Congratulations! After a long search you have found the house you were looking for and you are ready to make one of the biggest investments of your life, but... What do you need to know before buying a house?

First of all, in addition to the physical space, when you buy a property you buy a whole set of rights and obligations that go along with it. A review of the legal situation of the property is essential, as it avoids future problems and, consequently, a great loss of money. The help of a specialised lawyer can be key. In any case, in this entry we highlight 7 essential sections that you should take into account before buying a property.

1. Description of the property.

Although it may seem surprising, the first thing we must analyse when we are going to buy a property is the description that the property has in the different documents. As we mentioned in a previous post where we explained the five real estate realities, the property can be described in different ways depending on the branch of law we are analysing.

We can verify the description of the property in two different places: in the Land Registry, by requesting a nota simple and in the Cadastre. In the Land Registry we will find a description of the property in words, with an expression of its size and boundaries. In the land registry we will find a plan of the property, with its location and surface area.

It is necessary to verify that both coincide with reality because in the deed of sale the property will only be identified by means of its registry description, and that will be the object of the sale.

For example: we may have seen a flat with storage room and garage, but the description of the registered property only refers to a flat. In this case, the storage room and garage are separate properties that must also be included in the title deed, otherwise we would not be buying them.

In addition, it is important to verify that the legal situation and the reality match: it may be that the reality and the Land Registry show different surface areas, or it may be that the Registry does not show the building we have seen, or it shows a different surface area. All of these are deficiencies that need to be detected as soon as possible in order to try to rectify them before the purchase. They may also be an indication that illegal works have been carried out.

2. Ownership.

Verifying the ownership of the property means making sure that the person who is going to sell us the property is indeed the owner of the property, which is why he/she will need to have a title deed.

The most common way of verifying ownership is to ask for a simple note from the Land Registry, which in the Spanish legal system offers great protection for real estate transactions. However, the Land Registry may not be up to date. This may be because our vendor has not registered his title (purchase, inheritance, etc.) and the property is still in the name of the previous owner. In these cases, we will have to ask the seller to provide documentary proof of ownership, in addition to urging him to regularise the registration situation.

It should be remembered that only the owner of a property (or a person expressly authorised by him to carry out the sale) has the legal capacity to sell it. If the transaction is carried out directly at the notary's office, the notary will ask for the nota simple and will verify the ownership, but if a private document is signed beforehand (deposit contract, purchase option, etc.) it is important to carry out the verifications beforehand.

3. Charges and encumbrances.

Charges and encumbrances are all those third party rights that affect a property, such as mortgages, liens, easements, etc. Most of the charges will appear in the nota simple of the property, obtained from the Land Registry, although it is possible that there are additional charges (apparent easements, legal mortgages) that affect our property and are not registered.

Easements may mean that the purchaser of the property has to bear certain actions by third parties (passage of vehicles, wiring, views, etc.), while the existence of mortgages or liens make the property liable for the payment of the amounts indicated.

If a property is acquired and the encumbrances are not cancelled, you will be affected by the limitations of the encumbrances, whether they are easements or real security rights.

4. Community of owners.

If the property is a dwelling or premises in a building divided into condominiums, it is advisable to check at least the following aspects:

a)       The situation of payment of the community fees, since the flat is liable for the community debts of the current year and the three previous years. When the deed is executed, the notary will require a certificate issued by the secretary of the Community of Owners, with the approval of the president, stating whether there are any outstanding community fees.

b)       The existence of agreements approving extraordinary payments, because it is possible that there are previous meeting agreements approving extraordinary payments that still have to be paid. From the moment you become the owner, these payments will affect you directly, and you will be responsible for their payment, even if you have not voted for them.

c)       The statutes of the property, to see if there are any special limitations that may affect you as the owner, such as rules for the use of the common elements, limitations, installation of elements, works, etc.

5. Property tax (IBI)

It is necessary to verify that the IBI corresponding to the property has been paid in full during the non-prescribed years. It is usual to talk about the last four years (and the current one), but the truth is that, if the Town Council has taken action to collect the tax, it will have interrupted the prescription periods and there may be debts for more than four years.

The quickest way to prove this is for the seller to provide a copy of these receipts. If the seller cannot find the originals and he had direct debit, he can ask his bank for a copy. In the event that the above fails, the Town Hall can be asked to issue a certificate of the IBI payment status, although some Town Halls do not issue such a certificate.

IBI is a tax that has "real affectation". This means that the property is "affected" to the payment of the Real Estate Tax corresponding to the current year and the four previous years. Thus, if there are debts corresponding to that period, you may be obliged to pay them, as otherwise the Tax Administration could sell the property to collect these amounts.

6. Town planning

It is advisable to check the town planning situation of the property, especially when it is a villa or a country house. In these cases, it is not only advisable to confirm that it has a licence of first occupation (or certificate of occupancy), but also to verify the urban situation of the property.

If the seller is unable to provide the documentation, you can consult the corresponding Town Hall to check the licensing situation of the property, as well as the current urban planning situation, with the authorisation of the owner.

The licence of first occupation (cédula de habitabilidad) will confirm that the property meets the necessary conditions for its habitability, but it will not necessarily accredit the legality of all the constructions, so it is not sufficient to request this document to consider the property to be legal.

Confirming the urban planning situation of the property will allow us to know exactly if the extension we wanted to make or the swimming pool we are missing can be done legally.

7. Contract.

If you have reached this point and everything is correct, it is time to formalise the beginning of the purchase-sale operation by signing a private contract (deposit, option to buy).

It is very important to point out that the private contract implies a commitment between the parties and the disbursement of a significant amount of money (generally around 10% of the price). It is in the private contract where the obligations of the parties arise, so it is important to have previously checked the situation of the property (physical and legal), as well as to be advised by a specialised lawyer. The signing of these documents legally binds the parties, and you may be obliging yourself to buy a problematic property, and you may not include provisions in the contract to cover them.

As local lawyers specialised in Property law, we can help you with the purchase of your property in Spain. Please do not hesitate to contact us.