Items for consideration
information as possible about your future property must
be obtained and we consequently
advise you to bear the following items in mind:
1. Check the registration. At a new construction
property, the consumer will find details about its
registration at the sales office, as we will see later
on in this guide, depending on the state of progress of
the construction. Although we can apply for a “note
simple” from the register showing the registration owner,
the declaration of new work, horizontal property
division, etc. With used properties, the “note simple”
will provide us information about any possible liens
that might encumber the property, in addition to the
name of its present owner. Apart from this, before
signing the Public Deed of Purchase/Sale, the Notary
will apply for a registration note of the property and
the seller will provide a certificate from the president
of the owners’ association stating that the property is
up to date in its community fee payments, and last
Property Tax (IBI) bill.
2. Documentation at the public’s disposal. Law 8
of 20 October 2004, on Property in the
Autonomous Region of Valencia, and Royal Decree 515 of
21 April 1989, on consumer protection
regarding information to be supplied in the property
lease and purchase/sale, obliges the real
estate developer to have detailed information available
to the public at the sales offices, regarding
the developments it is marketing.
of the documentation listed below will be available to
1. Company name, address and its recording at the Trade
2. Site plan of the development.
3. Technical Project
4. Drawings of electricity, water, gas and heating
networks, and other services.
5. Guarantee of the installations.
6. Fire safety measures.
7. Scale plan of the properties, defining their useful
area. Memorandum referring to the measurements relating
to useful areas, built areas and areas built with
repercussion of the community elements.
8. General building description (number of stories,
number of housing units and type of building),
of the communal areas and accessory services.
9. Reference of the material used in the construction
including thermal and acoustic insulation
avoiding general references such as “first quality”, for
10. Instructions of use and preservation of the
installations and emergency exits.
11. Indication of the Notary who has performed the
Horizontal Division and New Works
Declaration and the Registration number where this has
been recorded or indication that
there is no recording entry.
12. Copy of the urban development licence or reported
delay and provisional classification, if applicable.
13. State whether the Owners’ Association has been
formed and if so, copy of the Articles of
Association and Administrator’s name and address. If
operational, extract of accounts and
obligations relating to the property.
14. Tax information.
15. Photocopy of the sale and purchase contract.
16. Scheduled terms for termination and delivery of the
properties, after obtaining the administrative
authorisations and licence for their occupation.
17. Name and address of the Architect. Name, registered
name and office of the builder.
18. Document formalising the guarantees for down
payments, stating the guarantor entity and
special account into which the payments must be
deposited.19. Note explaining the price with the
a) Total price, including VAT, if the sale is subject to
this tax, or otherwise Transfer and
Stamp Tax, and also Agent’s fees if intervening in the
b) Form of payment. Applicable interest on deferred
payments, amounts for principal and
interest and maturities.
c) Admissible payment means for deferred amounts.
d) If subrogation in credit with real guarantee is
foreseen, clearly state the name of the
Notary authorising the respective deed, its date,
recording particulars at the Land
Registry and mortgage liability for each property,
indicating maturities and amounts.
e) Buyer’s guarantees for deferred payment.
f) This note will state that any down payment made by
the buyer before formalising the
operation will be deducted from the total sales price.
3.- For finished properties, in addition to the above
documents and requirements, the following
will be required:
1. Formation of the ten-year insurance.
2. If subrogation in credit with real guarantee is
foreseen, clearly state the name of the
Notary authorising the respective deed, its date,
recording particulars at the Land
Registry and mortgage liability for each property,
indicating maturities and amounts. If
the buyer does not choose subrogation, the expenses for
cancellation of the mortgage
loan are payable by the Developer.
3. Building Log Book, containing the documentation on
the executed work and its use
and maintenance manual.
4. Licence of occupation or final classification
Steps to be followed for formalising the purchase/sale
This is a very commonplace document even though the sale
and purchase contract cannot be formalised between the
parties. The buyer will deposit an amount as guarantee
that he/she will buy the property in a given term and
the seller undertakes to sell it to him/her. Both
parties may terminate the contract in accordance with
the agreed penalties.
