Marbella-based lawyer Raymundo Larraín revisits a First Occupancy Licence and gives us a brief rundown on what it is and its relevance to a property buyer.
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By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
8th of September 2018
The Licence of First Occupancy (LFO, for short) is a crucial document on buying off-plan property in Spain that draws a line between what is legal and what is not, in general terms. A LFO does not (usually) apply to resale properties.
This article is just a stub, a short summary. If you fancy an in-depth take on this topic, you can read our 2005/2009 breakdown: Licence of First Occupation.
A Licence of First Occupation is a certificate issued by a town hall which confirms that a newly-built property (off-plan) fully complies with all planning and building regulations and is fit to be used as a dwelling. It assures compliance with Health, Access, Safety, Planning and Construction laws, and that the property has been fully completed, with no outstanding works.
The LFO allows off-plan purchasers to dwell in a property legally. A LFO is also known as Habitation Licence or Certificate of Habitation and in Spanish, Licencia de Primera Ocupación or Cédula de Habitabilidad.
It is important mainly for four reasons:
- It provides a check on the planning legality. A LFO means the developer has built the dwelling in accordance with the original town hall’s Building Licence as well as with all Planning laws. The inspection to grant this licence is carried out by town hall’s chartered technicians who certify that the dwelling is deemed apt for human habitation.
- It is required by utility companies to have access to official supplies: water, electricity and gas. Spanish law requires the granting of the LFO to hook up the dwelling to the supply grid.
- Lenders will ask for it if you require finance. Banks will also be asking you for a LFO. Even on reselling the property, your buyer may request a copy for his own lender.
- Holiday lettings. If you are looking to buy as an investment (buy-to-let), a LFO is required by Regional Tourist Authorities to rent out your place on a short-term. If your property hasn’t attained a first occupancy licence, you will not be able to legally rent out your house and may be landed with humongous fines if caught red-handed. The fines for non-compliance are six-figures in some regions of Spain.
Be wary of anyone downplaying the importance of a LFO on off-plan property claiming it is unnecessary.
In general, I advise you not to complete without a Licence of First Occupation.
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Maj. Antoine Marie Jean-Baptiste Roger, comte de Saint-Exupéry (1900 – 1944 KIA). French writer, poet, aristocrat, journalist, and expert aviator. He became a laureate of several of France’s highest literary awards and also won the U.S. National Book Award. During his U.S. hiatus, he wrote the three books that would earn him literary immortality whilst strongly lobbying for the U.S. to join the war effort against the cruel Nazi tyranny. He is best remembered for his novella The Little Prince (Le Petit Prince), based on his real life Libyan desert crash, and for his lyrical aviation writings, including Wind, Sand and Stars and Night Flight. He vanished without a trace during WWII over the Mediterranean Sea on a reconnaissance mission behind German lines whilst piloting his Lockheed P-38 Lightning. His tragic disappearance marks the start of his literary legend which continues to grow every year, as new generations of young readers become imbued with his exquisite work (in over 350 languages!)
Article originally published at Larraín Nesbitt Lawyers: Licence of First Occupation
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