Government takes steps to avoid incomplete information on the land register

With regard to the blog on EOS titled “Government takes steps to avoid incomplete information on the land register “

I noticed the following comment on Spanish Property Insight website

http://www.spanishpropertyinsight.com/2014/06/16/cadastre-property-register-share-data/

which read as follows:

“great news and about time. it goes to show that here in Spain your escritura or deeds are not worth the paper they are written on. even more so with new legislation. I have 940 Sq meters of land that is on my deeds however after measuring my plot I only have 760 Sq metres and is marked on the catastro papers. found out the border wall between neighbours was put in the wrong place. according to lawyers in Spain I cannot get my land back. so make sure your land is measured and put border walls right to the limit. as catastro only use Arial images and satellite to assume where your borders are. “

So the legal question remains…… are the deeds recognised as legal proof of ownership of land or not, as this comment implies that they are not?

Registered title in the Land Registy, generally through an Escritura signed by a Notary, is what is required as proof of title.  The Escritura by itself is only enforceable against the parties that signed it before the Notary.  In order to be enforceable against thrid parties, the Escritura needs to be registered in the Land Registry.  The Land Registry proves ownership.

If there is a discrepancy in the definition of the property in the Land Registry and in the catastro (which is mainly a fiscal registry), the Land REgistry definition will prevail and there is a procedure to modify and correct the catastro.

The case mentioned in your post says that the lawyers have advised that it is not possible to get the land back.  It is not clear from the post what the circumstances are preventing the catastro from being modified.  Perhaps there is an error in the Land Registry definition too.  This would make it more complicated, but never impossible, to correct the error.  It is the Land Registry that requires correction to gain ownership not the catastro.  The catastro does not prove ownership.  The Land Registry does.

Thanks Lobin.Hopes this helps others to understand the complexities!

Does your observation re the Land Registry being the means to prove ownership now place all those without habitation licences on their properties (and therefore presumably not on the Land registry) at grave risk?

If the owner of a property does not have his title registered in the Land Registry, then he cannot prove that he is the owner vis a vis third parties.  This does not necessarily mean he is at "grave risk" of losing ownership unless a third party is challenging his ownership with a valid reason.  Not having a habitation certification would not generally be a challenge of ownership of either the land or the house if one has been built on it.  In addition, presumably the Land Registry still lists the seller as owner of the property and in general, the Escritura would be enforceable against that seller.

Having said that, every effort needs to be made to obtain the habitation certificate so that title can finally be registered to the rightful owner and this is a requirement for selling the property or for heirs to inherit legal title, althout there are instances when an Escritura of transfer has been signed and registered without a habitation certificate.    In addition, there are some other issues that could come up due to the absence of the habitation certificate, like problems to get utilities, for example.

Thanks Lobin.

Without habitation licence in place will the purchaser now (since these new arrangements) not be able to legally sell on their property nor will their heirs be able to inherit the legal title?

Also how can mortgages be provided on properties that are not registered in the Land registry? In the eyes of the law is it for the Bank to ensure the person applying for the mortgage is the legal owner and that the property in question is registered in the Land registry? Will Banks no longer be able to provide mortgages on property that is not registered in the Land registry?

Aren't these grave risks that now blight existing owners of properties that have no habitation licences?

I can write a  book on this.On two occasions when we have bought land, the paperwork that went with the land  was wildly inaccurate. In the first case the deeds showed  a much larger piece than we were buying, and included a house on it that had been sold years before with nobody updating the deeds. In fairness, the seller told us "here are the deeds, but they are wrong. That house over there and that piece of land is not included".

We went to our delightful semi-English-speaking girl lawyer whose eyes lit up when I pointed this out. I swear she said "Guy, we can steal this land for you", I said that that wasn't quite what I had in mind, especially as I'd become friendly with the Spaniards who lived in the house. I just wanted to sort it out. My lawyer was quite put out. "If you change your mind we can still steal it. They can have nothing to show the land is theirs. We hold the deeds!".

