Tag: rustic

PURCHASE OF A HOME IN SPAIN AND HOME INSURANCE: WHAT YOU NEED TO KNOW

Home Insurance, purchase, property, Spain
Home insurance of your Spanish property

Buying a home in Spain entails a great financial investment and, therefore, you’ll want to do it with the lowest possible risk. This is why it’s very important to obtain legal advice and hire a specialised lawyer to help you throughout the purchase process, so that you can enjoy legal certainty and be aware of all the relevant information about the property.

However, there is another important thing to do before signing the Purchase Deed for the property. It is advisable to have home insurance ready to prevent any risk of financial loss due to potential damages, such as theft, water damage or fire. The importance of home insurance for the owner’s peace of mind and the investment made is self-evident.

This is why we’re posting this article, to clarify some concepts for foreign homeowners in Spain, so that they can understand this very important product well. In the event that you are buying with a mortgage, the bank will advise you and recommend that you obtain home insurance as, in the event of serious damage to the mortgaged property, the bank will want to secure repayment of the money borrowed.

At the end of the article, we cover home insurance for rural homes built in Andalusia, with or without DAFO/SAFO.

 

What are the building and the contents in home insurance?

A home insurance policy for an existing or new build property is based on two main concepts: the building and the contents.

1) The building (continente) is made up of the construction and structural elements of a home or building, whether these are walls, ceilings, floors or installations such as heating, water or electricity, among others.

2) The contents (contenido) are made up of the belongings of the people living in the home, such as furniture, electronic devices, personal effects, clothing, jewellery, art, etc.

 

What would be an appropriate value for the contents?

To properly assess the contents, we recommend that you think about how much it would cost you to buy the items you have in your home, going room by room until you cover everything in it. Jewellery or cash money have specific valuation in home insurance and may be insured up to a certain limit or under certain conditions. In other words, in this case, this information must be provided to the company so that it takes it into account in the policy.

 

And what is the right value for the building?

If the building becomes damaged, e.g. a fire, the company will provide compensation according to the cost of rebuilding the home, i.e. the potential cost of rebuilding the home must be calculated. The resulting value of this calculation is the one that should be included in home insurance as the value of the building.

A very common way to calculate said value is the use of average estimated building values published by the Colleges of Architects. For instance:

Mr Olle Johansson, a Swedish national, purchased a new home in the city of Malaga in 2020. It’s a flat measuring 120 sq. m.Well, taking into account the average estimated building values from the College of Architects of Malaga for 2020, the value per square metre built would be 809 euros. In other words, the value of the building for 120 square metres would be 97,080 euros. If there is an underground carpark and a store, these should also be appraised separately from the home, so that the policy covers them. Another example: Mr Jan Van Poppel, a Dutch national, will purchase a home in the countryside, in the Mijas area (rural land), which has: 200 built square metres plus 30 square metres for a pool. The value per square metre for an isolated home in the countryside is 984 euros and the value of the pool would be 445 euros per square metre. Therefore, the value of the building would be about 210,150 euros.

 

Valuing the building at the purchase price

When we buy a home and obtain home insurance, we often think about setting a value for home insurance as close as possible to the purchase price paid for the property. However, this reasoning is misleading as it should be taken into account that the land where the home is located is not covered by home insurance, as the land always remains intact. In the event of serious damage, if you already own the land, you only need to insure the cost of rebuilding the home. However, the value of this land is what makes up most of the purchase price of a home in most urban sales. For instance, buying a home in the golden mile in Marbella, in central Malaga or on the beachfront in Nerja entails a high cost due to the location (land) of the property, rather than for the value of the building itself.

Rebuilding is much cheaper than buying when you already own the land. Therefore, the most important thing is to insure the real reconstruction value in the event of serious damage. This is about assigning the actual value to the building of your property. You also need to take into account that, when you own a home in a block of flats, if there is serious damage affecting the building, the community insurance will cover part of the damages affecting only the common elements of the building. The façade, roof, terraces, etc., are elements that would be covered by the insurance of the Homeowner’s Association in the event of a fire. In other words, if you are buying a flat or apartment, you’ll need to insure the building. This is why, in these cases, you should calculate the reconstruction value of your building for insurance purposes. If you provide a value above the reconstruction value, this would lead to so-called over-insurance in your home insurance and, if you provide a lower value, it would lead to under-insurance.

 

What would happen in the case of over-insurance in the policy?

Imagine a home in a building measuring 100 square meters, with a building value of 300,000 euros because this was the price paid when it was bought. If there is a serious accident requiring the reconstruction of the home, the company will never pay more than the reconstruction value, which would in general be around 80,000 – 90,000 euros. In this case, the owner would be paying a very high premium every year for the insurance policy needlessly, as the company will only honour claims up to the reconstruction cost of the home. In extreme cases, the company could even interpret that there has been bad faith when obtaining the insurance policy and this could be a major issue, as it could declare the policy void and refuse to pay the amounts that should be paid in the event of damages.

