Buyer withdraws due to Fuera de Ordenación classification

We are the owners of one of one of 33 houses on an urbanisation built 8-10 years ago. The land was correctly classified as urbano and the urbanisation was in 2009 fully adopted by the local Town Hall notwithstanding the fact that the builder constructed every house in contravention of this or that planning rule i.e. too many metres, illegal third storeys, too close to the road etc.   The houses themselves were refused First Occupation Licences.  The main complaint of the Town Hall (Valencia Province) was  that the builder built each house on a 1000m2 plot when each property required 2000m2.   The Town Hall however knew what the builder was going to do as, in our case, they issued a licence for our house when a house had already been constructed 2 years previously on the same 2000m2 plot.

Our efforts to get the Town Hall to acknowledge their part in the fiasco and put things right for the owners have been fruitless but they have finally been persuaded to issue Second Occupation Licences to enable the properties to be sold on. However, having finally secured a buyer, he has been advised by his lawyer not to touch the house with a bargepole due to the fact that it has been given a ´Fuera de Ordenación´ classification. Seemingly this classification places a great many restrictions on what can be done to the property and with these restrictions in place, according to the solicitor, will never be acceptable to a bank as security for a mortgage as it has a limited lifetime.   The buyer could realistically therefore expect to make a loss when he comes to sell in future.

Our house is fully and correctly registered at the Land Registry and we have been paying full IBI since Day 1 and we had thought that with the Licence of Second Occupation we could at last look forward to moving on, assuming of course we could find that one elusive buyer!  Now it seems that the Licence stands for very little - how many people want to own a house they can do nothing to other than slap a coat of paint on now and again?

We are curious, do all solicitors take such a damning view of properties with a FdeO classification or is there scope for more balanced opinion?  The house is only 8 years old and hopefully will be standing for many years to come, far longer than the usual term of a mortgage.  Has anyone on here sold a property with this problem?  Is it possible to have the FdeO classification removed?  If so, what do we need to do.    We are at our wits end with this situation.

Why blame the solicitors?

You have answered your own question, nobody wants to buy a property they can't do a thing to. I certainly don't. And yes it's true, a bank will not give you a mortgage or if they do it wont be at the original value which is entirely fair enough. I know because we have been dealing with a seller with just this problem and the only real solution is for them to demolish the offending building or have an architect for the town hall give it a specialised clearance. The seller, or more appropriately the agent does not want to do this until they have money in their pocket. Frankly the house should never have been on the market yet it remains so and no attempt to regularise the property is being made. One can only assume they are holding off for a new buyer who has no solicitor so they can fob it off unawares.

And after all is said and done, even if they fix whatever the issues are the legal status only goes up to 'tolerated', now that is purchasing the dream right there. I'm just narky because we had to cancel our holidays over this rubbish.

Anyway, I can't speak for the nature of your FdeO, like I said in this case there was two solutions. Demolish the offending buildings or get an architect to say god knows what to somehow make it magically legally tolerated. Maybe that is an option for you?

Something I  would be concerned with though is the house is only 8 years old and with the introduction of the LOTUP rules this year then the implications may be much worse than a FdeO.

Having re-read the previous thread from 2013 ,although I have the greatest empathy for newbie, am very pleased to read that at last lawyers in Spain are working on behalf of buyers, as we expect them do in UK, at last. 

This is the best property boost there could be. And gosh, does the market need it.

Curious as to how/ who convinced newbie it was wise to buy into an urbanisation that didn't have the licences in place. Or perhaps it bought off plan. 

Whatever I think it is very wrong to offer a property for sale if some of the required paperwork was missing and ,before someone calls me smug, after 8 years have only just received my FLO. My scenario was totally unlike problems others have but if it have never been received...although 100% legal offering for sale wouldn't ever have been an option for me.

I have massive sympathy for you Newbie, but I can also understand your local Townhall's perspective.  The problem was created by the contractor and in effect the Townhall are just giving warning to any future purchaser that they will be refused any application for an extension etc.

In my limited experience I've found that Townhall's are intransigent on these sorts of issues.  You cannot change the mind of the clerk you are dealing with therefore it is vital that you first presentation is as good as possible, which probably means employing local representation.  Once they've decided that's it, unless you want to go to court.  The only possibility is a change in the personnel or mayor who might have a different interpretation.

The comments from Floella & Starfox are good and looking on the bright side the fact that you have been issued a Second Occupation licence presumably provides you with protection against action by the Townhall for the breaches of the planning permission by the contractor.

Incidentally, I did not understand the comment "according to the solicitor, will never be acceptable to a bank as security for a mortgage as it has a limited lifetime" - are you able to explain this please as it seems to be rather over egging the matter.

Perhaps you are unlucky in that lot's of buyers do not use a solicitor to buy in Spain.  But if I were you I would be upfront with the limitation and tell your next prospective purchaser the story as soon as soon as they show interest.  Once they receive surprise negative advice from their solicitor you are on a loser as there's so much other property on the market.

Thank you, acer, for your constructive comments.  Whilst we agree that the builder was the main culprit in this sorry saga, we find it impossible to accept that the Town Hall played no part in creating the problems.  Had they not granted a licence to build our house on 2000m2 when the builder had already built a  house on this very same 2000m2 plot 2 years earlier, there would have be no illegal house for us to buy.

When we bought off plan, we were assured by our then solicitor that the builder had the correct licences to build and yes, we did complete without a Habitation Certificate because we were assured by all concerned at the Notary that where they were dealing with an urbanisation, it was the standard practice of the particular Town Hall involved to issue these Certificates en bloc once the urbanisation was totally finished.  We were fairly relaxed about this given that we had previously had a house built on the coast and in that case, we also completed without a Habitation Licence, the document arriving a few months later without problem.  The law, even just a few years back, was not as stringent as it is now and Notaries/lawyers were certainly more relaxed about paperwork. 

