Make a declaration of new construction (called Obra Nueva) before to sell your property in Mallorca or any other place, it’s fine and fair. The mistake is to do it to “make-up” the property and deceive the buyer, or to make it believing that it is equivalent to legalize the property when it is not. As I will explain, only if a license was obtained the construction is legal.
Many times I meet the same situation. The seller, wrongly advised, has made a declaration of new construction for antiquity before to sell his property in Mallorca. If the intention it’s only to have a clear and nice Nota Simple (Property Registry description) and buyer discover it, vendor will be facing a real problem.
Why is this happening?
Some sellers and some Real estate Agents believe that if all the construction are registered in Land / Property registry or Cadaster, are legal. This statement is an absolute barbarity. Illegal constructions may also be registered in the Land / Property Registry.
Neither the land registry, nor the Cadaster, nor the certificate of occupancy (cédula de habitabilidad) certifies the legality of a construction. Only a valid license certifies the legality of a building.
The process / fatal error is always the same.
The seller wants to improve his / her property and the only thing he does is to make it worse.
.-Seller has a full construction or part of the property not registered in the land registry and someone advises him/ her to register it. So when potential buyer will look in the property registry will see the full description of the property.
.-That construction or part of the constructions was done without license. Note if was done with license, the process it’s 100% right and vendor will have no problem. So seller asks an architect for a report. The architect makes a report saying that it is old, normally more than 10 years. This means that the right to order demolition is time-barred (This only apply in urban area or in normal rustic are for constructions done before January 2018. In protected area infractions will never prescribe)
.- Seller goes to Notary and makes a declaration of new building works (Declaración de Obra Nueva por Antigüedad). It’s called new but has been there for a wile.
.-The Notary sends the deed to the Registrar. The Land Registrar registers all the volume but is obliged to send a notice to the Town Hall and if it is rustic to the Consell de Mallorca saying that a part of property has been registered without license.
.-At that moment, the simple note of the land registry has been ” makeup “. Everything appears described and if buyer or the bank that gives the mortgage, if he does not investigate in the registry, believes that everything was licensed.
Then selling process keeps going on
A contract of Arras or of reservation for one or two months is signed. In the contract the seller says (may be by ignorance) that everything is legal because he /she believes that if it is in the registry it is legal.
In many cases, the seller does not intend to deceive the buyer. He /she really believes, misguided, that registering in the land registry is equivalent to legalizing.
.-Between the signing of the Arras or reservation contract and the deed of sale, the buyer discovers that a part of the house was built without a license. It is registered but no license can be requested on that part because it is not legal. So, new owner will never be able to refer or repair that part of the property.
The seller, who may have only had an illegal porch, discovers that now the problem is bigger.
1.- Has signed a reservation contract promising to deliver a 100% legal property and now he /she cannot fulfill the contract. The buyer can demand double the deposit for damages caused or a substantial discount.
2.- The Land Registry has informed the Town Hall and the Island Council of the island of the illegality if it is a rustic area.
How to avoid this problem? Saying the true.
By clearly informing the buyer of the situation. If you have done an Obra Nueva with an old license, the buyer cannot claim anything. If a new construction has been inscribed because of the age of a part of it was built without a license, I always advise to tell the truth to the buyer and to put in the option contract that he knows and accepts it. This way he can not claim for this concept.
Better to tell the seller that the price is 500,000 but as there is a part built without license (prescribed or not) you sell it to him for 450,000, than to sign a contract for 500,000 and then the buyer demands a discount of 100,000 after discovering that you have deceived him (even if it was not your intention).
So, it’s a good idea to inscribe the missing square meters?Yes, it’s fair you sell a property with a right description, but if you do not have a license for that meters, be sure buyer do not understand you have been trying to hide that square meters where out of order.