Licence of First Occupation

If you are buying a new-build property in Spain understanding the Licence of First Occupation (LFO) is essential. This document plays a crucial role in ensuring a property is legally habitable and can be connected to essential utilities.

What Is a Licence of First Occupation (LFO) in Spain?

A Licence of First Occupation (Licencia de Primera Ocupación or Cédula de Habitabilidad) is an official certificate issued by a Spanish town hall confirming that a newly built property complies with all building regulations, planning laws, and habitation standards.

This certificate is necessary to:

• Confirm that all legal health, safety, and access regulations have been met.
• Allow the property to be connected to utilities such as water, electricity, and gas.
• Enable the property to be used for residential purposes.
• Obtain a mortgage or financing if needed.
• Legally register the property for holiday rentals.

An LFO is required mainly for newly built or off-plan properties, but in some cases, buyers and investors should check for its existence when purchasing resale properties as well.

What Does LFO Mean in Spain?

LFO stands for Licence of First Occupation and is sometimes referred to as:

• License of First Occupancy
• Habitation Licence
• Certificate of Habitation
• Licencia de Primera Ocupación (Spanish)
• Cédula de Habitabilidad (alternative Spanish term for certain regions)

This document ensures that the property meets town hall building regulations and can legally be used as a home. For older properties the equivalent of the LFO is called the Cédula de Habitabilidad, or Cédula for short.

Why Is a Licence of First Occupation Important?

The Licence of First Occupation is essential for several reasons:

1. Confirms Legal Compliance and Planning Approval

Receiving an LFO means the developer has built the property according to the approved plans, following local and national planning regulations. Town hall engineers will inspect the property to ensure that no illegal modifications have been made.

2. Required for Utility Connections

In Spain, an LFO is mandatory to obtain official water, electricity, and gas connections from suppliers. Without an LFO, utility companies may refuse to activate services.

3. Necessary for Mortgages and Property Financing

Banks often require an LFO when evaluating a property for a mortgage. If you are buying with a loan, lenders will want to ensure that the home meets all legal criteria before approving the mortgage.

4. Essential for Holiday Rentals and Tourism Licences

If you plan to rent out your property as a short-term holiday rental, an LFO is generally required to register the home with regional tourist authorities.

• In some areas, renting out a property without an LFO can result in fines reaching six figures (€100,000+).
• Tourists may also demand proof that the property meets safety standards before booking.

5. Crucial for Future Resale

When selling a property, potential buyers need to see a copy of the Habitation Certificate, particularly if they need a mortgage. Buying a property without an LFO can make reselling difficult in the future.

What Is an AFO Licence in Spain?

An AFO Licence (Asimilado a Fuera de Ordenación) is a special legal certification issued for:

• Older properties in the countryside (rural properties).
• Homes built without original planning permission that need to be legalized.

The AFO does not grant full building approval but allows certain properties to obtain legal recognition so that they can connect to utilities and be sold legally.

If buying a rural home without an LFO, it is important to check if an AFO licence is required to legalize the property.

What Is the Licence of Second Occupation in Spain?

The Licence of Second Occupation (Licencia de Segunda Ocupación) is a renewal or revalidation of the original Licence of First Occupation, used when:

• A property has undergone renovations that require municipal approval.
• A property is being sold and the new buyer needs an updated license.
• The original LFO has expired (some regions require renewal every 10-15 years).

The process is usually simpler than obtaining a first LFO since it evaluates the current condition of the property rather than requiring full planning inspections.

What Happens If a Property Does Not Have an LFO?

If a property lacks an LFO, the owner or buyer may face serious issues such as:

• Difficulties connecting utilities – The local providers may refuse to install water, electricity, or gas.
• Rental restrictions – Without an LFO, it may be impossible to legally rent out the property, particularly for holiday lettings.
• Mortgage difficulties – Banks may not approve financing or refinancing.
• Problems selling the property – Buyers may be hesitant to purchase a home without an LFO.

Not all resale properties in Spain have an LFO, particularly older houses built before current planning laws. It is strongly recommended to check the legal status of a property before completing a purchase.

Can You Obtain an LFO for an Old Property?

For older properties that were built before current licensing laws, it may not be possible to obtain an LFO retroactively. However, in many cases, a Licence of Second Occupation or an AFO Certificate may resolve the issue.

Steps to check or obtain an LFO in Spain:

1. Request a copy of the LFO from the developer or previous owner.
2. Contact the local town hall to verify if the property has an official Licence of Second Occupation.
3. If the property lacks an LFO, check whether an AFO certificate can legalize it.

Is It Risky to Buy a Property Without an LFO?

Purchasing a property without an LFO carries risks, including:

• Future resale difficulties.
• Potential problems with utilities.
• Difficulty obtaining a mortgage.
• Risks of legalization issues if the property was built illegally.

If a property does not have an LFO, it is essential to seek legal advice before proceeding with the purchase.

How to Apply for an LFO?

If your property does not have an LFO, you can apply through the local town hall. The process includes:

1. A technical inspection by the town hall’s engineers.
2. Confirmation that the building complies with legal construction and planning regulations.
3. Approval and issuance of the LFO, allowing the property to be used as a home.

The process can take several weeks or months, depending on the municipality.

Conclusion: The Importance of an LFO in Spain

A Licence of First Occupation (LFO) is a critical document for new builds and many resale properties in Spain. It ensures that a home complies with legal, safety, and planning regulations and is fit for habitation.

Key Takeaways:

• An LFO is required for utility connections, mortgages, and holiday rentals.
• If buying property in Spain, always check if an LFO exists or can be obtained.
• For rural homes, an AFO Licence may be necessary if the property lacks an LFO.
• Selling or renting a home without an LFO can be difficult and legally risky.

Before purchasing a Spanish property, it is always advisable to consult a legal expert to ensure proper documentation, including an LFO, is in place.

Final advice:

• Avoid completing without an LFO unless there are exceptional circumstances.
• Review your purchase contract carefully—beware of clauses requiring completion before the LFO is granted.
• Seek legal advice before signing or proceeding with a purchase.

Important note: This guide is not a substitute for legal advice

This guide is provided for informational and orientation purposes only and is not intended as a substitute for professional legal, financial, or other advice. While every effort has been made to ensure the accuracy and completeness of the information provided, no warranties or guarantees, express or implied, are made regarding its accuracy, completeness, or currency. The information contained in this guide may be outdated or subject to change without notice. Use of this guide is at your own risk, and the authors, publishers, and distributors accept no responsibility or liability for any losses or damages that may result from its use. It is strongly recommended that you consult a qualified professional for specific advice pertaining to your situation.