What you should know when buying a new built property

What you should know when buying a new built property

             
In our previous editorial we looked at the legal checks that has to be considered when buying a re-sale property.  This week we will concentrate on the main legal checks to bear in mind when buying a new- built or off- plan property.
1.-  Building Licence.  This is one of the most important documents you should check when buying a new built/off plan property.  This means that the building company has permission to build from the Town Hall and that the land where the construction will stand is eligible for having the construction of your property built on it.  This is especially important when the property is located in an urbanisation at the outskirts of a town as it would not be the first time that a full urbanisation in the area has been built illegally, with the consequent problems for the owners with water and electricity supply, not to mention future fines or even demolishment of the properties.
You should not just verify the existence of the building licence but also that its contents entitles to the construction of your property, whether it is a dwelling, a block of apartments or an urbanisation.
If by the time you reserve the property the building company has not been issued yet from the Town Hall with a building licence, make sure before you put any deposits down that your money will be refundable in the event the builder is not granted planning permission in the end.  There is a way of protecting any part payments towards the future property by way of receiving bank guarantees from the builder.
2.-  Bank Guarantees.  On off-plan properties, a bank guarantee issued by a Bank (or eventually an insurance contract) guarantees that the part payments are reimbursed to the buyer, together with the legal interest up until the moment of being reimbursed, in the event that the construction of the property is cancelled, extremely delayed or never started.  The amounts paid to the developer are to be deposited in a restricted bank account where the monies are not allowed to be disposed of unless it is used strictly for purposes related to the construction of the building.
On many occasions the obligation of the builders to provide the purchasers with a bank guarantee (Act 57/1968) is hardly taken into account and it should always be ensured that the bank guarantee is provided upon signing of a private purchase contract.
3.-  Ten year building insurance.  In accordance with Act 38/1999 builders are obliged to contract a 10-year insurance with an insurance company to respond of any structural defects that may affect the building within 10 years of its construction. The Land Registry will not accept registration of the property if the insurance is not in place.
4.-   Habitation Certificate / Final Certificate of Works.  If you are buying a new built property always remember to check that the habitation certificate (cédula de habitabilidad) and the architect’s certificate (certificado final de obras) is in place before you go to the notary and pay the outstanding fees.  The main reason being is that you will not get the water and electricity connected unless the habitation certificate has been previously issued.  Also, remember to ask for all information relating to the taxes on the property and connecting fees for utilities.  
Please forward your enquiries or comments to This email address is being protected from spambots. You need JavaScript enabled to view it.

 

By Noelia Poveda, Poveda & Associates Lawyers


                In our previous editorial we looked at the legal checks that has to be considered when buying a re-sale property.  This week we will concentrate on the main legal checks to bear in mind when buying a new- built or off- plan property.
1.-  Building Licence.  This is one of the most important documents you should check when buying a new built/off plan property.  This means that the building company has permission to build from the Town Hall and that the land where the construction will stand is eligible for having the construction of your property built on it.  This is especially important when the property is located in an urbanisation at the outskirts of a town as it would not be the first time that a full urbanisation in the area has been built illegally, with the consequent problems for the owners with water and electricity supply, not to mention future fines or even demolishment of the properties.
You should not just verify the existence of the building licence but also that its contents entitles to the construction of your property, whether it is a dwelling, a block of apartments or an urbanisation.
If by the time you reserve the property the building company has not been issued yet from the Town Hall with a building licence, make sure before you put any deposits down that your money will be refundable in the event the builder is not granted planning permission in the end.  There is a way of protecting any part payments towards the future property by way of receiving bank guarantees from the builder.
2.-  Bank Guarantees.  On off-plan properties, a bank guarantee issued by a Bank (or eventually an insurance contract) guarantees that the part payments are reimbursed to the buyer, together with the legal interest up until the moment of being reimbursed, in the event that the construction of the property is cancelled, extremely delayed or never started.  The amounts paid to the developer are to be deposited in a restricted bank account where the monies are not allowed to be disposed of unless it is used strictly for purposes related to the construction of the building.
On many occasions the obligation of the builders to provide the purchasers with a bank guarantee (Act 57/1968) is hardly taken into account and it should always be ensured that the bank guarantee is provided upon signing of a private purchase contract.
3.-  Ten year building insurance.  In accordance with Act 38/1999 builders are obliged to contract a 10-year insurance with an insurance company to respond of any structural defects that may affect the building within 10 years of its construction. The Land Registry will not accept registration of the property if the insurance is not in place.
4.-   Habitation Certificate / Final Certificate of Works.  If you are buying a new built property always remember to check that the habitation certificate (cédula de habitabilidad) and the architect’s certificate (certificado final de obras) is in place before you go to the notary and pay the outstanding fees.  The main reason being is that you will not get the water and electricity connected unless the habitation certificate has been previously issued.  Also, remember to ask for all information relating to the taxes on the property and connecting fees for utilities.  
Please forward your enquiries or comments to This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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