So we had a surveyor survey what was supposed to be our land (with the seller showing him where the border was) and sent the survey off to the deeds registry.  The nice Spanish people then tried to tell us that the geometrico had stolen a lot of their land. I asked if I could see their deeds or whatever so we could see where the border was. They kept stalling but eventually admitted they had nothing even to show it was their land, let alone where the boundary was.

Fortunately the seller was a local villager who knew everything about everybody and said "we'll get the Justice of the Peace over if there are any problems". Apparently this is quite common, they get all the old people who have farmed the area etc out to the property and they all tell the JP where they think the borders are. The JP supervises the placing of  great big white concrete  "JP" boundary posts that you tamper with at your peril. The people who lived in the house were gringos from Madrid who'd only been in the area a few years. So they backed down, with good grace, and we got our updated land registry and updated cadastro.

We then bought a second piece of land (from the same chap). Same story as before. The deeds showed a vast tract of land - although we were only buying a hectare. The cadastro showed a completely different piece of land yet again - with different parcel numbers. Our friendly notary just laughed. (He is unbelievably helpful.) But, with perseverance you get the real piece surveyed and fenced. Show all the neighbours the fence and ask if they've got problems. Of course, you can only do this with a helpful a seller who will back you up. But he is motivated - he wants to get paid. Then get your deeds tidied up/consolidated and then get the cadastro updated. 

It's been quite funny, with all our neighbours (some of them well educated and well off business people from Madrid) seeing these anal English speakers plodding along sorting out the deeds, bizarrely they have all come to us for advice and all say, "yes, we are all very slack in Spain, we must do what you have done for our children's sake". I don't say this to show what clever harrys we've been but to show that even the Spanish realise they've got to change their ways.

Land Registry problems are not just in Spain.

In 1968 I bought a new house in UK on a new development.  On completion the Land Registry maps where drawn up and all was well.  At least I thought it was, until some 17 years later when I came to sell, and the buyer’s survey showed that my boundary was wrong so ‘my plot’ was encroaching by 10 feet on the neighbours.   (The space between the plots was about 5 feet, so my neighbour’s house should have been five feet inside ‘my plot’).

When I looked more carefully I found that it was a problem which started at one end of the road, with a few inches discrepancy, which was repeated on each `plot.  So increasingly the boundaries were wrong.  As I say, when it got to my plot the error and accumulated to about 10 feet.

I spoke to Land Registry as I claimed the properties were all new (17 years before) and that they had a responsibility to draw up the plans to prove our ownerships.  The first attempt to get then to put it right failed and so did my potential sale.  I did not get another buyer for about a year. I approached Land Registry again, with the same argument, and that time they put it right.

Several of the houses, where the plots were shown incorrectly, had changed hands in the 17 years, some several times,  without anyone noticing.

For clarification Lobin, I'd be really grateful if you could please answer the following questions.

Without habitation licence in place will the owner now (since these new arrangements) not be able to legally sell on their property nor will their heirs be able to legally inherit the title?

Also how can mortgages be provided on properties that are not registered in the Land registry? In the eyes of the law does the property in question have to be registered in the Land registry? Will this mean that Banks will no longer be able to provide mortgages on property that is not registered in the Land registry?

Aren't these grave risks that now blight existing owners of properties that have no habitation licences?

Legally the owner can sell his property and the heirs can inherit the property without a habitation certificate.  Ownership and title are not impaired for lack of habitation certificate.  Lack of habitation certificate technically implies that  the construction or building on the land cannot be used as a dwelling and does not imply that title cannot be legally transferred.

In practice, however, a buyer may have difficulties in getting utilities and a seller may have difficulties in finding a buyer willing to go through the hassle of obtaining the habitation certificate and this is what is preventing many seller from selling or having to substantially reduce the price in order to find a buyer willing to buy without a habitation certificate.

The new regulations mentioned in your original post only refer to the discrepancies in the description of the land in the Land Registry and the Catastro and is trying to streamline the process for correct these discrepancies.  It seems that in the future, only one of them will be deemed to be correct as far as description of borders and this type of thing and it appears this will be the Catastro for technical reasons.  However, title is not affected and title will still be as shown in the Land Registry.

