Understanding the Certificate of Habitation (Cédula de Habitabilidad) in Spanish Real Estate: Andalucia and Valencia region

The “Certificate of Habitation (Cédula de Habitabilidad)”, also known as the “License of Occupation“, is an essential document in the realm of Spanish real estate, particularly when it comes to the sale, purchase, and legal use of residential properties.

This document serves as an official confirmation from the local Town Hall that a property is suitable for habitation. It certifies that the property complies with the necessary conditions and regulations to be used as a residential dwelling, distinguishing a mere construction from an officially recognized home.

What is the Certificate of Habitation?

The “Certificate of Habitation” (often abbreviated as CH) is issued by the Town Hall once a property has met several critical requirements. These include the completion of the property according to the standards set out in the “Final Works License” (Certificado Final de Obra) and its registration in the “Land Registry” with the “New Buildings Declaration” (Declaración de Obra Nueva, or D.O.N.).

This certificate is crucial because, without it, a property cannot be legally occupied or connected to essential utilities such as water and electricity under standard residential contracts. The CH effectively transforms a building from a mere construction site into a legally recognized home, ready for habitation.

Importance of the Certificate of Habitation in Utility Connections

One of the primary reasons the “Certificate of Habitation” is so important is that it is required to obtain utility contracts in the homeowner’s name, specifically for residential use.

Before the CH is issued, any electricity or water supply provided to the property is typically under a temporary or “construction” contract. This type of contract is intended to facilitate the building process, allowing contractors to use the necessary tools and machinery.

However, these contracts are not meant for long-term residential use and often come with higher costs and limitations.

Without a valid CH, homeowners might find themselves stuck with these temporary utility contracts for extended periods, resulting in higher bills and less reliable service.

In some cases, buyers or developers have been left in properties where the utility supply remained under a construction contract for years because the builder failed to obtain the CH. This situation can be particularly problematic, as it not only increases the cost of utilities but also complicates the legal standing of the property as a residential dwelling.

To avoid these issues, it is highly recommended that buyers or developers retain a portion of the payment until the builder obtains the CH. This incentivizes the builder to complete all necessary steps to secure the certificate, ensuring that the property is fully compliant and ready for residential use. This strategy protects the buyer from potential long-term complications and ensures that they can legally and comfortably occupy their new home.

Historical Context: The Role of the CH in Real Estate Transactions Before and After 2008

Before July 2008

The requirement to obtain a “Certificate of Habitation” to complete a property sale was not strictly enforced across Spain.

a) RESALES

Sellers were not legally obligated to present the CH to buyers at the time of sale, and as a result, notaries, land registry officers, banks, and lawyers often completed transactions without requesting this document. The absence of this requirement meant that many properties were bought and sold without an official confirmation that they were legally habitable.

The rationale behind this lax approach was that the primary purpose of the CH was to facilitate the initial connection of the property to essential utilities such as water and electricity. Once a property was connected, and the utilities were in the owner’s name, the CH was often deemed unnecessary for further transactions, particularly in the case of resales.

In many regions, especially in rural areas, electric and water companies did not require the CH to transfer utility contracts into the new owner’s name. Consequently, for decades, both new properties and resales were frequently bought and sold without the CH, and the absence of this document rarely impeded the ability to obtain utility services.

b) NEW BUILDINGS

The same for new buildings. Builders and promoters were not forced to provide the Certificate of Habitation when selling new homes and apartments. Usually, builders were allowed to force buyers to complete their acquisitions when works were finished, and providing the correspondent “License of Final Works”.

The Impact of the 2008 Legal Changes

The landscape changed dramatically in July 2008 when a new law came into force, altering the requirements for completing real estate transactions in Spain. One of the key objectives of this law was to protect buyers of new properties, particularly those purchasing units in large urban developments or apartment complexes.

The law mandated that builders could not finalize the sale of new properties without first obtaining the CH. This requirement was intended to prevent situations where buyers would be left with incomplete or partially serviced properties, a problem that had become increasingly common in the wake of Spain’s real estate boom.

Under the new law, notaries, land registry offices, and other relevant authorities were required to ensure that the CH was presented before completing the sale of any new property. This shift effectively ended the previous practice of selling properties before all the necessary infrastructure and paperwork were in place.

However, the law specifically targeted new properties and did not impose the same requirement on resales. As a result, there was no legal obligation for sellers of resale properties to provide a CH during the transaction. This distinction created a significant divergence in the market, with new properties subject to stricter regulations, while resales continued to operate under the old, more lenient framework.

Confusion in the Market: The CH and Resales

The introduction of the new law led to considerable confusion among buyers and sellers, particularly regarding resale properties. Buyers, now more aware of the importance of the CH due to the new regulations on new properties, began to demand this document from sellers of resale properties as well. However, because the law did not require the CH for resales, many sellers were reluctant to provide it, leading to disputes and misunderstandings.

This confusion was particularly pronounced in rural areas, where the CH was often not required by utility companies for transferring contracts into the new owner’s name. In these regions, sellers argued that the CH was unnecessary, while buyers, influenced by the new legal framework, insisted on its provision as a condition of sale.

The Crisis and Its Aftermath: The CH in Unfinished Urbanizations

The global financial crisis that began in 2008 exacerbated the problems associated with the CH, particularly in large urban developments. Before the crisis, it was common practice for builders to sell properties in stages, often before the entire urbanization was completed. For example, in a development of 500 houses, the builder might sell blocks of 100 houses at a time, without waiting for the entire project to be finished.

