Legal due diligence is the most important step in the Spanish property-buying process. It is crucial not to rely solely on the notary, as they only formalise the sale. You need a personal shopper and a lawyer who specialises in property to investigate the property’s legal standing. This involves verifying ownership, identifying charges (liens or debts) and ensuring urban compliance. Thorough due diligence ultimately protects you from future fines, debts and demolition orders.
1. The critical flaw of the Spanish system
Many foreign buyers have a misunderstanding about the role of the notary. Specifically, the notary ensures that the deed is legally valid. They do not conduct a thorough investigation into the property’s history. Therefore, it is the buyer’s responsibility to conduct their own legal and technical checks. Failing to do so can result in inheriting the seller’s debts or legal problems.
2. Legal status: The ‘Nota Simple’ investigation
The Nota Simple Informativa is the most important document of all. Issued by the Property Registry, this report details the property’s legal history. Consequently, it is essential that every buyer obtains and reviews it carefully.
A. Ownership verification
This document confirms that the seller is the registered legal owner. It also ensures that they have the right to transfer the title to you. Complications often arise in cases of inheritance or divorce.
B. Checking for charges and liens
Cargas are any encumbrances tied to the property itself. For example, debts of this kind travel with the property, not the owner. It is essential to ensure that the property is completely free of such issues.
- Mortgages: Are there any active mortgages or charges in place?
- Seizures/Embargoes: Are there any legal claims or liens on the property?
- Tax debts: Are there any outstanding property taxes (IBI) or utility bills?
3. Financial due diligence: Inheriting debt
Under Spanish law, the property is liable for certain debts. Therefore, a financial check is essential.
A. Community fees (gastos de comunidad)
If the property is part of an apartment block, community fees will apply. Any unpaid fees from the current year and the three preceding years will be transferred to the new owner. Therefore, you should request a certificate proving that the seller is up to date with all payments.
B. Local Tax Compliance (IBI)
The annual property tax (IBI) is payable to the local town hall. Unpaid IBI for the past four years can be claimed from the seller. Therefore, always request the seller’s most recent IBI receipts.
4. Urban compliance: Avoiding demolition orders
The urban planning and zoning laws in Valencia are complex. This check is particularly important for villas or properties on rustic land. Illegal construction poses a serious risk.
- Cadastral vs. Registry: We cross-check two government records. The Cadastre describes the physical features, while the Registry lists the legal status. Discrepancies often indicate that a pool or extension has been built illegally.
- Building Licenses: We verify that any construction or renovation work has received the correct permits. Otherwise, the Town Hall may issue fines or order the demolition of the work.
- Habitation Certificate: You need a Cédula de Habitabilidad. This document confirms that the property is legally fit for human habitation. Without it, it may be impossible to connect utilities.
5. Why independent experts are essential
It is risky to rely on the seller’s documentation. Therefore, hiring your own independent team is the best defence.
- Personal Shopper’s Role: We coordinate all the necessary inspections. We obtain and translate the crucial documentation.
- Independent Lawyer: Your lawyer works solely for you. They will review the Contrato de Arras and all other relevant documents to protect your interests. Furthermore, they can provide you with legal advice that the notary cannot offer.
- Technical Inspection: An architect carries out a physical audit. They check for structural defects and hidden water damage. HelloHome Valencia will assist with this.
❓ Frequently Asked Questions (FAQ)
The Nota Simple is a report from the Land Registry. Crucially, it confirms the property’s legal owner and details any outstanding debts, mortgages or charges.
The new property owner is legally liable for certain debts. These include the last four years of IBI tax and community fees.
The local council has the power to issue fines or demolition orders. Furthermore, illegal works are often not eligible for registration, which makes resale or mortgaging very difficult in the future.
No, the notary formalises the transfer of title. However, they do not check for illegal extensions or urban planning violations. It is the buyer’s responsibility to do so.