As for mortgages, you ask "how can mortgages be provided on properties that are not registered in the Land Registy and other similar questions".  First of all, please note that in general all properties are registered in the Land Registry.  So I guess your real question is "how can mortgages be provided on properties that are not registered in the Land Registry TO THE PERSON REQUESTING THE MORTGAGE?  Am I right that this is what you mean?

A mortgage is a lien put on a property in guarantee for the fulfillment of an obligation by someone.  It is not necessary for the party that must fulfill the obligation to be the registered owner of the property that is mortgaged in guarantee.  For example, I can accept a mortgage on a property registered in my name in guarantee for the repayment of a loan given by a bank to someone else (a descendant of the guarantor being a very typical case).  The Banks have to make sure that the person giving the mortgage is the registered owner of the property.  This is not because it is unlawful or illegal if their title is unregistered  but because then mortgage cannot be registered in the Land Registry and the guarantee then is not enforceable against third parties.  So it is really not a question of lawfulness (as long as the guarantor has an Escritura even if not yet registered) but a question of good risk management for the Banks to make sure the person giving the mortgage is the registered owner of the property.  In my experience Banks very very seldom take this risk and in those instances where the mortgage is given by the buyer of the property in guarantee for repayment of a loan to buy that same property (a very normal scenario) because the buyer is still not the registered owner of the property, the Banks will make it mandatory for them, the Banks, to take charge of registering the Deeds with the Land Registry rather than leaving it up to anyone else (including the Buyer) to do so.  In addition it is also normal for their Legal Departments to carefully overview that the transactions meets all requirements for the property and the mortgage to be registered. 

In this very normal scenario it is very unsual for an owner whose title is not registered to be able to obtain a mortgage on the property but to answer your question in a precise way, it is not illegal or unlawful if the Banks do accept the risk.  It is up to them and they usually do not accept the risk.

In summary, not having a habitation certificate does not really affect ownership unless the property is still registered to a third pary and that registered owner challenges the title of the current owner.  It may affect the resale value of the property, its access to utilities an services and it will usually affect the possibility of obtaining a mortgage to finance the property.  Therefore, owners should really do everything in their hands to obtain the habitation certificate.

Calling these problems "grave risks" is a matter of personal opinion and, more importantly, of the particular cirumstances of each case.  In my opinion, and in general,  they are not really GRAVE risks although, of course, they are issues that need resolving in order to protect your investment.

These issues are highly technical and it is difficult for me (I am Spanish) to be accurate and precise in an language I am fluent at (I hope) but is not the language I am used to using and reseraching technical issues.  I apologize for any lack of clarity.

Thanks again Lobin for all your explanations. Your English is excellent!

With regard to your observation “In summary, not having a habitation certificate does not really affect ownership unless the property is still registered to a third party and that registered owner challenges the title of the current owner.“ Isn’t this the risk associated with all those who have no habitation licence? Their dwellings by definition are still registered to a third party are they not (developer/previous seller)?

It appears that lack of habitation licence prohibits the registering of the dwelling and the land it sits upon in the Land registry, and as Maria identified back in 2010 “Provision 19 also establishes that the deed for the end of work will need the verification by the Notary on the existence of the First Occupation License and therefore deeds for the completion of the purchase business and transmission of ownership rights to Consumers cannot be granted without First Occupation License. In short words:  no house can be acquired without that license “.  Isn’t the inference then that the risks associated with “non transmission of ownership rights” is significant?….(please see details at end of this posting)..

 Some time ago Keith Rule identified of an instance where (if memory serves me well) a developer never repaid the developer mortgage on transfer of ownership, and moreover the developer extended the mortgage (all unbeknown to the buyer), and all presumably because there was no detail held in the land registry to check against to identify the change of ownership (due to lack of habitation licence). If I remember correctly, when the developer went bust the Bank came looking for repayment of these outstanding monies from the buyer who had already paid in full for their property (notary witnessed etc but without habitation licence in place). All the Bank was interested in was regaining their monies. Whether this was eventually resolved or not, no-one should under-estimate the stress and lack of trust that results from this failure to issue habitation licences. Nor should they ignore issues that lead to this failure in the first place, namely disputes between regional and local authorities, or town halls and developers, who treat the innocent buyers as “pawns” as they argue between themselves what retrospectively constitutes legal land, legal build, legal dwellings, etc.

