The Housing Law 12/2023 has introduced numerous changes. While most are related to housing policy - including rent controls - it does have an impact on consumer protection and transactional transparency, directly affecting the work of real estate agents. In our view, the sparse two articles dedicated to this aspect do not provide much novelty compared to existing legislation, such as:

• General Advertising Law 34/1988

• Royal Decree 515/1989, on consumer protection in terms of information to be provided in the purchase and rental of homes

• General Law for the Defense of Consumers and Users And on a more local level, Law 7/2014, of July 23, on the protection of consumers and users of the Balearic Islands, and Law 5/2018, of June 19, on housing in the Balearic Islands.

All these regulations set the obligations for involved parties about the information to be provided to consumers. Many of these were primarily focused on new constructions, but they are also applicable - as confirmed by numerous consumer agencies - to the brokerage of second-hand homes.

Information Obligations in the Housing Law

The first of the two articles dedicated to this issue in the Housing Law goes by the grandiose name of "Basic Principles of Rights, Powers, and Responsibilities." In summary, it states that agents operating in the real estate sector have a duty to provide information that is "complete, objective, truthful, clear, understandable, and accessible."

Furthermore, the law specifically states that advertising related to housing must be objective and truthful, avoiding any type of information that could be considered insufficient, poor, or misleading, which may be subject to penalty under the General Advertising Law.

As can be seen, these would be reasonable minimums for any professional sector: to offer the necessary information and not to mislead.

To comply with this information obligation, Article 31 elaborates on the "Minimum Information in Housing Purchase and Lease Transactions," detailing the information to be provided, which includes the following:

a) Identification of the seller or lessor and, where appropriate, the natural or legal person intervening in the operation in the context of a professional or business activity. b) Economic conditions of the operation: total price and concepts included in it, as well as the financing or payment conditions that may be established. c) Essential characteristics of the housing and the building, including:

1. Habitability certificate or record.

2. Accreditation of the useful and built surface of the housing.

3. Age of the building and, where applicable, of the main renovations or actions carried out on it.

4. Services and facilities available to the housing, both individual and communal.

5. Energy efficiency certificate of the housing.

6. Accessibility conditions of the housing and the building.

7. Occupation or availability status of the housing. d) Legal information of the property: registry identification of the property, with reference to charges, liens, and conditions of any nature, and the share of participation established in the property deed. e) In the case of protected housing, express indication of this circumstance and of the legal protection regime applicable to it. f) In the case of buildings with official architectural protection, information on the degree of protection and the conditions and limitations for refurbishment or renovation works. g) Any other information that may be relevant to the person interested in buying or renting the housing, including territorial, urban, physical-technical, heritage protection, or administrative aspects related to it.

However, the list does not add much content, as most of the information would be contained in the basic documents that any diligent agent should always make available to the seller, which would include:

• "Nota simple" (Land Registry Exceprt).

• Descriptive and graphic cadastral query.

• Certificate of Reference Catastral Value.

• Energy Efficiency Certificate (mandatory since 2013).

• "Cédula de habitabilidad". (Habitability Certificate), which is mandatory in the Balearic Islands since 2018.

• IEE (Informe de Evaluación de Edificios). This is a technical revision of the building that has to be made every certain years.

Critique of the New Regulation and Challenges for Agents

Despite this, it is in the last section where the greatest danger for real estate agents lies, as a generic clause is incorporated that would require an excessively thorough review of each and every one of the assets in marketing.

In an overly broad and vague manner, it includes the generic obligation to provide "any other information that may be relevant to the person interested, including territorial, urban, physical-technical, heritage protection, or administrative aspects." This provision draws special attention, in particular: i) "Any other information": With such a broad generic mention, the legislator does not limit at all the scope of information that must be provided. ii) "that may be relevant": It establishes a discretionary element. iii) "for the person interested": In fact, it expressly declares that the relevance is subjective. iv) "including territorial, urban, physical-technical, heritage protection, or administrative aspects related to it":

So, to what extent should an agent know the physical-technical or urban aspects of every single property they are marketing, without being a specialist (architect, lawyer, etc.)? How can the agent know how far to go in their analysis of the property?

But this wording not only prejudices the agent but also the consumer: How can an interested party demonstrate that relevant information was not provided if they did not indicate that a specific issue was relevant?

Regarding the sanctioning regime, we understand that although the Housing Law does not include a specific sanctioning system, these two articles serve as basic regulations for consumer laws. For example, Article 81 of Law 7/2014, on the protection of consumers and users of the Balearic Islands, identifies as a punishable act in consumer matters "3. Making available to consumers products, goods, or services without the minimum and/or relevant, truthful, correct, sufficient, and transparent information about their essential characteristics, as well as their conditions of use." This is classified as a serious offense, with a penalty ranging from €4,500.01 to €24,000.

In this regard, in the Balearic Islands, where numerous properties are partially or completely out of urban planning or have urbanistic restrictions, it will be especially burdensome for agents to have the full knowledge of the properties that the law requires.

Conclusion

In large real estate transactions, it is common for the seller to commission a "Vendor's Due Diligence" (Vendor's DD) before marketing, which is a report prepared by external professionals (lawyers, architects) that reflects the property's situation (legal, urbanistic, physical-technical). Perhaps the legislator intends for this practice to also extend to housing sales, although this would imply a cost that the seller should be willing to assume prior to marketing.

In summary, the new Housing Law, although well-intentioned in its aim to protect consumers, suffers from a certain lack of clarity and precision. This, coupled with the existing sanctioning regime, can put real estate agents in a difficult position, as they will have to assess how this regulation may impact their day-to-day activities.

desalvador | Real Estate Lawyers Mallorca