The FOL verifies if the building can be assigned to its legal use, because it is located in a proper planning zone and if it meets the basic safety and health conditions. It also confirms that the builder has fulfilled his commitments on urbanisation of the surrounding land.
Regarding FOL and completion, Consumers specialists state:
1.- The seller who signs the public deeds of purchase without FOL ( First Occupation License) is in breach of contract even if the house has been physically handed over, because the ownership rights that he is trasmitting are not valid for the use of the house till the FOL is granted.
2.- The buyer can refuse to the signing of the deeds till the FOL is granted if the completion date was fixed for anytime after the end of the work, and the seller cannot cancel the contract due to this negative of the buyer until he fulfills his contractual obligations ( after obtaining the FOL).
3.- The buyer can cancel the contract ( even after the signing of the deeds), with full devolution of amounts, interests and compensation of damages if after the completion date, either the deeds having been signed or not, the building does not have the FOL.
4.- If the buyer decides not to cancel the contract, he must not occupy the house, even when having being formally handed over, because that would involve an administative infringement and because he can be deprived of its use by the competent Administration
Also , the Ground Act dated the 28th of May 2007 establishes in its provision 19 that the Notary deeds of " Under construction New Work " which are granted at request of developers when starting the building of a work require the existence of Work License. No Notary can sign a New Work deed without such license.
Provision 19 also establihses that the deed for the end of work will need the verification by the Notary on the existence of the First Occupation License and therefore deeds for the completion of the purchase business and transmission of ownership rights to Consumers cannot be granted without First Occupation License. In short words: no house can be acquired without that license