2.- THE SALE AND PURCHASE CONTRACT
You should analyse the sale and purchase contract you
will be given by the real estate developer and if you
have any queries, do not hesitate to ask for the
suitable explanations; make it clear who will pay for
the expenses and taxes incurred from the conveyancing
and any exceptional cases in which the seller may modify
the property, and for example for technical needs or
government impositions, without this implying any change
in the price or surface area.
Remember that the law on housing property states that
for new construction properties the seller
must accredit the following at the time of signing the
contract, in addition to the documents required for
a) The availability of the land, technical project and
b) The deed of Declaration of New Work and constitution
of the Horizontal Property
Regime, and also certificate of registration of the
participation rates in the communal
elements of the property and the articles of association
or project of the property
c) The schedule of deadlines for completing and
delivering the properties.
d) Guarantee of the down payments made (as set out in
item 18, section B.2.
Documentation at the public’s disposal).
3.- THE SALE AND PURCHASE CONTRACT
In used housing properties, the documents mentioned in
point B-1 of this guide (Registration Verification) will
be accredited when signing the deed. When the public
deed is a new construction property, the real estate
developer will issue you the following documents:
1.- The Building Log Book, which is composed of:
- Project of the building, with the modifications made
and duly approved during the construction.
One copy should be issued to the owners’ association.
- Final certificate of reception. Final works
- An identification list of the agents who have
participated in the construction.
- User and Maintenance Manual of the building and of
your property, and also its
installations, with the obligations assumed by the
future owners regarding the good use
and preservation of the property.
2.- The licence of occupancy.
3.- The bulletins for contracting utilities (water,
4.- THE FINANCING
Spain is one of the countries where the offer of
mortgage credits is most regulated. The finance company
from which we request information must issue us a
prospectus clearly specifying the repayment term,
interest rate, bank charges and fee and expenses payable
by the client.
Once we have chosen the finance company, it will study
our circumstances to ascertain the feasibility of
granting the loan. If we have chosen not to be
subrogated in the loan that the property might hold, and
to arrange it with another credit entity, this latter
entity will take charge of a new appraisal, at our
expense. This is an important step, because the amount
of the mortgage loan will vary between 70% and 80% of
the property appraisal value. Lastly, the finance
company will ask us for a registration note of the
property or it will carry out the query in our name to
guarantee the security of the transaction. With all this
data to hand, the credit entity will issue a binding
offer, which we will have ten days in which to analyse.
The mortgage loan is signed in the presence of a Notary
Public and is simultaneous to the sale and purchase deed.
By Law we are obliged to take out a fire insurance
policy for the property that is to be mortgaged. It is
also recommended, although not compulsory, to contract a
loan repayment insurance covering the outstanding
capital to be paid in the event of the death of its
borrowers we are entitled to examine the deed three days
before it is signed and the notary will furthermore
check there are no discrepancies between the binding
offer that the finance company gave us, and the deed of
EXPENSES FOR FORMALISING THE OPERATION
The property buyer shall be responsible for paying:
- V.A.T..: 7% Proportional payments will be made on down
- I.A.J.D. (Legal Documents Tax): Payable when a
recordable notary document is
subscribed and for an economic amount. This tax does not
apply to governmentsponsored
protected housing or used housing. See following table.
- I.T.P. (Transfer and Stamp Tax): Payable when buying a
used property. .. See following table.
- THE NOTARY: The buyer will pay the fees for the first
copy of the deed. The amount will
depend on the value of the purchase/sale.
- THE REGISTER: The buyer will also pay the fees for
recording the deed at the
- THE MANAGER: If contracted for handling all the
formalities, in accordance with his tariff.
shall be responsible for paying:
- CAPITAL GAINS TAX: Its correct definition is Tax on
Added Value of Urban Property.
- THE NOTARY: The seller is liable to pay the fees for
the original deed.
When forming a mortgage loan, the buyer shall be
responsible for paying:
- THE NOTARY: The public notary again intervenes and the
fees are in function of the
- THE REGISTER: The mortgage loan must also be
registered and its fees will depend
on the mortgage liability (the sum of all items that are
guaranteed by the mortgage).
- I.A.J.D. (Legal Documents Tax): This must be paid in
advance (within one month
from signing the deed) when recording the property at
the Property Register. This
procedure is normally processed through a management
FORECAST OF EXPENSES DERIVED FROM THE PURCHASE/SALE OF
The registration and notary fees are approximate,
because they depend on factors that are not only related
with the amount.
