CHANGES IN THE HOUSING LAW THAT AFFECT THE BUYING PROCESS RESIDENTIAL PROPERTIES IN SPAIN – A NEW SCENARIO FOR THE PURCHASE OF PROPERTIES IN SPAIN

 Law 12/2023, of May 24, para el derecho de la Vivienda . Click here to see the law 

This law introduces, among other things, a fundamental advance in the protection of the rights of buyers and tenants of residential housing against builders and property owners.

The law declares the provision of transparency in the process of providing all kinds of information that affects the property as mandatory requirements in the property buying and selling processes.

Thus, in this way, the law establishes, in its Article 30, that the basic principles of the acquirers, buyers or tenants of properties are to receive information about the characteristics of the properties, their services and facilities and the legal and economic conditions of their acquisition, lease, assignment or use, and that this is:

• Complete
• Objective
• Truthful
• Clear, understandable and accessible

Who must comply with this duty of information to the buyer and/or tenant?

This “duty of information” is established as an obligation for all agents that, operating in the housing construction and rehabilitation sector and the provision of real estate services, are empowered to transfer, lease and transfer properties in own name or on behalf of others, such as:

• Promoters and builders
• Owners, sellers and other holders of real rights
• Real estate agents
• Property administrators

All these agents and professionals must comply and guarantee that, in the exercise of their activity, they comply with their obligation to provide complete, objective, truthful, clear, understandable and accessible information to buyers and/or tenants in accordance with the provisions of this law. household.

In addition to the duty of information, agents must comply with consumer and user defense legislation in the case of relationships between consumers or users and businessmen, the advertising they carry out being subject to the general legislation that regulates it.

Any advertising act with insufficient, deficient or misleading information is prohibited .

What type of information should owners, developers, real estate agents and property managers provide to buyers and/or tenants?

 It must be “complete” information. In other words, any form of communication addressed to housing applicants, users or the general public in order to directly or indirectly promote the transfer, leasing and any other form of property assignment.

The information that, “as a minimum” must be provided to the buyer or future tenant is, according to Art. 31, the following:

– Identification of the seller or lessor and, where appropriate, of the physical or legal person involved, within the framework of a professional or business activity, for intermediation in the operation. That is, the owner must be identified, and, where appropriate, the real estate agent involved in the operation.

– Price and economic conditions of the transaction: Total price and concepts included in it (furniture, fixtures, etc.), as well as the financing or payment conditions that, if applicable, could be established.

– Essential characteristics of the dwelling and the building, including:

1.-  Certificate of Habitation, or certificate of habitability, or occupation license.

2.- Accreditation of the useful and built area of the dwelling, differentiating in the event of horizontal division the private area from the common ones, and without the ability to compute for these purposes the surfaces of the dwelling with a height lower than that required in regulatory regulations.

In other words, the owner or agent may not advertise or offer as “useful surface” or “built surface” those parts of the house that do not meet the minimum height required by regulations for the habitable area of the house.

3.-  Age of the building and, where appropriate, of the main reforms or actions carried out on it. That is, a history of the reforms carried out on the property must be provided.

4.-  Services and facilities available to the property, both individual and common, such as water, electricity, sanitation, sewerage, septic tank, etc.

5.- Certificate of energy efficiency of the house.

6.- Conditions of accessibility of housing and building. That is, if the house has facilities and access for people with limited or reduced mobility.

7.- State of occupation or availability of the dwelling. That is, if the house is occupied or free.

– Legal information of the property: the registry identification of the property, with the reference of the charges, encumbrances and conditions of any nature, and the share of participation in the common areas established in the title deed.

– In the case the house is protected or in protected areas, express indication of such circumstance and of the subjection to the legal regime of protection that is applicable to it.

– In the case of buildings that officially have architectural protection because they are part of a declared environment or because of their particular architectural or historical value, information will be provided on the degree of protection and the conditions and limitations for reform or rehabilitation interventions.

