Buying a rural property in the Malaga region

Hello,

I have done months of endless research and my head is constantly spinning! I thought I had a fair understanding of what was required and was checking to see if the house had either -

a First occupation licence - Licencia de primera ocupacion or Certificate of Habitation - Cedula de habitabilidad...

Or

a DAFO/AFO/SAFO - Asimilado al Fuera de Ordination

One of the other I believe is required for the house to either be legal or accepted......and required for a mortgage.

We've found a house that we like. The private owner has sent me a copy of the escritura of the house and an architect's report called a 'Certificado de vivienda unifamiliar'. The house has mains electric, they pay IBI and have access to community water...

The owner (as they would) is telling me this is enough - is it?

We will be hiring a conveyancer etc all in due course but if anyone could help with any insight just now that would be extremely helpful!

Thanks
Emma

Hello Emma and welcome to EOS

You could consider seeking advice from a qualified and registered Spanish lawyer, they have been known to deal with these type of things on occasions.

Hi Emma,

You sound like you've started in the right way and the comment re a lawyer is good, but be very wary - many do not follow the same professional standards you might expect.  You need to be more proactive.

They rarely put anything in writing, so it's good to confirm important stuff back to them.  It may help to download the standard UK Law Society conveyancing forms to use as a checklist - some parts are irrelevant, but it does no harm.

Good luck.

Emma do not believe anything that the owner tells you. They are interested in selling. As Kavanagh has suggested get a Spanish Lawyer to check everything.

Also worth reading the following website for guidance

https://www.gov.uk/guidance/how-to-buy-property-in-spain

Hi Emma 

As others have stated retain the services of a qualified lawyer. Many many rustic properties are what would otherwise be considered illegal constructions. Once perhaps a cattle shed or shepherds hut they have been converted to dwellings. Many of them have been retrospectively been "legalised" after a fashion in that despite their illegality the local town hall (ayuntamiento) acknowledges the fact that its there and being lived in.....hence they can charge IBI and property taxes. 

As to mortgages most lenders will not lend on rustic property as there is increased risk to their security - the few that will, will drastically reduce loan to value (that in itself tells you something) and the bank's valuation report (Tasacion) which will be far more thorough than the vast majority of lawyers when it comes to ensuring complete legality (nothing against lawyers but the banks have a vested interest) will never come close to the sale price of the property (well I have never known it to).Just to give you an idea I have recently had a client arranging finance for a commercial project and part of the land was fully urbanised and part of the land is still officially rustic - the urban element of the project was valued at 1300€ per square metre - the adjacent rustic land 4 Euros 50 cents per square metre. 

Tread with extreme care and don't forget the vendor is likely motivated to tell you what you want to hear to get the sale through.

All the best 

Smiley,

Good posting.

Given your forewarnings do you see any potential problems with regard to plans to increase the rural holiday industry in Spain ( see blog below)? Isn’t it important now to WIDELY expose the risks associated with the issues you have raised, given the fact that a contract could be signed prior to an agreed mortgage with the bank? Or have I misunderstood the risks going forward?

https://www.eyeonspain.com/blogs/spainnews/18991/tourism-is-necessary-for-broadening-horizons-and-avoiding-walls-says-sanchez-at-global-summit.aspx

Thank you Ads 

Loving the irony of Sanchez's comments about building walls and borders given his rhetoric on Gibraltar but that is an argument that will go on ad infinitum.

I am far from an expert on the tourism sector but from what I can see there is definitely more interest in exploring the hinterlands of Spain far from the madding crowd although it is still hard to find a bed on the beaches most days in Summer. If this growth continues it can only be a good thing for the less well visited areas in terms of stimulating the local micro economies and be more incentive for younger people to stay in the whitewashed pueblos instead of having to seek work elsewhere. 

