re furniture

hi to all,

i was speaking to a finance company based in the south of spain today. a senior advisor told me that it is now illegal for a bank or financial institution to lend for mortgage purposes to anyone buying a property in spain which does not have the LFO granted. he said this law came in about 6/8 weeks ago and applies to the whole of spain.

is this correct ? is this now the law ?

regards,

ken..   

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Hi Kennym - the simple answer is yes! There are now several developments in Marbella for example where banks will not lend a cent without the license not in place. Some developments - due to the fact it is a small infringement are lending but there may only be a small choice of banks to borrow from

So - no licence, no mortgages EXCEPT for the developers mortgage, so be wary!

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Hi Rixxy,

Do you have any more information on this law that you can pass on? Is it a new law or just new policy for the banks? Is it the whole of Spain or just the CDS area?

Sorry for all the questions. We have bought in the Murcia region, with Escritura but without Habitation Certificates. Its difficult to get accurate information as there are so many opinions but not many hard facts. I'd be really grateful for any details you can provide.

Gail

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Hi Gail - its alwyas been actual law that any property must have all its licenses and the licenses themselves must be approved by the local town hall in accordance with the towns general plan which itself has been approved by the Junta - in theory no room for error or backhanders!

However in Spain for years and years the Spanish sort of do what they want so for example a peice of land will be bought that has permission for a 100sqm house, the owner builds it but with a basement underneath perhaps. This cannot go on the title deeds, but over time it gets converted and used as a second apartment - then after a period of time I beleive it becomes legal through use and it can be added to the title deeds. The sqmetres on the deeds are what the bank uses to value a proeprty, so a 100sqm one will value lower than a 200sqm one (hope that makes sense)

Developers here in Marbella (and other areas) gave large sums of money effectively for the local town hall to 'grant' a building licence - this was on the basis that a future town plan would be approved to allow extra building for the growing population and on the fact that higher up officials would grease palms to allow it (my opinion folks!) Once the works are complete, then a body from the town hall is supposed to go and approve the works in accordance with the plans and licenses given by the town hall - BUT there WAS a loophole called administrative silence which meant if no one went within 3 months of the request, then in order no to hold things up the final licens would be granted to the developer! On that basis loads of people went ahead and completed, but in recent times due to themassive abuse, these licenses have been revoked and are being reviewed.

Banks would blindly lend as this was 'the way' in Spain, but now it has all come to light, the excuse of ignorance cannot be used and so the banks are exercising the law as they chould have done all this time and are now refusing to lend on anythig that is not correct and does not have actual license.

Developments are underwritten by certain banks lending to the developer and these grant the 'developers mortgage' for buyers. These are still being offered as it is in the banks interest to do so, therefore in theory yo can stil buy an 'illegal' property with a mortgage.

This is law in Spain (others may correct me and Smiley who arranges mortgaes will know the correct info as he handles this problem daily)

What have you bought and have you actually completed? If it is an off plan then you wont get the full license until it is finished and approved anyway and until then do not proceed. It may be an idea to approach another bank for finance with the deeds of your propety and see if they give you a mortgage - if they do then maybe its all ok, if they dont then you need to find out more from your lawyer

Im sure Georgia can help you up there as well - Ihope some of this info goes someway to explaining things

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UPDATE to my above posts. I have just been informed that to recent knowledge only it is not illegal to complete without a habitation license although as Kennym states it may have been changed in the last few weeks.

Im looking to clarify this point although I do know you are entitled to REFUSE to complete on a property wthout this and SOME BANKS MAY refuse finance without it.

Sorry if I have mislead anyone and in the morning I will ask our lawyer for his views!

Watch this space!!

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I have asked for some clarification on this specific issue but I do not think it has been made illegal. It is certainly a situation where one should tread with extreme care and development specific. If you are talking about Marbella then there are certain developments that have conflicts with the Town Hall over simple issues such as build size in that the urb is 60 sq m larger than intended (or somethingn like that). Because of that there is no LFO but it is still possible to get a mortgage.

