Before July 2008, it was not necessary to obtain a Certificate of Habitation to complete a sale. Sellers were not requested to present the CH to new owners. So, notaries, land registry officers, banks, lawyers, etc were not requesting the CH to complete the sales. Thus, this document was not obligatory before July 2008.
Why this document was not obligatory to complete sales? – Because, the aim of this document, as explained above, is to “connect” the property to water and electric for the first time, and, once connected, to “change” the existing contracts into the new owners name.
In fact, for RESALES, during decades, Spanish buyers and sellers have been connecting their properties to water and electric, and changing the supplying contracts without this document. Specially in rustic land areas, electric and water companies were not asking for this document to change the supplying contracts.
So, NEW properties, and RESALES were bought and sold, and sales were completed at the notary office, and registered in the land registry office, without CH. Thus, builders were selling their new built houses to buyers without this document. Also, vendors (in resales) were selling their properties to buyers without.
In some areas, even supplying companies were not demanding this document to contract. In the majority of the cases, buyers could contract the water and electric by a phone call, or changing the name of the contracts into their names, and the CH was never been requested. Even today this is possible in determinate areas.
The problem arrived with NEW properties, like new apartments, urbanizations, etc, and for the explosion of the Spanish crisis. As explained, before July 2008 was not necessary for builders to provide to their buyers the CH to complete their sales. So, it was really common to sale properties “on construction”. For example, in an urbanization with 500 houses, the builder could sale by blocks of, for example, 100 houses, once they were completed, without to wait to complete ALL the urbanization infrastructure.
The CH is the last document obtained after the finalization of the construction works of the building. So, as before 2008 it was not necessary to present CH on completion, builders were building and selling their properties before they were “completely finished”. With this scenario, buyers they were buying their new properties ready to be used, but, sometimes without to “complete” other phases or blocks from the urbanization, or some urbanization infrastructure. Buyers were connected to supplies with “building supply” eventually, with the hope that the builder, once completed the rest of the urbanization, or the rest of the urbanization works, would then provide them with “mains” supply.
This was the scenario before the Spanish real estate “crisis” in the years 2008-2011.
But, with the crisis, it was repeated in the market that builders entered in bankcrupcy suddenly, and their companies were in big financial troubles because banks were closing . Also, the market stopped, and big urbanizations were suddenly unsold. So, builders were blocked with a dramatic position in which they could not finish the urbanizations or construction already started, because they could not find enough credit to do it from banks. In addition to this, they could not get private finance from their sales because the market was stopped, and they could not sale their properties.
As result of this scenario, buyers who previously had completed their sales and bought units from the builder from urbanizations not completed, they found theirselves on “building supply” utility contracts, and they saw how the builder simply disappeared, leaving the urbanization complex unfinished. As the global works of the urbanization were not complete, the CH was impossible to be obtain it, and buyers, and families, were left with “building supply” for long time.
This problem did not happen in RESALES where, with very few exceptions, sellers and buyers of OLD properties, which were really connected to water and electric, could obtain the cnahge of the contracts into the new owners name, after the sale, without any kind of problems. Thus, it was really common in the market NOT to apply to the CH on resales (urban and rustic), if the properties were already connected to water and electric, and when the CH was not needed to change the utility into the new owner’s name.
But, in July 2008, a new law came into force for all the Spanish territory. One of the intentions of this law was to avoid situation of buyers of New properties in urbanziations, complex, buildings, etc. This law said that builders cannot complete the sales of NEW properties without the CH. And ordered to notaries, land registry offices, etc, to request the CH to complete the sales of new properties. But this law, was forcing the notaries and the land registry officers to ask for the CH to complete purchases ONLY FOR NEW PROPERTIES.
In instance, this law did not say anything regarding RESALES. So, as consequence, to complete a sale of a resale, it was not necessary to provide this document.
This law helped to avoid future problems with buyers buying NEW properties, but, as they did not mention anything in relation to RESALES, creating a big confusion in the market.
As explained above, buyers and sellers were selling, and reselling their properties, without the CH. Resale buyers were changing their water and electric bills without any kind of problems, and the notary never asked for the CH in their transactions.
The confusion was created when, after the approval of this law, durign the years 2009-2010, buyers started to ask to vendors to provide this document. Sellers were requested to provide the CH, but, when they consulted the notary office to confirm if this document was obligatory to be supplied, they were confirmed that it was not requested by the law. So, notaries, land registry offices, etc, only required the CH for NEW sales, and not for RESALES.