 

What happens in case of under-insurance?

In the event that the building or content is valued below the actual value of the building or furniture, the company will not cover 100% of the damages, even if the amount of the claim is lower than the value of the insurance policy. For instance, if the actual value of reconstruction of the building is 100,000 euros and the policy contains a building value of 60,000 euros, the home would only be insured at 60%. Someone might think in this case that any damages equal to or lower than 60,000 euros would be covered by the policy but in reality that’s not the case. For instance, in the event of a small fire with damages valued at 10,000 euros, the company would interpret that 40% of the claim is not covered by the policy as only 60% of the building value of the home is insured. Therefore, it will only pay 6,000 euros as compensation, always applying the rule of proportionality to every claim.

 

Special insurance: luxury homes

If you own a luxury home or you are thinking about buying a luxury home, the estimated cost of reconstruction or replacement based on the coefficients of the colleges of architects would surely not be a valid calculation method for homes of this type. The key to insure the building in homes of this type is to calculate the reconstruction value of the property with objective parameters. I.e. if the home has very high quality finishes in terms of automation, insulation, aluminium or timber structures, flooring, taps, toilets, air conditioning, etc., this must be taken into account and, in this case, these values should be added to the building insurance. As mentioned, the value of the building must be as accurate an estimate as possible of what it would cost to rebuild the home to the same standards. In this case, it’s very important to inform the company of the “peculiarities” of this home so that it has as much information as possible and to accredit the reason behind the value of building insurance being above the average reconstruction values in the area. Keeping all purchase invoices and proof of purchase for high-value furniture is very important to prove the estimated cost.

 

What is the insurance compensation consortium?

All persons who have an insurance policy in Spain, whatever the type, pay a small part of the price to the consortium. The consortium is a public business entity that covers accidents such as flooding, terrorism, atypical cyclones, large fires or other risks set down in the “extraordinary risk insurance regulations”, which are not covered by insurance policies, with damages of this type being expressly excluded from insurance covers. When damages of this type occur, as the insurance company does not cover them, the consortium acts as guarantor to compensate policyholders and keep them protected in these situations.

 

Rural homes and the building value in home insurance

First of all, we should remember the legal premise that most existing rural homes (rustic / countryside) in Andalusia, which are used for residential purposes, are illegal and, therefore, in the event of the destruction and total loss of the home, such as due to fire, earthquakes, serious flooding, etc., they cannot be rebuilt. This is because the Urban Planning Law of Andalusia (LOUA) does not allow for issuing a building permit on rural land for a residential home. The existence and continuity of those thousands of illegal homes on rural land are based on their age. Therefore, in the case of destruction or total loss, there would no longer be an old home and it would not be possible to obtain a permit to build a new house or rebuild the one that was there.

The above explanation means that the value of the building in home insurance for these homes can be estimated, as mentioned above, at around 984 euros per square metre built in Malaga. As the value is based on what it would cost to rebuild the home and the rural home cannot be legally rebuilt in the event of total loss, what situation would we be in? In the event of total loss, if we have a country home with a surface area of 150 square metres and the building is valued at 150,000 euros, the company would pay that amount as compensation for the building, along with the amount corresponding to its contents. In this case, the owner would receive compensation for the home in addition to the value of land where nothing can be built. This is why the value of the land in a rural home is very low compared to the construction value, especially when compared to an urban home on land where it is legal to rebuild it.

 

Tips for a safe and well insured home

When obtaining home insurance and purchasing your property, think carefully about the value of the building and contents and don’t forget to include stores, parking spaces, pools, etc. If you have any doubts about the insurance value, talk to the insurance company itself. It’s important for the company to help you clear up any doubts when assessing your insurance value.

 

Author: Gustavo Calero Monereo, lawyer of C&D Solicitors (Torrox, Málaga Andalusia)

malaga, costa del sol, sewage, properties

MALAGA AND COSTA DEL SOL: GREAT TOURIST AREA, WORRYING WASTEWATER PURIFICATION

malaga, costa del sol, sewage, properties
The wastewater purification in Malaga, financial and environmental consequences

With this article, I am detracting from the usual ones of a more legal nature, aimed at foreigners, resident or non-resident, who own a home in Malaga. In this post, I attempt to analyse the situation of wastewater purification in terms of the most significant tourist municipalities in Costa del Sol, as well as the financial and environmental consequences that lack of purification entails for municipalities like Nerja and Coín. I also focus on properties on rural land and the purification required for homes wishing to obtain a DAFO.