However there are certain developments that have really major issues such as "they stole 500 sq metres of beach" - that is somehting of a different story and the banks wont lend - whether illegal or not - additionally where there are such serious issues the Notaries have been told not to sign the documents - there are even situations that exist where there is an LFO and it is deemed to have been granted illegally ........ Gosh it goes on and on.

Regarding what you have been told Kenny, I think it is not the case but I am going to speak to a couple of Risk Directors at a couple of the major lenders tomorrow and see if they have had an y kind of directive from the Bank of Spain as they are the ones that lay down the rules.

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if buying overseas you should always act the same as you would in UK

In UK if buying a new house you would not complete unless there was planning permission, the local building inspector has approved the building works [ ie built to the required standards]

You are connected to main drains [ or sceptic tank] , electric gas and water

In Spain they have similar rules[ not identical] to make sure that everything is OK and the habitation Licence is an important part

Therefore there are no if & buts.....you do not complete without a HL [ applies to re sales!!], you do not complete on builders water and electric  

If you do then all the blame if it all goes wrong is yours  

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Totally agree, but clearly some people's experience says it's easier said than done. There's been some discussion elsewhere I think about the differences between the buying/selling process Spain v UK - maybe the thread about people without a conscience? I'll check & post there. There were some valid points about feeling pressured to pay a deposit to avoid losing a property, before all the checks have been done, and on the other hand, the gazumping problem in the UK where no money changes hands until all checks are done.

But bottom line is, as you say, if you don't carry out the necessary checks etc., you only have yourelf to blame ultimately.

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Perhaps someone ought to tell ATLAS INTERNATIONAL. Still waiting for Escatura after nearly 3 years and a Certificate of Habitation not even in sight ie still on builders water and electric and urb not finished and not being finished.

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Nice idea Brian but as Rob says it is not always possible to act as one would in the UK. Silencio de Administrativo for sake of argument does not exist in the UK and in Spanish Law it is a statute. Thus a developer could say the licemnce has been issued but in reality it hasnt (confused - no? you should be, because it baffles the crap out of me!! and I have a reasonable idea of what is going on). Best advice to anyone is not to complete without it however there are certain instnaces where banks will advamnce the finance as a result of a technical report that confirms that everything will be conmfirmed legal and licensed - thus who is wrong? The client for deciding to go ahead - they want to use their property and understandable or shpould they not - as long as they are armed with all the facts and have taken approproiate advice they are the best people to decide what to do.

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Take your point and many have completed on that basis and been happy

But I will not -although a risk taker by nature , not when you do not have to!!!

You need to see the paper work not just a promise

I have just signed for a property and the builder produced copies of his land purchase including site map and permits on request!

I suspect that even the Spanish lawyers and builders are starting to realise that due to the changing market they have to provide a service acceptable for their customers and react to all the bad PR in UK about buyers completing without all correct paper work

A year or so back ' black money ' was the norm and had been for ages-since Madrid all change and no one should now pay part ' black money' ...the start of the changes  

This message was last edited by rowlandsbb on 9/20/2007.

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Am I right in saying that if you have been taken off builders supply and you have had your water bill then the habitacion license has been issued

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Hi C0nrad, I asked my lawyer and he said yes and has received a c0py 0f this 0ff the builders 0f

Dream Hills 2.

Julia

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Hi Julia thats what I thought will ask my lawyer when over in October see you still have a dodgy keyboard

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Yes, Row. Things are changing, and consumers regulations are getting very tied in the property field.

Good for purchasers and for my country!

M.

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Many thanks to everyone who has replied to my questions on here.

Am I correct in assuming that there is not a new law as such, but that the existing laws are being more strenuously enforced in some areas? Or have I got that wrong?

 

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Both new laws and better enforcements.
M

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