When purchasing a property in Spain, there are a number of important legal documents you will need to obtain during the conveyancing process. This is usually done by your lawyer, but it’s vital that you are aware of what’s required so that everything is in order and that the sale proceeds with minimal fuss.
Never take it for granted that your lawyer has done or will do everything correctly. Lawyers are like anything else. Some are good and some are not so good. Many people have come unstuck in Spain when purchasing property due to a lack of due diligence on the lawyers part.
Make sure you have a sound understanding of the buying process and double check with your lawyer that he/she has done everything correctly. Never be afraid to ask.
What Is a Licence of First Occupation?
If you are purchasing an off-plan or new build property, you will need to make sure that you have a Licence of First Occupation or Licencia de Primera Ocupación in place before you sign any sales contract. The licence is also sometimes referred to as a Cédula de Habitabilidad and is an administrative licence obtained from the town hall.
The Licence of First Occupation generally needs to be renewed after 10 years, although in some regions it can be 5 or even 15 years.
Once development of a property or urbanisation has been completed, the developer of the property will need to apply to the council for its Licence of First Occupation or LFO.
If the town hall (Ayuntamiento) are satisfied that the development complies with local planning laws and what was specified in the original building licence, the Licence of First Occupation can be granted and will indicate that the developer has fulfilled all of their obligations.
The granting of the licence shows that the property is fit for human habitation and may now be occupied for residential use. It also verifies that the property has now been fully ‘legalised’.
An individual property will have its own LFO, whereas if the property is part of a complex, for example an apartment in a phase of an urbanisation, it will have a grouped or shared LFO to cover all of the properties within that particular phase.
It’s important to reiterate that the Licence of First Occupation only applies to new build or off-plan properties and not to resale properties. It is unlikely that you will ever be asked for one if for example the property is 20 or 30 years old.
This is because firstly, LFO’s did not exist until after 1979. Secondly, without an LFO you are unable to get connected to the utility services such as for water, electricity and telecommunications. Instead, you would have to use the builders supply, which would be minimal and definitely not sufficient enough for you to live off long-term. Besides, the builders supply would eventually be cut off leaving you with no water or electricity and in effect, in limbo.
After the first 10 years, you will need to replace the Licence of First Occupation with a Habitation Licence, also referred to as a Licencia de Habitabilidad.
You can read more about the Habitation Licence further below.
Do I Need a Licence of First Occupation?
Legally, no, logically, yes. You can still complete on a sale without it, you just won’t be able to live in the property, which is not ideal.
As stated previously, you will need one in order to contract basic utilities. You will also need an LFO if you intend to take out a mortgage loan on the property. Without an LFO, it will be almost impossible to get one.
As you will need an LFO to dwell in a property legally, it will also mean you will need to have one if you intend to rent the property out, regardless as to whether it is on a long or short-term basis.
Where can I get my Licence of First Occupation?
If you previously purchased a property and do not have a habitation certificate, you can check with your local town hall to see if they have a copy, which they should have if there is one.
If there isn’t one, you will need to pay for this and may also need a technical report from a professional architect to confirm that the property is habitable.
Should I Complete on a Sale Without One?
Generally speaking, it is NOT advisable to purchase a property if it is a new build or off-plan property and the developer cannot produce a Licence of First Occupation.
As pointed out previously, without a Licence of First Occupation you will:-
- Not be able to contract utilities such as water, electricity, gas and telecommunications
- You will not be legally permitted to live in the property or rent it out
- You will not be able to get a mortgage loan on the property
- You will have a lot of trouble trying to sell the property.
So What Is a Habitation Certificate?
The habitation license or certificate, which is sometimes referred to as a Licencia de Habitabilidad in Spanish, needs to be renewed every 10 years and is confirmation from the town hall that the property is habitable.
You will need to get a habitation certificate after the property is 10 years old and once the initial Licence of First Occupation has expired. If you are selling a property and the habitation certificate is less than 10 years old, you will not need to update it in order to complete.
A new purchaser will need to have a valid and up to date habitation certificate so that they can put the utilities in their name and make any future changes to the water or electricity contracts that may be required.
Another benefit of the habitation certificate is that it provides the purchaser of a property with the assurance that the property is recognised as being legally habitable and that it complies with the local habitation laws.
If you try to sell a property without either an LFO or Habitation Licence, you will be in a weaker position as a vendor and leave yourself open to much reduced bids on your property.