What we want to say in response to the postings by starfox and floella  is that it was never our intention to try and fob our illegal property off on anyone.  When we first attempted to sell we were still awaiting the Habitation Licence and this fact was disclosed to all interested parties.  The situation, as had been put to us at the Notary, was explained to the buyers and their solicitors.  With the law having been tightened up considerably over the past couple of years, the buyers, not unreasonably, decided not to proceed in the absence of the certificate.

We immediately set about trying to get things put right.  Having sought the help of an independent architect, we spent a considerable amount of time and money in attending meetings with the Town Hall planners in an attempt to find a solution which would enable us to sell on with honesty and total security for any buyer.   Finally after 7 long years of trying, and after incurring yet more expense for legal help,  we finally obtained the Second Occupation Licence which the Town Hall insist is all that is needed to be able to sell on with total security for a buyer.  We thought, naively it now seems, that the the FdeO (Outside of Management) classification was merely confirmation that no action could be taken against us or the property in respect of the planning irregularities due to the passage of time.   Believing that the matter had been put in order, we had no hesitation in providing a copy of the Escritura, Occupation Licence and the accompanying FdeO letter to the most recent buyer’s solicitors.  

Acer, with regard to the ‘no mortgage’ comments made by the solicitor, the buyer explained that the solicitor had said that because the FdeO meant we could do nothing to the building except minimal maintenance,  the building would over time deteriorate to the extent that it would eventually fall down and therefore no bank would accept it as security for a loan.      We were not in any way attempting to blame the buyers solicitors for doing their job, we were just taken aback at their total condemnation of the property and were simply asking whether they were just being ultra cautious or whether we could expect all solicitors to respond in a like manner.  We posed the question because over the past couple of years houses on this urbanisation have changed hands, with at least 2 having been bought with the aid of a mortgage. 

We also asked the question as to whether anyone had been successful in having this classification removed as, far from being the villains portrayed by starfox and floella, we will be prepared to expend more time and money if it will ensure that any future buyer is 100% secure in his purchase. 

Stupid we may have been in our purchase of this property but dishonest we are not where the sale is concerned.

Please re-read our posts again newbie because neither Starfox nor I have accused anyone of being villains. Although having empathy with your situation  just both extremely pleased that some notories and members of the law society are at last acting in a responsible manner. Now it is time for councils and builders to make amends for their cohabitation on this con.

Plus the condemnation of people selling without appropriate licences in place couldn't be aimed at you because ,as you wrote, at that time you were under the impression your paperwork was in order. So think you are rather unfair in your accusation.  But hey oh, we all read things differently.

Have an issue with " only minimal maintenance". Any property that needs more , over a reasonable lifetime, would surely be uninhabitable in the first place. All properties, worldwide,  will require an upgrade of services and replacements of certain non structural  items after 20/30 year period. So think this an excuse by your potential buyer as a reason for refusal of a mortgage.

Nobody said you were a villain and don't mistake my frustration in my own experience for an attack, it wasn't. And it doenst really matter how the situation has come about because nothing will change where you are at now. It is admirable that you are trying to do things correctly but a measure of how poor the system is that you might not be able to.

I gave you some rough advice, it depends what the FdO actually applies to. If it is an outbuilding, fence or actually the entire house itself. Like I said in the case with the property we wanted to buy there were three solutions, ignore it and live with the property as is, demolish the offending structures or an architect needs to come round and make some sort of declaration to see if it can be cleared. So yes it is possible to have it removed, or at least was at this particular town hall for the particular structures in question, as I'm sure you well know results may vary depending on where you are.

This is I guess dependant on the town hall so you will need to ask them what is required. What I would be more concerned about if I'm honest is the fact that it sounds like the whole build may be deemed illegal, you mentioned the passage of time. Well that loophole has been tightened up since August so now what was declarable aftter 4 years had passed has now been stretched to 15 years. So yes 'IF' your property has fallen foul to the LOTUP ruling there might not be anything much you can do about it. Then again maybe it is possible to work something out so I would get a lawyer to find out exactly where you stand from the town hall.

Best advice is unfortunately seek legal advice and spend some more money.

Floella and Starfox - I apologise if I misinterpreted your postings but as I read them, it did seem that there was a underlying insinuation that anyone who markets a property with the paperwork not being 100% in order was behaving dishonestly and was therefore a 'villain'.   Your subsequent explanations have clarified your messages - thanks for that.

Have you seen this blog by Maria

www.eyeonspain.com/blogs/costaluz/14178/Legal-tip-1241--NEW-Court-Decission-on-Liability-of-Notaries-in-a-property-purchase.aspx

Perhaps Maria can advise if the circumstances related in this thread would qualify as a breach by the original Notary who allowed the purchase to proceed without licence in place.

What appears equally concerning is the fact that the property appears on the land registry.... so has the land registry in effect been compromised by this lack of due diligence on the Notary's part?

I agree that it's essential for " notaries and members of the law society are at last acting in a responsible manner" if the conveyancing system in Spain is ever to regain any credibility, but to make innocent purchasers the scapegoat for failures of due diligence in the conveyancing process, will sadly only add to the insecurities associated with purchase in Spain.

What sort of conveyancing/justice system is it that makes innocent purchasers accountable for their own system's failure to regulate, and their own system's failure to adhere to the rule of law? (see Maria's blog and comments-  http://www.eyeonspain.com/blogs/costaluz/14170/Legal-tip-1239-Still-unregulated-after-8-years.aspx).