TAX BENEFITS IN THE YEAR 2005:
purchase of a first residence property entitles the
owner to enjoy the following reductions when making his/her
Income Tax return:
- The amounts destined to the purchase or rehabilitation
of the first residence property:
5% with a maximum base of 9,015.18 € (1,500,000
pesetas). The same percentage
applies on amounts earmarked for adapting the first
residence of disabled taxpayers
with an independent limit of 12,020.24 € (2,000,000
- For the purchase or rehabilitation financed with loan,
including the repayment of
interest and other charges derived from this, and
provided the amount of the loan is
at least 50% of the purchase value of the property and
that in the first three years no
amounts have been repaid that altogether cover 40% of
the amount of the requested
loan, these will benefit from:
a) In the two years following the purchase: 25% on the
first 4,507.59 € (750,000
pesetas) and 15% on the excess until 9,015.18 €
b) Later: 20% on the first 4,507.59 € (750,000 pesetas)
and 15% on the excess
until 9,015.18 € (1,500,000 pesetas).
The housing account: it is also interesting to know that
the amounts deposited in a housing account for first
residence purchase or rehabilitation of the first
residence housing are entitled to a 15% deduction with a
maximum base of 9,015.18 € (1,500,000 pesetas).
Resolution of disputes
LIABILITY FOR VICES OR DEFECTS
There is the following liability for vices in property
built under a municipal licence after the 6th May 2000:
- One year for vices or defects in termination or finish.
- Three years for vices or defects in the installations
that cause non-compliance in the
habitability requirements (insulation, damp,
- 10 years for damages caused by vices or defects
affecting the foundations, supports,
beams, forging, bearing walls or other structural
elements (they are covered by the
ten-year insurance). If these are properties with
municipal licence previous to the 6th May 2000, there is
a 10-year liability in cases of total or partial ruin.
CONSUMER ARBITRATION SYSTEM
An arbitration system is a quick, simple procedure for
resolving controversies between the parties
without having to resort to the Law Courts. If the
product or service that you, as consumer or user, have
purchased does not respond to the correct
characteristics and you file a complaint, you should
know that article 31 of the Statute of Consumers and
Users of the Valencia Autonomous Region has foreseen the
establishment of this system for resolving claims.
The Consumer Arbitration is free, private, voluntary and
equal and is made at the so-called Consumer Arbitration
How are the arbitration proceedings processed?:
- The process starts by formalising an Arbitration
Request that may be submitted
directly at the Consumer Arbitration Board or through a
- Once the request is received, it will be checked to
see whether the trader or
entrepreneur claimed is a member of the System. If it is,
the actual proceedings will
commence; otherwise the request will be transferred,
having a term of 15 days in
which to accept or to reject it.
- If the entrepreneur rejects the arbitration invitation,
the request will be filed without
further formalities, because this is a voluntary System.
- If it is not rejected, the parties will be called to a
hearing, at which they may state
whatever they deem suitable about the existing dispute.
- The College will agree whatever evidence it deems
pertinent at its own initiative or
that of the parties.
- The Proceedings conclude with a verdict which resolves
the dispute as a court sentence
and has the efficacy of judged chose. If the parties
reach an agreement themselves
throughout the proceedings, this will be included in a
judgement called conciliatory
judgement, so it also has the same efficacy as if this
were a court sentence.
- Only an Appeal for Cancellation is possible against
the sentence ruled by the College
of Arbitrators, filed at the Provincial Court in a term
of two months from notification to
the parties concerned and the Appeal for Review, in
accordance with the provisions
laid down in the procedural law for firm court sentences.
four Consumer Arbitration Boards in the Valencia
Autonomous Region. For more information, see:
Urban Development Regulations
middle of the decade of the ‘90s, Law 6/1994, Regulating
the Urban Development Activity
(LRAU) was incorporated in the Valencia urban
development legislative framework, and following
its approval this would mark a clear progress in the
forms of managing land. To clarify the
application of the urban development legislation, we
will distinguish between the purchase and
sale of new construction housing and plots.