Surely this situation can’t continue without recognising the major impact this is having on individual investor faith in a country that for the past decade has treated those who wanted to invest in Spain, so badly.  

So long as the change of ownership is not identified in some way within the Land registry for those currently without habitation licence, or decisions made as to the  “legality” of dwellings, then the risk of abuse remains. It saddens me to say this, but nor can buyers at present rely upon the Banks in Spain to follow correct procedures, or do what is “right”. Banks have acted negligently with regard to offplan purchase and the issuance and honouring of Bank Guarantees during this last decade, and they still continue to deny their responsibilities according to an existing Spanish law, by appealing rulings at every opportunity..... but we won't go there in this thread.

Suffice to say that until this matter of issuance of habitation licence, with compulsory updating of the land registry with the most recent details of transfer of ownership (even if there’s a “marker-reference” to those with non issuance of habitation licence) and more importantly the legality of dwellings is resolved, the problems will not go away.

The knock-on effects on the provision of utilities and services, mortgages, impact on resale values let alone issues affecting ownership rights, all serve to prove how crazy and compromising this situation has become.

I keep repeating this, but it does a grave disservice to all those who are desperately trying to deal with a system and “ethos” that is screaming out for reform, regulation, accountability and consistent recognition of property rights. The statement “Therefore, owners should really do everything in their hands to obtain the habitation certificate. “ is sadly an impossibility so long as the battles remain between the various authorities in Spain.

So long as a “back door” is open to permit buyers transference of properties in this manner then buyers will remain at great risk.

But more importantly those who have been exposed to non-issuance of habitation licence and have been allowed to complete by Notaries have, in effect, been given a green light to commit an administrative infringement if they move into their properties (see Maria’s posting from 2010, below). And all of this has been performed without buyers being made aware of the risks associated with these malpractices. It’s a disgrace.

So the question remains to those legal firms striving for reform, how can this be resolved? How can those who continue to be compromised by this malpractice (in complete ignorance of the complexities) be compensated in the eyes of the law? To correct the system without due attention to compensating those badly affected (unable to sell, no utilities, unable to acquire mortgages, etc), will only add to the lack of trust in the real estate industry in Spain.

Apologies for the rant, Lobin, and thank you for reviewing what appears to be complex technical details.

Note: The informative summary from Maria, (back in 2010) which was contained within the thread

http://www.eyeonspain.com/forums/posts-long-18606p1ondak-.htm reads as follows:

House cannot be transmitted without the First Occupation License

Legal tip 325. First Occupation license ( Edited version)
30 July 2010 @ 09:53
 

The First Occupation License is a license which states that what it has been built  isadjusted to the  work Project who obtained License by the Local Planning Authorities.

The FOL verifies if the building can be assigned to its legal use, because it is located in a proper  planning zone and if  it meets the basic safety and health conditions. It also confirms that  the builder has fulfilled his commitments on urbanisation of the surrounding land.

Regarding FOL and completion, Consumers specialists state:

1.- The seller who signs the public deeds of purchase without FOL ( First Occupation License) is in breach of contract even if the house has been physically handed over, because the ownership rights that he is trasmitting are not valid for the use of the house till the FOL is granted.

 2.- The buyer can refuse to the signing of the deeds till the FOL is granted if the completion date was fixed for anytime after the end of the work, and the seller cannot cancel the contract due to this negative of the buyer until he fulfills his contractual obligations ( after obtaining the FOL).

 3.- The buyer can cancel the contract ( even after the signing of the deeds), with full devolution of amounts, interests and compensation of damages if after the completion date, either  the deeds having been signed or not, the building does not have the FOL.

