The Licence of First Occupation Explained

[Lawbird Lawyer]

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]

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]

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 LarraÃ*n Nesbitt

[Martin Roe]

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]

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 LarraÃ*n Nesbitt

[Unregistered]

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 LarraÃ*n 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]

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 LarraÃ*n Nesbitt

[Steve Smith]

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]

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 LarraÃ*n Nesbitt

[Susana Isabel]

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.