– Any other information that may be relevant to the person interested in buying or leasing the property, including aspects of a territorial, urbanistic, physical-technical, asset protection, or administrative nature related to it.

Important !

Failure to provide this information will be understood as a breach of the duty of information by the owner and/or agent.

In addition, in general, information that omits essential data or contains it in terms capable of misleading recipients or producing economic or legal repercussions that are not admissible, is understood as incomplete, insufficient or deficient, for disturbing the peaceful enjoyment of the house in the usual conditions of use.

Information about asbestos in the property or building

In the same terms as established in the previous section, the person interested in buying or leasing a property may request information about the detection of asbestos or other substances that are dangerous or harmful to health.

Information about “stress zone”

The local governments will indicate which areas are considered as “zonas tensionadas” (stressed areas), where there is a high demand of properties and a low offer.

When the property that is going to be rented as a habitual residence is located in an area with a stressed residential market, the owner and, where appropriate, the person who intervenes in the intermediation of the operation must indicate this circumstance and inform , prior to the formalization of the lease, and in any case in the contract document, of the amount of the last rent of the habitual residence lease that had been in force in the last five years in the same property, as well as the value that may correspond to it based on the applicable housing rental price reference index.

When should this information be provided?

The law establishes that the duty to provide this information must be fulfilled BEFORE the formalization of the transaction and the delivery of any amount of money on account.

This legal obligation establishes a substantial change in the traditional process of buying, selling and renting real estate in Spain. To date, it has been common practice in the Spanish real estate market for the information to be provided to the buyer or tenants to be made AFTER the delivery of a signal or payment on account of the purchase or rental transaction.

However, the law includes the obligation for owners to provide this information to buyers or tenants at the time they decide to put their properties up for sale or rent.

In this way, the law tries to correct those cases in which buyers or future tenants delivered amounts of money “blindly”, and without being provided with essential information about the properties. This gave rise to complicated situations in which buyers, or tenants, discovered legal defects in the property, having already delivered and in the hands of agents and/or sellers certain amounts of money.

Therefore, a substantial change in the procedure is required in the activity of buying, selling and renting real estate. It will be necessary for the owners or sellers, at the moment they opt for their decision to sell or rent the property, to take the necessary steps to obtain this documentation, either by themselves, or assisted by real estate agents and/or lawyers. to represent them in the process.

The Certificate of Habitability or Occupation License (CH)

The law establishes as an obligation on the part of the owner to provide the Certificate of Habitability or Occupation License BEFORE the buyer or tenant makes any type of delivery on account of the price.

For this reason, the trend that in recent years has been practiced in the sale procedure that the owner must provide the Certificate of Habitability or Occupation License to the buyer and/or tenant is confirmed.

The question then arises of those houses that do not have a Certificate of Habitability.

In these cases, the following assumptions may occur:

• That the house is in a condition to obtain the CH. In these cases, the owner must carry out the appropriate actions to obtain this document, hiring the services of the technicians and lawyers necessary for it.
• That the house is not in a condition to obtain the CH. There are many houses on the market that have difficulties in obtaining the CH or Occupation License, in most cases because these houses do not comply with urban regulations. In these cases, it will be necessary for the owner to contact architects and/or lawyers to guide and advise them to study the ways to obtain this document.

In these cases of lack of Certificate of Habitability, what the Law says is “House” must be taken into account.

The Law defines “a Dwelling- House” as:

“Building or part of a building of a private nature and intended for residence and habitation of people, which meets the minimum habitability conditions legally required, being able to have access to common spaces and services of the building in which it is located, all of this in accordance with the applicable legislation and with urban and territorial planning.”