4.- If the buyer decides not to cancel the contract, he must not occupy the house, even when having being formally handed over, because that would involve an administative infringement and because he can be deprived of its use by the competent Administration

Also , the Ground Act dated the 28th of May 2007 establishes in its provision 19 that the Notary deeds of " Under construction New Work " which are granted at request of developers when starting the building of a work require the existence of Work License. No Notary can sign a New Work deed without such license.

Provision 19 also establihses that the deed for the end of work will need the verification by the Notary on the existence of the First Occupation License and therefore deeds for the completion of the purchase business and transmission of ownership rights to Consumers cannot be granted without First Occupation License. In short words:  no house can be acquired without that license

So, where does that leave people on Camposol who don't have CofHs, yet have mains electricity, water, house insurance. They are on the land registry, have escrituras, fin de obras, pay IBI. Houses are bought and sold  without problems.obviously the situation is that the urbanisation treated as if properties do have the certificate.

Duplicate deleted

Campasol, it’s obviously a postcode lottery depending on where you live in Spain and which development you live in. The following has been quoted “Afore just highlights the problem in Andalucía, but there are sixteen other communities in Spain which are likewise empowered to enact their own laws on the matter compounding the problem furthermore creating a legal Tower of Babel – shades of grey. “

NOT GOOD FOR THOSE SEEKING AN EASY SOLUTION !!!

Two informative articles however, which might assist those concerned or totally confused are as follows:

http://www.spanishpropertyinsight.com/legal/licence-of-first-occupation/

and an updated guide (April 2013)

http://www.spanishpropertyinsight.com/legal/licence-of-first-occupation-explained/

Hi Ads, 

Sadly you do not have the correct information regarding the Habitation certificate, WE have been waiting 8 years for ours because the Builder did not build the Road or have the Utility Meters installed (all the purchasers paid the Builder €900 for the meter instalation) and settled the bill for the utilities he left when he ceased to trade back in Feb 2008. 11 non nationals had purcahsed and we are all still in the same position. At the Notary we were told that they would hold the last payment 25% of the purchase price with a cheque fron the Builder for the same value.

The Notary gave the builder the funds back but we are still in the same sad position. .

No Habitation Certificate, No Legal personal Meters, No Road built. No Street swept yet we all pay ther Sumo taxes etc. 

I think there might have been some misunderstanding Poedoe as this is exactly what I have been forewarning about in this thread, that there ARE risks associated with purchase when no habitation licence is provided, so maybe best to seek a reputable legal opinion as to the best way forward given your own particular circumstance.

It's sadly an awful situation that you find yourself exposed to, presumably through no fault of your own.

Perhaps Maria could advise how she assesses your existing legal position and suggest a way forward?

Several questions arise from this scenario that Poedoe has highlighted.......

1) Is it correct to assume that there appears no possibility of issuance of licence in the foreseeable future?

2) Is this a correct legal  definition of FOL?

   The FOL verifies if the building can be assigned to its legal use, because it is located in a proper  planning zone and     if  it meets the basic safety and health conditions. It also confirms that  the builder has fulfilled his commitments on urbanisation of the surrounding land,

3) Is it therefore a correct assumption that so long as the licence is not provided the unsuspecting owner retains the right to cancel the contract ( even after the signing of the deeds), with full devolution of amounts, interests and compensation of damages if after the completion date, either  the deeds having been signed or not, the building does not have the FOL? Or is there a legal time limit applicable to this? Would any time constraint on cancellation rights be unenforceable given the unsuspecting owner has been waiting 8 years for issuance of licence from the Town Hall under the assumption that this was due to administrative failures?

4) The question then arises, who becomes responsible for compensation and damages since the developer ceased to trade? Does the responsibility lay with the Notary who appears to have given a green light to commit an administrative infringement if the owner were to occupy the property, or the conveyancing lawyer who did not demonstrate due diligence to ensure provision of licence prior to completion, or the Town Hall who have allowed the developer to develop on land that might not be located in a proper planning zone? Or do all three become jointly and severally responsible!!!!

5) Another important question to clarify is has the land registry already been compromised by registering properties without licences, and how is this to be corrected?

It's questions such as these that require answers.

