Lawyer Raymond Nesbitt briefly explains how to go about legalising unregistered property extensions and the consequences of not doing so.
By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of August 2017
Photo courtesy: Kingspan Insulation Ltd
Often, with a view to sell, property owners decide to make improvements or extensions to their Spanish properties to make them more attractive to prospective buyers. Adding an outbuilding in the garden next to the pool, adding a few additional guestrooms, adding a toilet, building a cellar with home cinema or an in-door heated swimming pool all sound harmless and like a great idea on paper. Surely these improvements add value to the property, making the prospect of selling them far easier, yes?
The fact of life is that if these improvements are not carried out following the correct legal procedure they may become a perfectly good waste of money or even be counter-productive to selling your home.
In this article, I explain what are the legal consequences of unregistered extensions and how to go about legalising them.
Legal consequences of unregistered property improvements
There are several risks associated, with varying degrees of importance, of not following the statutory legal procedure; I will list them as bullet points.
Making it easier on us, let us examine it with a practical example. If a rural property is being sold with a modern two-storey villa of 450 m² in a plot of 10,000 square metres (€1.5mn) albeit on paper (Land Registry description) it is actually a vintage cortijo of 80 m² (€120k), a lender will only be able to finance a fraction of the asking price. Meaning a buyer will be facing a huge shortfall in the money required to close the gap. Consequently, the deal will likely fall through because of lack of finance. What we can glean from this example, is that what is not lodged at the Land Registry simply does not exist legally to lenders and no money can be borrowed against it.
Profile on the legal procedure to register extensions and improvements
Registering extensions and improvements is in a property’s owners’ best interests as these will be made legal and will allow him to fetch a more attractive sales price for his property.
Bottom line, for your own good, your Title Deed must reflect and match exactly your property’s description. If this is not the case, you must hire a lawyer to amend your Title Deed and adapt it to reality to legally sell your property or to apply for a loan against it.
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Article originally published at Spanish Property Insight: Legalising Unregistered Property Extensions
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