Buying property in Spain: The First Occupation Licence is essential

Editor’s note: When buying property in Spain you need to make sure there is a valid ‘First Occupation Licence’ before you close the deal. This is true everywhere in Spain, but in this article Rafael Berdaguer, a lawyer with many years experience working in Marbella and the Costal del Sol, uses the case of Andalusia to explain why.

By Rafael Berdaguer
Lawyer/Abogado

Say you have decided to buy the house of your dreams in Spain, then one of the essential documents that your lawyer must get from the vendor before you complete is the First Occupation Licence (FOL). Here I will explain this document, and its importance when buying a home in Spain, with special reference to Andalusia, where I am based.

What is the FOL?

This is a document that is issued by the local council, which confirms that the property has been built in accordance with the project for which building consent was granted and that the building meets the necessary requirements for its intended use. For example, if the building is an apartment or villa, the use will be to serve as a dwelling for the owner. The FOL also confirms that the dwelling has the necessary infrastructure (i.e., road access, lighting, sewage, water and electricity).

What do we need the FOL for?

If you are the developer of the building, the FOL needs to be attached to the Deed of the Building together with the Building Licence and the architect’s Certificate of Completion, confirming that the property has been completed with the necessary infrastructure and that the description of the property in the Deeds coincides with that of the Project for which building consent was granted.

It is also required for the contracting of services and supplies, such as water, electricity and gas, for newly built properties.

Therefore, if you are a developer, you have to allow the necessary time in the contract of sale to deliver the property to the purchaser with FOL; otherwise, the purchaser can demand the resolution of the contract for non-delivery of the property by the agreed date. The timescale for this will depend on how long it takes for the particular council (where the property has been built) to resolve the application; it also depends on whether the property has been built exactly as per the plans for which building consent was granted. If extensions have been made to the original project, these will require building consent before the FOL is produced.

What alternative does a developer have if the council does not reply to the FOL application within the statutory time?

The Law on Andalusian Land Use (LOUA) provides for three months for the council to expressly resolve the FOL application. If there has been no reply, the applicant can consider the application implicitly granted (although this does not relieve the council of the duty to expressly resolve the application in which case the express resolution must confirm the implicit resolution granting the FOL). In this case, the developer has to do two things: first, apply for a certificate for the presumed FOL resolution, which the council has to grant within 15 days, and, second, communicate to the council that the property will be used within 10 days. If the council does not grant the presumed FOL resolution within 15 days, the statement of the developer before the attesting notary, confirming that the council has not resolved the application in three months and that the certificate for the presumed FOL resolution has not been granted within 15 days, will serve for the execution of the Deed of the Building.

Will the purchaser accept the presumed FOL resolution?

The fact that the FOL is implicitly granted after three months from the date of application does not relieve the council of its duty to expressly resolve the application. On the other hand, if the building has not been built in accordance with the project for which building consent was granted, the LOUA provides for the non-possibility of acquisition of rights by the elapse of time if these refer to acts that contravene the legal planning order. In this case, the council would have to deny the FOL. Our recommendation is that the purchaser makes a parallel investigation to see if there are any impending problems with the granting of the FOL, whether these are non-existent or minor problems that can be resolved and agree a retention with the vendor on the purchase price until the FOL is obtained.

Does a property with a FOL equate to non-existence of planning charges?

No. For example, in Marbella, some urbanisations have FOL irregularly granted by the council, and the owners may end up paying planning charges. Some of these developments with FOL which were built with licences not in compliance with the 1986 Town Plan are at present in the limbo. This has resulted from the Supreme Court Judgment dictated in October 2015 which made the 2010 Marbella Town Plan null and void and consequently reinstating the 1986 Town Plan. Therefore, a search in the town plan will have to be carried out to verify the planning status of the property. In addition, the purchaser has to carry out an investigation to see whether the building licence for the property has been challenged in the courts and whether such licence has been made null and void by a firm judgement and whether there are any administrative proceedings being followed by the council to try to restore the legal planning order.

With old properties, is it essential to demand the FOL?

In the past, the FOL was only required to contract services for newly built properties. Nowadays, it has become the closing element for the documentation of ownership of the property and is being demanded in every single transaction. As the LOUA requires the FOL for the execution of the Deed of a new building, the building cannot be sold to a purchaser without FOL, and, as in the past, the supplying companies cannot allow the supply without FOL.

However, if the property has been in use for considerable time, there are no planning issues and the property comes with long-standing services and supplies, the production of this document may prove a lengthy and burdensome process because a copy will have to be obtained in the archive of the council. In my opinion, in these cases, it is understood that the property has FOL and this should not be an essential document to obtain. However, some banks insist on the production of the FOL to grant a mortgage, thus making the FOL an essential component in the legal documentation of current property transactions. In addition to this to let a property under the new legislation of Tourist Holiday Rentals in Andalusia the FOL is demanded to be produced to register the property in the Special Registry for Holiday Apartments at the Andalusian Assembly (Junta de Andalucía). Registration of the property is a must to let the property for Holiday purposes.

Therefore, our recommendation is to seek experienced legal advice in planning and administrative matters to assess the importance of the FOL whenever you intend to carry out a safe real estate transaction.

Rafael Berdaguer
Lawyer with the firm Rafael Berdaguer Abogados based in Marbella, Spain.
www.berdaguerabogados.com

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution.
Copyright © 2016 Rafael Berdaguer Abogados All Rights Reserved

THE VIEWS EXPRESSED ARE THE AUTHOR’S ALONE

See also Licence of First Occupation (with example document) by Raymundo Larraín Nesbitt

Comments

comments

Leave a Reply

Profile photo of Rafael Berdaguer

About Rafael Berdaguer

Rafael Berdaguer is the founding partner of Rafael Berdaguer Abogados in Marbella, where a team of solicitors and economists offers fiscal and legal advice specialising in the needs of foreign investors, whether in company or property transactions. Prior to establishing his law firm in 1987, Rafael Berdaguer spent two years in a London law firm, where he gained an in-depth understanding of the needs of International clients. http://www.berdaguerabogados.com/