PURCHASE AND SALE OF NEW CONSTRUCTION HOUSING
As a general rule, its construction is authorised on
“land with ground plot condition” or, in a
singular case, on ground that is subject to an urban
development process as foreseen in the
LRAU: Whereas in the first case, the ground has the
necessary utilities and infrastructures,
in the second case, it must be developed. During the
urban development process, the
construction of housing may be authorised, provided the
entire urban development works are
fully guaranteed, among other requirements foreseen in
the current law. At the end of the
urban development process with its respective cessions
and charges, the resulting land will be
“urban ground with plot condition”.
situations may be accredited by the “urban development
issued by the Town Hall.
Once the housing building has been concluded in
accordance with current law, which in this second case
means the complete termination of the urban development
works, the “occupancy licence” will be issued. This
document evidences that the building is fit for
habitation, destined to residence of individuals, that
it meets the basic quality requirements of edification,
environment and location in accordance with the
In these cases, the new construction housing cannot be
affected again by an urban development
process and, consequently, it will not be subject to new
urban development cessions or charges.
The construction of housing on different land to “urban
land with plot condition” or “land under
urban development process” is authorised by way of
exception when its purpose is to serve as
residence for the owner who exercises a forestry,
agricultural or livestock activity. The purchase and
sale of these properties is not exempt in future of
contributing in the urban development charges:
compulsory cessions plus urban development cost. In this
latter case, we insist, the properties
and land where they are located, may be affected by the
application of the LRAU, through an
urban development process and, consequently they will be
liable to the ground cessions and urban
development charges in accordance with current law.
PURCHASE AND SALE OF PLOTS
Plots classified as “urban land with plot condition”
shall not be subject to the application of the
LRAU and consequently shall not support cessions or
urban development charges. Nevertheless, and absolutely
by way of exception (cases of redevelopment of sectors),
these may be taxed with an urban development fee.
The plots located in a zone (sector, industrial estate,
partial plan, etc.) that is under urban development,
shall not be subject to the application of the LRAU
again, once the urban development has been completed and
the cessions have been made in accordance with current
Plots located in land than the above may be affected by
The “urban development guarantee certificate” issued by
the Town Hall accredits the land classification and
whether it is taxed by an urban development fee.
The occupancy licence is the document that evidences
that the built property is adapted to the architectonic
project for which the municipal building licence was
formed. The Town Halls are the competent administration
to grant this document. In new construction
housing, the real estate developer is the party obliged
to give the buyer the occupancy licence, when granting
the public deed of purchase and sale, or evidence of
having obtained it as consequence of administrative
silence for the lapsing of three months. It is also
obliged to issue the habitability certificate, or
evidence of having obtained this as consequence of
administrative silence, only in those cases where the
Town Hall has not adapted the regulation on occupancy
licences to the
Valencia law (Law 3/ 04 and Law 8/ 04).
By legal imperative, the owner of a land on which the
Administration authorises urban development is obliged
to revert part of the capital gain he obtains to society.
This means he must assign the Town Hall 10% of the
already developed ground, and must also cede another
percentage of ground free of charge for constructing
roads, pavements and public facilities (parks, schools,
hospitals, etc...). In practice, this percentage varies
between 10% and 50% of the initial gross land.
This is the cost of the urban development and equipping
of public utilities to the ground that has received an
authorisation to develop. The owner is entitled to pay
in cash or in land.
Urban development fee:
This only applies in absolutely exceptional cases on
plots and not on housing. When the Town Hall undertakes
some very costly urban development infrastructures e.g.:
drains and sewers, pavements) the law allows it to
reflect part of this cost on the plots that have
from this action: urban development fee. The plot is
taxed with this cost, but it will not be demanded by the
Town Hall until the building licence is requested, at
which time the owner’s benefit becomes effective.
Novelties in the Valencia Urban Development Law with
regard to the LRAU:
The Government of the Autonomous Region of Valencia is
aware that the LRAU has fulfilled a very important
social and economic role in the development of our
territory and it is furthermore aware that there are
aspects to be improved and imperfections to avoid. It
will consequently approve a new law shortly (Valencia
Urban Development Law) that will replace the present
LRAU, and whose measures will include introducing more
information, broader terms, greater facilities for
owners to become urban developers, more transparency in
fixing urban development charges and objectivity in
awarding the PAI.