As to the risks involved in an individual purchasing a rustic property - I believe those have always been there although it is only in a more regulated and scrutinized arena that awareness is starting to grow. Gone are the days when a villa could be constructed with a huge underbuild basement and once the First Habitation Licence was issued and everything signed off by the Technical Architect the basement would be opened up into living space and thus a "perceived increase of value" of 30% or more. When it comes to rustic or rural land that has been built on then yes I believe it is VITAL that a buyer investigates all the risks (not just mortgage) before signing any form of contract that is binding - but then I think that applies to every property if a mortgage is needed and not just rural. Banks in Spain have different methodologies of assessing affordability and over the years I have come across a fair few people who have signed a contract and paid a non-refundable deposit assuming that the mortgage would be a formality (some high earners as well). There is nowhere where this is more applicable than the borough of Marbella. Forgive me if you are familiar with the abuse of the 86 PGOU scandal whereby 18,500 properties were deemed to be illegal by the Junta de Andalucia and the ensuing chaos over whether a property was legal or not, the eventual compromise and retrospective legalisation of 16,000 of the properties and then the eventual ruling by the Supreme Court that threw all those properties into uncertainty all over again (that is very much the abridged version ). There are banks who once again will not lend on those properties (a few who will but usually at reduced LTV as they are looking glass half full) and these are urban properties.

Not sure that answers your question but I guess in essence it must be remembered that it is a buyer beware situation and anyone buying here whatever it is crosses all the i's and dots all the t's before tying themselves into a financial commitment   

Thanks Smiley. Couldn’t agree more.

What I am concerned about however is how this message is best communicated to those who have little understanding of the complex detail associated with purchasing rural properties, especially if this is going to be an area of growth in the foreseeable, and how best to ensure that the message is conveyed as widely as possible, to pre-empt problems that we have all witnessed to date.

 Given the historical background and complexities in Spain, would you know if there is any plan to ensure some form of trusted regulatory accreditation system is being developed in the UK, ( sadly given up on this option in Spain!), to ensure that companies promoting sales in Spain from the UK would be denied accreditation (and if possible fined?) in the event of malpractice or failing to advise of this form of essential detail when promoting their “products”? 

If this isn’t already in the pipeline, do you think this a viable option going forward, and if so would you be prepared to corroborate this detail to the UK govt in an attempt to gain a trusted accreditation system in the UK? 

This would have the potential to work in everyone’s favour in the longer term if it results in minimising problems going forward and improve purchasers trust in that process.

More fairyland. How do you regulate a Spanish cowboy company from the UK?

Hi Ads 

I'm sorry but I have no idea whether plans are afoot to introduce  the sort of "safety net" mechanism you're talking about and bearing in mind it relates to Spanish property I seriously doubt whether they would. One would like to think that agents selling Spanish property in the UK would make themselves informed of the situation and pass that knowledge on to purchasers but I am inclined to think that their motivation lies in a different direction.

Having said that there is a question over whether prospective buyers are willing to listen. I have had countless conversations over the years with prospective mortgage clients regarding the risks associated with rustic properties and the limitations on mortgage options and on the whole most have been somewhat reluctant to listen. Those who fully understand the risks (once explained) are few and far between and don't like to have their plans shot to sh#t. I get it, I honestly do because nobody likes disappointment. 

I remember many, many years ago being approached by a client for a construction mortgage - this was for a 5 bedroom villa inland from the coast. When I received initial documents the licence was clearly for an industrial unit and the land was not for residential development. When I explained to the client that no lender would agree to the proposal his response was that the project had been proposed to him by a Spanish lawyer so it must be kosher - the lawyer allegedly told him that it happened all the time and had happened for years. Build the villa, wait 4 years (used to be an old 4 year ruling here that limited demolition time on illegal construction) and then get the Town Hall to recognise it and change its classification from industrial unit to dwelling house - then flog it for a massive profit! That may well have been the case but no bank would even consider lending on such a project simply because of the risk and technically they would have aided and abetted fraud. His next comment took the wind from my sails a little because he asked if there would be any private financiers that would do it! When I explained that unless he wanted to build an industrial unit his final comment to me was that he would find some other way to raise the money through a UK remortgage or something and pay cash. Some people just don't want to hear.

As to corroborating anything to the UK government then absolutely I would be happy to but I rather think that getting them to listen to a situation outside their jurisdiction in the first place would be an achievement - even at a time when Brexit problems weren't uppermost in their minds I doubt they would get involved. With Brexit and the ensuing problems with or without a deal I reckon it would be even further down the agenda  

Thanks for your thoughts Smiley and I do understand the timing is not ideal and that of course there are some who even when presented with detail continue to take major risks...

I’m sure you know this but 

“Accreditation helps limit “product” failure while simultaneously reducing barriers to trade.....

Its purpose is the improvement of quality and public accountability. It’s a quality control process.

It helps determine if a company meets or exceeds minimum standards of quality, it assists purchasers in determining acceptability.”