Because the CH is typically issued after the completion of all construction work, this practice meant that many buyers took possession of their homes without the CH, relying on temporary utility connections under “construction” contracts. The expectation was that the builder would complete the remaining infrastructure and obtain the CH in due course.

However, when the financial crisis hit, many builders went bankrupt or faced severe financial difficulties, leaving developments unfinished and buyers stranded. Without a completed urbanization, the CH could not be issued, and buyers were left with properties that lacked the legal and practical necessities of a home. These homeowners found themselves in a precarious situation, relying on temporary utility contracts with no certainty about when, or if, they would be converted to permanent residential connections.

Resales and the CH: Continuing Challenges

While the 2008 law helped to clarify the requirements for new properties, the issue of the CH in resales remained unresolved for several years. As noted, the law did not mandate the provision of the CH for resales, leading to ongoing confusion and conflict in the market. Buyers continued to request the CH as a form of assurance that they could legally occupy the property and secure essential utilities, while sellers, backed by the absence of a legal requirement, often resisted these demands.

The situation was particularly challenging in rustic areas, where properties built on plots smaller than the minimum size required for development (usually 10,000 square meters) were often ineligible for a CH. Some Town Halls took a pragmatic approach, issuing CHs for properties that complied with all other regulations and were free of fines, regardless of the plot size. Others, however, strictly adhered to the minimum plot size requirement, refusing to issue CHs even for long-standing properties, which led to further market complications.

Recent Developments: Clarification and Standardization of the CH Requirements

Between 2012 and 2021, in several regions as Valencia, Murcia, Mallorca, Cataloina and Andalucia, and recently in 2023 for all the Spanish terrotiry, significant efforts were made to standardize the requirements for obtaining the CH across Spain.

The financial support provided to Spain by European Union institutions during this period included a mandate to improve environmental protection and reduce the environmental impact of new developments. As a result, new regulations were introduced to ensure that all properties, regardless of their location, met certain environmental standards before being granted a CH.

Legalisation of properties without building license (LOTUP in Valencia, DAFO in Andalucia, etc.)

Valencia and Andalucia, are examples on the issue of normative to legalise construction built with the proper building license.

• Valencia: LOTUP and MIT (Minimimizacion del Impacto Territorial)

• Andalucia: DAFO – Declaración de Asimilado a Fuera de Ordenación

The general criteria that emerged on the above normative is that properties may be legalized with the allowance to habitation, when respecting the following: 

1. Freedom from Construction Fines

The property must be free of any fines related to illegal construction activities.

2. Council Tax Compliance

The property and its associated constructions must be fully declared and up to date on council tax payments.

3. Architectural Report

In many cases, an architect’s report on the property’s construction is required, ensuring that it meets all relevant safety and structural standards.

4. Environmental Compliance

The property must comply with local environmental regulations, particularly regarding energy consumption and waste management.

These standardized requirements have helped to reduce the confusion surrounding the issuance of the CH, particularly for older properties, specially in rustic areas.

As result, many Town Halls are now more willing to issue CHs for properties that meet these criteria, even if they do not conform to modern planning standards. However, some municipalities, such as Crevillente, continue to take a more restrictive approach, refusing to issue CHs in certain circumstances.

The new Law for Housing in Spain 2023 – Certificate of habitation on resales obligatory

Ley 12/2023, de 24 de mayo, del derecho a la vivienda (Ley para el Derecho de acceso a la Vivienda) Law for Housing in Spain 2023

This normative is the first one to introduce the obligation of sellers to provide the Certificate of Habitation to buyers in RESALES. 

So, buyers may require and force vendors to supply this document on property transactions.

But, the efficacy of this law in Spain is relative.   After more than one year if application, Notaries and land registry officers are not requiring  this document for resale transactions, and the absence of a CH does not legally impede the transfer of ownership.

Catalonia. The sole region demanding CH in resales

The sole region where we have found the obligation to provide the CH when selling a property is in Catalonia.

In Catalonia region, sellers must provide buyers with the CH at the time of completion of the purchase transaction, otherwise the notary does not authorise the sale.

In case the CH is expired, then, the vendor has to demand the renovation and obtained renovated for the buyer.

Rest of Spain: Selling a Property Without a CH: Legal vs. Commercial Considerations

If you are a seller (not a builder) looking to sell your property, the question of whether you need to provide a **Certificate of Habitation** to the buyer is a common concern.

However, from a commercial perspective, providing the CH can be highly advantageous. So, offering the CH as part of the sale package reassures the buyer that the property is fully compliant with local regulations and that utility contracts can be transferred without any issues. This can make the property more attractive on the market, potentially leading to a quicker sale and a higher selling price.

Additionally, it is important to consider the validity of the CH. Typically, a CH is valid for five years (or ten years for more recent certificates). Even if you obtained a CH when you purchased the property, it may have expired by the time you are ready to sell. While you are not legally obligated to renew the CH before selling, doing so can provide an extra layer of confidence for the buyer, making the transaction smoother and more appealing.

Conclusion: The Ongoing Importance of the Certificate of Habitation

The “Certificate of Habitation” remains a critical document in the Spanish real estate market, particularly for new properties and developments. While the legal requirements for resales are less stringent, the CH plays a vital role in ensuring that a property is fully compliant with local regulations and ready for habitation.

For buyers, ensuring that the property they are purchasing has a valid CH is essential, particularly if the property is new or located in a recently developed area. For sellers, providing the CH, even when not legally required, can enhance the marketability of the property and facilitate a smoother, faster transaction.

As Spain continues to refine its real estate regulations and align them with broader European standards, the importance of the CH is likely to increase, making it an essential consideration for anyone involved in the purchase or sale of property in Spain.

TLACORP SLP