In other words, it establishes that, for a construction to become “Housing”, it requires

• That it is a “building” of a private area. In other words, the parts of the house or apartment that do not belong exclusively to the house, such as common areas or that belong to the community of owners, cannot be considered as built or useful area.
• That the destination of the construction is that of “residence” and “habitation”. On many occasions, we do not find buildings, or parts of them, that have been built as “warehouses”, “agricultural warehouses”, garages, uninhabitable basements, Therefore, what the law says is that these parts or constructions cannot be computed as the constructed area of the dwelling.
• That they meet the minimum conditions of habitability legally required. Therefore, it is required that there be confirmation from the seller or owner that the property meets the legal requirements and conditions of habitability. The best way to prove this will be by providing a renewed and valid Certificate of Habitability or Occupation License.
• In accordance with the applicable legislation and with urban and territorial planning. In a few words, that the house complies with both local and territorial urban planning and construction regulations.

Obligation of the seller or owner to provide the Certificate of Habitability or Occupation License renewed and in force.

This requirement clears up the confusion that has existed in the real estate market for years, and which made reference to the obligation of the owner to demonstrate that he is selling a habitable property. For years, agents and professionals in the sector have witnessed a confrontation with property owners for sale who literally refused to provide the informative documents of their property to guarantee the legality of the same to the buyers. Among them, and we would almost say the most important, the Certificate of Habitability or Occupation License.

The opposition maintained by the owners was based on arguments such as:

• “It is the buyer who must obtain the habitability certificate and not me”
• “I have gone to the City Hall and they have told me that I should not renew the habitability certificate because it is the buyer who must renew it”
• The notary has told me that the renewed certificate of habitability is not necessary to sell a property

… and a long list of arguments that were used to avoid the expense and effort of obtaining this type of documentation, so essential to confirm the legality of a property to the buyer.

This situation gave rise to conflicts between the owners, the buyers, and all those professionals who participate in purchase, sale and rental transactions in Spain.

Now, with this new Law, it is confirmed by legal obligation that it is the seller or owner who must provide this document from the first moment they decide to rent or sell their property.

Will this prevent the buyer to obtain the CH after acquisition?

NO

The vendor has to supply the CH renewed to confirm that the property fulfils the laws but, depending on the local normative the buyer may be requested to renovate it and change it on his name after the acquisition to complete the change of water, electric and others (as tourist rent license).

Information on protected housing and urban information.

As is the case with the occupancy license or certificate of occupancy, it has been common practice in the Spanish real estate market for the owner to put his property up for sale or rent with a total lack of documentation and even knowledge of the legal situation and planning of the property, leaving the search and detection of said documentation in the hands of the buyer or tenant.

This position has supposed, until the entry of this law, a reason for insecurity and legal uncertainty of real estate purchase and sale operations in Spain.

With this new law, the seller is obliged to, first, carry out an analysis and legal study of the house before it is put on the market. Said legal study involves providing all kinds of information that affects it, and which is based on the following:

• Is the house protected or does it have a protection regime?
• Is it affected by any type of public condition or limitation ( Affection of Coasts, forestry, public domain, expropriation, etc ?
• What type of land is the property on, urban, rustic, developable?
• Has the house been reformed?
• Which are the exact borders and size of the house?
• Does it have any type of urban limitation or condition ( urban infringement, semi-consolidated urbanization , housing outside planning?

The fact that the owner obtains or is forced to obtain this information will provide greater security in real estate transactions in Spain, and will allow the disputes that have been taking place in the Spanish market to be avoided about who should provide this information and , above all, if “there was” or it was mandatory to provide it, and who must do it according to the law.

Special reference to the information to be provided by Property Administrators

Establishes the sixth additional provision:

3. Property administrators, in the development of their professional activity, must act with efficiency, diligence, professional responsibility and independence, subject to current legislation and the ethical codes established in the sector, with special consideration towards the protection of consumer rights established by the autonomous communities and in this law.

This precept of the law comes to recognize the duty of property managers to protect the rights of consumers under this law. What it comes to say is that, understanding as “consumers” the buyers and future tenants of the properties they manage, they must protect their rights.

The property information contained in the community by laws and community agreements is essential to the buyer to get this information on time.

