Property sales in Mallorca have experienced a spectacular increase in the last year accompanied by an exponential increase in the price of both legal and illegal properties. As a consequence, it is now common to find partially or full illegal properties even at risk of demolition orders for prices that, with taxes, reach up to one million euros. Some buyers buy without knowing it, but others, tired of looking for their dream home, decide to take a chance and accept the situation.
Until now, illegal properties, which may be in urban areas, but are usually in rural ones, were being sold for significantly reduced prices. However, the scarcity of properties has meant that even those that are out of development are fetching exorbitant prices.
Neither the real estate agency, nor the notary, nor the land registry, nor the “cédula”, guarantee legality.
The most important thing is that before making the decision, the buyer knows exactly what he or she is buying. The problem is not buying a property with illegalities, the problem is buying without knowledge. Many buyers believe that just because it is advertised as “legal” in a real estate agency, the property is legal. This is not the case; the agent is a commercial agent paid by the seller and is not obliged to know the town planning regulations. In the same way, the signature before a Notary Public does not guarantee the urbanistic legality. The Notary attests that the property is transferred and that the price is paid, but not that it is legal. Not even the land registry guarantees legality. Illegal properties are registered and the certificate of occupancy “Cedula” certifies that they meet health and safety requirements, but not that they are legal.
If not warned when new owner later want to renovate the property or when they receive a complaint, they discover that their property is not legal.
Properties must be checked before signing
This past year the excuses of unscrupulous sellers or intermediaries for not allowing the potential buyer or advisor to visit town hall to check legality have been more creative than ever.
The best one was from an intermediary who told me that the Town Hall would interpret it as interference if we went to ask if there was a building permit.
Remember that town halls are obliged to give this information and that the only way to know if a house is legal is to look at the licences. The certificate of occupancy does not prove legality, having a mortgage does not prove illegality, being registered in the land registry does not prove legality, having supplies does not prove legality.
Many decide to buy knowing about the illegalities.
The truth is that after having been warned of the existence of the illegalities by the vendor, their lawyer or the agent, many decide to take the risk and buy.
It is therefore very important to know whether the illegalities are time-barred (you can never reform but the administration cannot order demolition), or whether they will be time-barred in the future or will never be time-barred at all.
It is important to remind that every month the Agéncia de Defensa del Territorio orders new demolitions in Mallorca. The Agency oversaw 102 demolitions of illegal works on rustic land in 2020.
The consequences also affect sellers.
If the buyer discovers that the property is illegal between the signing of the reservation contract and the purchase contract, he/ she may claim double the deposit back from the seller, since the seller, if he has not warned of the illegalities, will not be able to fulfil the signed contract.
However, if the buyer discovers the illegalities later, he/she can take legal action against the seller by claiming a reduction of the price or by claiming the cancellation of the purchase.
Therefore, the seller should also be advised by an urban planning lawyer.
Even if the seller is unaware of the existence of illegalities, he will be liable to the buyer if they are discovered and he has not warned of their existence before the sale. Proof of this is the recent Supreme Court ruling that condemns owners who failed to report illegalities to pay double what they received in the earnest money contract to the purchasers.
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