So given the above and all the problems already encountered in Spain where so many problems are only resolved after the event, it is disturbing to think that those who do whistle blow on uncomfortable realities such as this, consider those in power have little incentive to protect ( and this includes both the UK and EU). 

The bottom line appears to be that it’s only those willing to follow through with firm resolve to effect solutions will ever make progress.

In the interim the message continues BUYER BEWARE and make sure you use a highly respected and trusted lawyer....but there again we’re back to how effective the Bar Associations are at regulating their own members! 🤨

Thanks again for whistle blowing Smiley.

My two-cents:

It is very good that banks are not granting/subrogating mortgages on illegal buildings anymore. That adds a lot of  safety, of course.

There are also enforceable regulations for estate agents by which they are responsible for any statement/s included in their publicity and their documents , which being false may lead to a wrong  decision by the and hence generate  a damage to this..

But, as we say in Spain, "better to prevent than cure" and therefore it is best to hire a good independent lawyer.

The embassies of UK and Ireland have a list of recommended attorneys, which may be helpful

Link to UK List

Link to Ireland List

A few years Ago we published a series of posts on this topic, perhaps they add:

https://www.eyeonspain.com/blogs/costaluz/3975/legal-tip-327-farm-houses--a-business-and-a-home.aspx

https://www.eyeonspain.com/blogs/costaluz/3995/legal-tip-328-farm-houses--a-business-and-a-home-ii.aspx

https://www.eyeonspain.com/blogs/costaluz/4015/legal-tip-330-farm-houses--a-business-and-a-home-iii.aspx

https://www.eyeonspain.com/blogs/costaluz/4030/legal-tip-331-farm-houses--a-business-and-a-home-iv.aspx

https://www.eyeonspain.com/blogs/costaluz/3113/business-tip-6-how-to-set-a-rural-bed-and-breakfast-in-spain.aspx

It is shocking what we are being told.....by owners and agents - as expected......by also by solictitors, lawyers and gestors....I did a test and sent the papers we'd receieved to a few and they all told me that its fine to go ahead and that they looked at the papers for free but their fees for helping with the purchase were xxx

The house in question was on mains electric, was part of a community water system, paid IBI for the land and IBI for the house, had everything on the land registry, had the house signed off by an architect etc......all in all it looked legal.......yet my suspicions of it being legal but not legal to live in etc were justfied...we went to the town hall and found that yes it was built on protected land and as it was built after 1999 it wouldnt even be able to get a DAFO - so we've walked away......but this is the house they all said was ok to buy!

Shocking!

Emma

Your post confirms the dangers of unaware Brits entering the cowboy lion’s den of Spain. Most Brits come along in good faith with their UK head on and find the lies, deceit and fraud beyond their imagination. EOS forum would be a good education to anyone thinking of relocating to Spain; however the forum has been somewhat drowned and spoiled again with BREXIT.  

Unfortunately due to politics the British Consulate cannot warn and publish the facts.

Absolutely!

I've lived here 20 years, just moving inland from the coast

But those buying from the UK are completely being duped :-(

Excellent posting Emma.

So yet again if a system beset by loopholes continues to expose purchasers to this scenario, we come back to the benefits and need for effective regulatory structures and accreditation systems to be developed in Spain if  lawyers, agents, notaries, town halls, gestors, whoever , are to be entrusted going forward.

What is the point for instance of having Bar Associations if they fail to effectively regulate those members who do a grave disservice to their profession? 

How can it be right to suggest a system that allows from the outset “ being legal but illegal to live in” is a trusted system?! Crazy.... Why are these instances not prevented at source I.e. identified on the land registry?

How can it be right to have lawyers, notaries, gestors, agents who fail to correctly inform from the outset? This doesn’t appear to be prevention rather than cure.

The thought of purchasers being duped by a system that continues to fail to protect from the outset, that fails to recognise a duty of care to adequately regulate its real estate professionals and legal professionals (and financial institutions for that matter) doesn’t bear thinking about, given the already overloaded justice system still struggling to cope with thousands fighting for justice from the last financial duping by the Banks. 

This message was last edited by ads on 07/04/2019.

Yes ads but what do you do about it all when society is totally bent from top to bottom and everyone in authority is fully aware and do not have the slightest interest in ever changing things? Perhaps send a letter up the chimney to Santa Clause.

You continue to whistle blow and educate the purchasing public of uncomfortable realities, so that those unaware of the ongoing risks can at least make better informed choices.

Thank you.