This point is very important in Spanish real estate practice, since for decades we have encountered situations in which property managers hindered the flow of information to property buyers, alleging that they were not authorized to share this information. This behavior generated a high level of insecurity in real estate transactions, since the buyer was forced to enter into an investment in a house that he did not know if it could have hidden problems in the hands of the owners and their administrators.

With which, once again, this law comes to clarify the obligation imposed on property managers to supply this important information for the buyer and future tenant.

IBI surcharge – Real Estate Tax for unoccupied properties

In the case of properties for residential use that are permanently unoccupied , the municipalities may require a surcharge of the IBI of up to 50 percent of the net amount of the tax.

For these purposes, it will be considered an unoccupied property. permanently unoccupied , continuously and without justified cause, for a period of more than two years , in accordance with the requirements, means of proof and procedure established by the tax ordinance, and belong to owners of four or more properties of residential use.

The surcharge may be up to 100 percent of the net amount of the tax when the period of vacancy is greater than three years , and may be modulated based on the period of vacancy.

In addition, the municipalities may increase the corresponding surcharge percentage in accordance with the aforementioned by up to 50 additional percentage points in the case of properties belonging to owners of two or more properties for residential use that are unoccupied in the same municipal area.

 Does the IBI surcharge affect second residences owned by non- resident foreigners?

 The answer is no. The law establishes that, in the case of second residence properties, the vacancy term will become FOUR YEARS.

In any case, the following causes will be considered justified (that is, it will not give rise to considering the property unoccupied and will avoid the surcharge) :

• The temporary transfer for work or training reasons of the owner
• Change of address due to dependency or health reasons or social emergency
• Properties intended for second residence housing uses with a maximum of four years of continuous vacancy
• Properties subject to work or rehabilitation actions, or other circumstances that make their effective occupation impossible
• its use and disposal or that it is real estate whose owners, under market conditions, offer for sale, with a maximum of one year in this situation, or for rent, with a maximum of six months in this situation.
• In the case of properties owned by a Public Administration, it will also be considered as justified cause if the property is the subject of a sale procedure or put into operation by means of a lease.

The surcharge, which will be required of the taxpayers of this tax, will accrue on December 31 and will be settled annually by the municipalities, once the vacancy of the property has been verified on that date, together with the administrative act by which it is declared.

The municipal declaration as permanently unoccupied property will require the prior hearing of the taxable person and the accreditation by the City Council of the indications of vacancy, to be regulated in said ordinance, within which may appear those related to the data of the municipal register, as well as as the consumption of supply services.

What this precept intends is to place empty houses on the market, thus avoiding speculation, which will promote the supply of products in the real estate market.

 A new scenario for real estate agencies

The obligation of prior information required of owners and real estate agents protects the buyer as a consumer. However, it really represents a risk for real estate agents since they will be obliged to provide the information of the owner of the property before being able to close the transaction with the buyer or tenant.

This type of prior information can lead to situations in which the buyer makes contact with the seller directly, increasing the risk that the real estate transaction is concluded directly between them, maliciously avoiding payment for the agency’s services.

This is already a habitual fact and unfortunately in the real estate market, in which, many times the parties, with the aim of saving money in their transactions, disregard the good work done by real estate agencies which is to contacting buyers and sellers in the market.

The essential task carried out by real estate agencies, which is so important for the real estate market, may be affected by this obligation to provide prior information about the property and the owner, to buyers who may be tempted to contact the owners directly to avoid pay commissions or fees from the real estate agency.

With which, it will be important and recommended for real estate agencies to review their mandate contracts for both owners and buyers or future tenants, in order to legally protect the payment of their professional fees, including, if necessary, high penalties in case of breach. for the parties that conclude their agreements directly and without going through the good service of real estate agencies .

In addition, it will also require real estate agencies to obtain the necessary authorizations from the owners to share private information in compliance with the personal data protection law.

That is why progress will be required in the professionalization of the real estate agent sector, who must surely have greater specialization in the sector, expanding their skills beyond the strictly commercial task of contacting buyer and seller.

Without a doubt, this new regulation will boost the professionalism of the real estate agents.

TLACORP 2023