Consult an expert

What is the License of First Occupation?

Acquiring property in Spain necessitates thoroughly completing all necessary paperwork, which is essential for averting possible legal and financial complications. Among the most important of these documents is the Licence of First Occupation (LFO), a requirement for every newly constructed home in Spain. This license, known as Licencia de Primera Ocupación in Spanish, confirms that a newly built property adheres strictly to all planning and building regulations, thereby verifying its suitability as a dwelling.

Compliance with building laws

The Process and Requirements to Obtain an LFO

To obtain an LFO, it’s imperative to demonstrate compliance with many laws, including those concerning health, safety, planning, and construction. An additional requirement is the completion of the property without any remaining work. The significance of this certificate lies in its testament that the property has been built lawfully and per the standards specified in the original building licence granted by the town hall.

Types of Properties Eligible for an LFO

The LFO can be granted to various types of properties. This includes individual properties, new developments that consist of multiple properties, or specific phases or sectors of larger projects. Crucial for the issuance of the LFO is that the surrounding area meets the urbanization standards detailed in the original construction license or partial urban plan.

The Role and Importance of an LFO

The Licence of First Occupation plays an essential role when it comes to living in newly built properties. Technically, it is required before inhabiting a new property. Even though many properties are inhabited without an LFO, this license remains crucial for establishing utility contracts such as water, electricity, gas, and telephone. Utility companies are obligated to check for an LFO before providing services.

Implications of LFO for Property Rental

An LFO is typically necessary for renting out a property. Legally, the LFO is mandatory for holiday rentals advertised online, such as on Airbnb, property websites, or similar platforms. Should an individual rent out a holiday property without securing an LFO, potential penalties may be imposed by the Junta de Andalucía. From an insurance standpoint, landlords without an LFO might encounter complications.

The LFO Scenario in Spain

In Spain, it’s not uncommon to find properties without an LFO. Many properties manage to connect to utilities without one, yet with the law being enforced more stringently, it has become increasingly important to ensure an LFO is in place before purchasing a new property. This scenario often involves unlawful properties for which the Town Hall has not taken any action to rectify the legality breach due to a lapse of 6 years without response. The Town Hall can grant the LFO to these properties after successfully completing legalisation procedures. Additionally, properties built before 1975 can also be granted the LFO without the necessity for prior legalization.

Potential Complications of Buying a Property Without an LFO

Purchasing a property without an LFO can lead to significant issues. Some buyers, particularly foreign ones, have been persuaded by developers into buying newly built properties without an LFO. Without an LFO, homeowners may rely on the builder’s temporary supply of water and electricity, which can be unpredictable and might even be cut off if the builder runs into financial trouble. Moreover, securing a mortgage without an LFO can be challenging, and many potential buyers are wary of acquiring a property lacking an LFO.

Handling Properties without an LFO

For properties bought without an LFO, it’s recommended to apply for one and shoulder the associated costs. However, if safety or planning issues arise that prevent granting an LFO, the owners must resolve them to the satisfaction of the town hall. This process can range in cost depending on the severity of the issue.

Role of Developers in Obtaining an LFO

Developers must present a “declaración responsable” (responsible declaration) to the Town Hall, providing supporting documents to show that the property has been constructed as per the approved project and is habitable. Upon submission, it is considered as effective as an expressly issued LFO from the Town Hall, meaning there’s no need to wait for a decision from them. For this to be legally effective, it’s crucial that the accompanying documentation fulfils the requirements prescribed by law. The Town Hall may choose to dispatch an inspector depending on the scale of the project. For large-scale projects, an inspector’s visit is guaranteed. However, for smaller properties, an inspection may not necessarily occur.

Understanding the Legalities of Buying and Selling Properties Without an LFO

For new properties, the LFO is required by the notary to provide the declaration of new construction (Obra Nueva) deed and for subsequent registration in the Land Registry. Consequently, it can be stated that without an LFO, a new property cannot be registered under the first buyer’s name. However, selling a property without an LFO is legally permissible as long as the buyer is not misled. Therefore, completing the purchase without an LFO may be a viable option in exceptional circumstances. The LFO is typically requested as a document either supplied by the seller or procured by the buyer’s lawyer. If it is absent, it is necessary to investigate why.

Consequences of Property Modifications

Complications may arise if substantial unregistered changes have been made to the property. After six years, homeowners can apply for a Certificate of Non-Infraction to regularize the changes. Therefore, when buying a new home, requesting both an LFO and a Certificate of Non-Infraction (Certificado de No Infracción Urbanística) is recommended to avoid potential issues.

Read more in our guide.

By Adam Neale | Consult an expert | July 13th, 2023

What is the License of First Occupation?

"Looking to buy or sell a property?"