Buying property: the first occupation licence is essential

Once an investor has finally decided to buy the house of his or her dreams, one of the essential documents that their lawyer must demand from the vendor is the First Occupation Licence (FOL).

What is the FOL?

This is a document that is issued by the local council, which confirms that the property has been built in accordance with the project for which building consent was granted and that the building meets the necessary requirements for its intended use. For example, if the building is an apartment or villa, the use will be to serve as a dwelling for the owner. The FOL also confirms that the dwelling has the necessary infrastructure (i.e., road access, lighting, sewage, water and electricity).

What do we need the FOL for?

If you are the developer of the building, the FOL can be applied by presenting a responsible declaration to the Council confirming that the property has been completed in accordance with the project for which building consent was granted and the building meets the necessary requirements for its intended use. The application must contain the completion of work’s Architect Certificate, the building licence, certificate of connection to the water and electicity infrastructure, and all necessary permissions or authorisation from the different bodies of the administration involved, i.e. if the property occupies or affects public property (roads, sea, rivers, etc) permission must be sought and attached to the responsible declaration. The presentation of this entitles the occupation of the property, providing all compulsory documentation has been attached to the responsible declaration and notwithstanding the right of the Council to review, control and inspect the procedure. If for some reason the application lacks the necessary documentation or authorisations, the Council will demand its amendment in 10 days and if this is not carried out the Council will take the necessary measures to stop the occupation of the property.

Proof of the lodging of the responsible declaration for the First Occupation Licence needs to be attached to the Deed of the Building together with the Building Licence and the architect’s Certificate of Completion, confirming that the property has been completed with the necessary infrastructure and that the description of the property coincides with that of the Deed.

It is also required for the contracting of services and supplies, such as water, electricity and gas, for newly built properties.

Therefore, if you are a developer, you have to make sure that the responsible declaration is complete to comply with the obligation to deliver the property to the purchaser with FOL; otherwise, the purchaser can demand the resolution of the contract for non-delivery of the property with FOL or seek compensation for damages for the delay in the obtention of same. The timescale for this will depend on how long it takes for the particular council (where the property has been built) to resolve the application; it also depends on whether the property has been built exactly as per the plans for which building consent was granted. If extensions have been made to the original project, these will require building consent before the FOL is produced.

Will the purchaser accept the presumed FOL resolution?

The fact that the FOL is implicitly granted from the date of the lodging of the responsible declaration to the Council it does not relieve the latter of its duty to expressly resolve the application. On the other hand, if the building has not been built in accordance with the project for which building consent was granted, the LISTA (Law on Land Use in Andalucia) provides for the non-possibility of acquisition of rights by the elapse of time if these refer to acts that contravene the legal planning order. In this case, the council would have to deny the FOL. Our recommendation is that the purchaser makes a parallel investigation to see if there are any impending problems with the granting of the FOL, whether these are non-existent or minor problems that can be resolved and agree a retention with the vendor on the purchase price until the FOL is obtained.

Does a property with First Occupation Licence equates to non-existence of planning charges?

No. For example, in Marbella, some urbanisations have FOL irregularly granted by the council, and the owners of property still have to pay compensation for planning charges. Therefore, a search in the town plan will have to be carried out to verify what these charges refer to and their amount. In addition, the purchaser has to carry out an investigation to see whether the building licence for the property has been challenged in the courts and whether there are any administrative proceedings being followed by the council to try to restore the legal planning order.

With old properties, is it essential to demand the First Occupation Licence?

In the past, the FOL was only required to contract services for newly built properties. Nowadays, it has become the closing element for the documentation of ownership of the property and is being demanded in every single transaction. As the LISTA requires proof of the presentation of the responsible declaration for the FOL for the execution of the Deed of a new building, the building cannot be sold to a purchaser without FOL, and the supplying companies cannot allow the supply without FOL.

However, if the property has been in use for considerable time, there are no planning issues and the property comes with long-standing services and supplies, the production of this document may prove a lengthy and burdensome process because a copy will have to be obtained in the archive of the council. In my opinion, in these cases, it is understood that the property has FOL and this should not be an essential document to obtain. However, some banks insist on the production of the FOL to grant a mortgage, thus making the FOL an essential component in the legal documentation of current property transactions.

Therefore, our recommendation is to seek experienced legal advice in planning and administrative matters to assess the importance of the First Occupation Licence whenever you intend to carry out a safe real estate transaction.

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution.

Buying property: the first occupation licence is essential

Once an investor has finally decided to buy the house of his or her dreams, one of the essential documents that their lawyer must demand from the vendor is the First Occupation Licence (FOL).

The aim of Rafael Berdaguer Abogados is to assist clients in their needs from a legal and fiscal viewpoint both in Spain and throughout the world.

CONTACT INFORMATION

FROM OUR BLOG