tenant has been living there all this time without electric. The tenant does keep most of his belongings in the property as he is only in a room at the moment. The tenant is adament that he has not been living there and even brought us to where he is staying at the moment. He admits that he does go into the property every few days to get a change of clothes, collect mail etc but said he couldn't possibly live there without electric, hot water, fridge etc. He is desperate to move back in permanently once the problem is resolved.

The problem we have is that the owner now wants the tenant to pay a minimum of 1000 euros for the past 3 months and start paying half of the rental amount each month until the electric returns fully. The tenant says he didn't "live" in the property as it wasnt fit to do so and doesn't see why he should pay any rent for the foreseeable future when the property doesn't have full electric and again he is not staying there full time.

We are caught between the 2 of them and therefore I would really appreciate any advice on this matter. Who is right in this instance? Can the owner charge for a property without electric? How do we prove that the tenant wasn't living there full time?

I thank you in advance.

Lawbird Lawyer
06-18-2009, 10:01 AM
Dear Sir/Madam,

Just before I reply to your query I must clarify some legal issues which you seem unaware of following your query.

It seems the electrical problems in the property all stem from the fact that the development has "licences issues". Having the developer to install himself a provisional generator.

The main problem is that -probably- the development does not have the mandatory Licence of First Occupation (aka certificate of habitation) issued by the Town Hall. Please read my article which explains it in detail:

The Licence of First Occupation Explained (http://www.marbella-lawyers.com/articles/showArticle/lfo-licence-of-first-occupation)

The LFO is required to secure the official supply of utilities (water, electricity). Until the LFO is issued and the properties are connected (boletines de enganche) you are still on the developer's supply of water and elctricity. The advantage is that the developer pays -or should pay- the electrical bill until there's an officcial connection made after the issuance of the LFO. The pitfall this has is that if the developer stops paying the bill (i.e. files for creditor protection) the supply will be shut off.

The bottom line here is that an owner cannot legally let a property that has still not attained a Licence of First Occupancy which makes the dwelling fully fit for human dwelling. I point this in my article above as one of the pitfalls:


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:


1. 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.

2. 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.

3. 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.

4. 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.

5. Needless to say, you cannot let a property legally without a LFO.





In fact, the owner can be fined for letting a dwelling which still does not have a LFO issued because it is not yet apt for living legally, such as the case you depict in which the electrical supply is cut off regularly.

Your rental business should not mediate letting properties lacking the mandatory LFO, else you want to face the prospect of being fined or sued as well.

Yours faithfully,
Raymundo Larraín Nesbitt

sunshine
06-18-2009, 12:09 PM
Hello Again,

Many thanks for your quick response. When the electric was cut off initially we were informed that it was to do with some licence issues however we have a copy of the 1st Occupation licence which was granted in December 2007 so we are unsure what they meant by "licence issues". As far as we were concerned the property was legal to be rented albeit that the electric supply was still on developers as the developers had still not finished the community areas.
Therefore we are unsure on how we should proceed with this matter regarding the owner asking the tenant for backpayments and now asking to pay a reduced rent even though he claims he is not staying there.
Thanks again for your assistance and advice.

Lawbird Lawyer
06-18-2009, 12:41 PM
Dear Sir/Madam,

This is fairly common. The issuance of the LFO doesn't automaticvally mean the development is going to be connected to the official utility supply shortly afterwards.

In fact, in a case we've had a development had the LFO issued in May 2008 and they are still on the devloper's electrical supply in June 2009 but they do have the official water supply since October 2008.

Your case it's a bit of a grey area really.

There is no individual electrical supply connected (contador de luz individual) and you are dependent solely on the developer's generator yet the property is being let.

I would be of the opinion that it's the owner's responsibility not to let a property that still has no individual water and electrical supply, specially if its dependent on the developer supplying it.

The licence issue at this stage can only refer to the LFO. Perhaps the LFO you have is for one of the other phases of the developemnt and is not specific to the block where the tenant lives in. Normally large developments have various LFO issued for each of the phases built. In fact each property has a LFO issued but for economies of scale are grouped following the Building Licence that was granted for the group.

It is not uncommon that within one gated development some blocks have a LFO whilst others do not. Yet from a layman's point of view they all look the same and ready to be lived in.