In the interim the irony is however, that those like Poedoe, (who have adhered to all the legal responsibilities), are left in legal limbo, unable to legally occupy their properties, without legal personal meters, without provision of roads, without Streets being swept, etc, not to mention other knock on effects associated with non provision of licence (legal mortgage implications etc).

The current system across Spain appears chaotic and inconsistent, and the sooner the stark realities are recognised with legal clarification of Poedoe’s (and others) compensation rights, the better.

I fear it's sadly a long way off, however, especially when you review the conclusions from Spanish Property Insight article which makes reference to the recent Constitutional Court decision

"By using confusing criteria to nationalise thousands of waterfront properties without compensation, the Ley de Costas has done damage to Spain’s reputation for property rights, whilst spectacularly failing to protect the Spanish coast from over-development. The law was badly conceived to begin with, and it appears the reform was badly drafted too. This latest blunder comes soon after news that the Supreme Court struck down Marbella’s town plan, reinforcing the impression of incompetent law-making and unreliable regulations in Spain. ".

Here's the link:

http://www.spanishpropertyinsight.com/2015/11/17/formentera-coastal-law-boundary-changes-struck-down-by-court/?utm_source=Spanish+Property+Insight+News+Bulletin&utm_campaign=837f857038-SPI_NB_2304144_23_2014&utm_medium=email&utm_term=0_5c1bbc37e8-837f857038-137954973

How much longer will innocents be caught up in the cross fire of political debate and wrangling, unreliable regulations, and badly conceived laws that fail to adhere to the rule of law (“there is no expropriation of private property without adequate compensation, and strong rule of law requires that administrative proceedings are conducted timely, without unreasonable delays )?

Is the conclusion from these recent high court and constitutional court decisions that politicians from all political persuasions should never be allowed to play politics with essential property rights, and must be made accountable to provide adequate resources to the Spanish court and judicial systems thereby ensuring compensation  and/or inalienable rights are enforced in a fair and timely manner?

But equally important is the Spanish Government’s role in ensuring that an effective regulatory structure is in place to inhibit professional negligence and Banking abuse, since self correction from Bar Associations and the Bank of Spain have failed miserably to address malpractice and negligence of such a high order to have impacted thousands of innocent purchasers, and in the process decimated their trust in the Spanish real estate and Banking industries.

Sadly Spanish Government(s) have a great deal to address before any semblance of trust will return. They can no longer rely upon a patchwork of ill-conceived laws or a blind approach to unreliable regulations as a means of escaping some uncomfortable realities.

Nor should they ignore the need for timely, effective and consistent enforcement of good laws in place to protect…. Ley57/68 acts as a classic example where Banks and Insurance companies should be made FULLY accountable for their compromising negligences during this past decade.

Hi Ads,  So kind of you to take the time to find the information we are all seeking regarding the problems that have blighted the purchase of our & Thousand of other buyers of Spanish Holiday homes, Our complex Community have spent thousands on Lawyer fees which we hope will eventually solve the multitude of problems we all have. From all the joint information gained. INFORMATION that the same Notary @ address No 12 Avendia de la Libertad y Carlos Irels, Alicante, was used through, the Builder-Architect of our complex.

6 months after completing our purchase and collecting the Deeds from our lawyer, the Notary returned the large funds of 25% of the purchase price plus the same value from the builder. a totasl €52k held by the Notary. for just our purchase when we completed.

These funds were were said to be held to complete all the work YET to be done by the builder, even though he had not completed all the said work on the complex in question. Whe I enquired about the funds held I was informed that the Builder had confirmed that the work which included building the Road,  Instalation of the Utility Meters and numerous other parcels of work still out standing.was all complete.  (TOTAL LIES).   8 years and the extra rising cost to each of the owners purchasers, we are still in the same position.

The fact that the same Notary was used for each of the purchase completion's. The Builder did not turn up at the Notary for 2 other purchaser's that to date, MAY not have been repaid the €80 to 100k they invested of their Spanish holiday home. Possibly we will never know. I did meet one of the these couples but have not heard from them for the last 7 years.