Introduction wastewater purification

With environmental sustainability or the environmental impact of our lifestyles being such an important issue in our times, I would like to speak my mind about the great problem of faecal water purification in the province of Malaga in general, even through it is sadly extensible to most regions in Spain, in population centres both large and small. However, Malaga, as a top tourist destination and due to its population density, especially along the coastline, should have an infrastructure that mitigates the environmental impact caused by all of us who live on the shore.

Many of our clients, both resident and non-resident, who are thinking about purchasing a home in Andalusia and that we provide advice to, are attracted by the Mediterranean Sea that bathes our shores but on which we indiscriminately dump millions of litres of unpurified wastewater. A recent article in La Opinión de Málaga on 5 January stated that Malaga dumps 123 million cubic metres of wastewater into the sea every year, a real atrocity.

National problem, million-euro fine 

On 15 February, El País national newspaper published an article informing that, until that date, Spain had paid about 32.70 million euros in fines due to not complying with the wastewater treatment directive in municipalities with over 15,000 inhabitants. This has been the highest fine paid by Spain to the EU in history.

This breach of the directive led to a conviction from the European Court of Justice and the resulting fine being imposed by the European Commission. This fine continues to grow for as long as those 17 municipalities fail to treat their wastewater, an obligation that came into force in 2001, which means almost 19 years have passed since that directive was enacted.

Nerja, beautiful beaches with faecal waters

One of the many municipalities that have been fined and do not have a sewage treatment plant is Nerja. It is striking that this municipality, which such beauty  and such great beaches and cliffs, in 2020, is still dumping the sewage it generates directly into the ocean, through a collector located 1,200 metres from the coast.

Nerja has spent over 20 years on the project for its sewage treatment plant and even though it seems that this year may finally mark the end of the works, according to an article in Diario Sur on 6 January (fingers crossed), this does not detract from the sloppiness and lack of interest of the local and regional government have displayed about this project.

The situation is so obvious from an environmental standpoint that, following several complaints, the prosecutor’s office brought judicial proceedings against senior officials of the Nerja City Council for the illegal dumping of this untreated wastewater. One of the toxicology reports certified that all samples taken from five beaches in Nerja contained faecal organisms according to their tests.

Construction of the Nerja treatment plant was declared to be of public interest by the Government in 1996 but, 23 years later, it has not yet been completed. If you visited Nerja and the surrounding areas in 1996, you could see the large number of works that did get started and completed because there were many years with large capital movements but the faecal water purification plant was not so lucky. Other municipalities on the eastern coast, such as Torrox, Vélez Málaga and Rincón de la Victoria, do have a sewage treatment plant in operation.

Mouth of the Guadalhorce, a natural site with a “faecal” river

Another area that also presents a high degree of pollution due to illegal dumping is the mouth of the Guadalhorce river in the city of Malaga. This enclave is the last unspoiled beach in the city of Malaga and is home to a very significant ecosystem of flora and fauna, with a network of trails to move through it. However, in this river, municipalities as large as Alhaurín el Grande and Coín dump their untreated faecal waters, which also led to a fine being paid by the government of Spain.

The city of Malaga has reinvented itself as a multicultural European city, currently highly appreciated by foreign tourists due to its many urban development projects, mostly in real estate. But Malaga is unable to commit to a project in the mouth of the Guadalhorce, which could affect this unique space –as it is the last unspoiled one– to preserve its environmental value.

It is non-profit associations that are reforesting and trying to preserve this space altruistically, as our firm was able to witness during the conference we held with some of them last November.

The municipality of Coín, a peculiar case

For the town of Coín to be able to connect to the treatment plant in the lower Guadalhorce, it is necessary to build the 3 kilometres of collectors that were destroyed by the torrential rains in autumn 2018 but the Andalusia Council, along with the contracting company, continue to fight to decide who will pay for these repairs. Coín is also immersed in legal proceedings due to its failure to treat its wastewater. While the administrations argue, this collector continues broken and the faecal water from Coín is dumped directly into the Guadalhorce river.

Isolated homes and their regularisation through DAFO, a bad focus of faecal waters

Even though compared to large population centres, the impact of these homes is lower, it should be noted that there are many isolated homes existing in Malaga. In La Axarquía, municipalities such as Alcaucín, Viñuela, Competa, Periana and Torrox have thousands of rural homes, as well as towns in the Guadalhorce valley, such as Coín, Alhaurín el Grande and Alhaurín de la Torre. Likewise, municipalities such as Mijas or Ronda also have many houses on non-urban land.

Among the positive aspects of the DAFO these homes are required to have an individual and autonomous treatment system. It should be noted that this procedure is important for foreigners who buy and sell homes in the province.

What is the problem?

I see that one of the negative aspects is the requirement from the Andalusia Council for properties subject to DAFO to have a watertight septic tank, forbidding septic tanks with a biological filter. This guideline is a serious mistake and its effect is contrary to what is intended, which is to prevent these homes from polluting the land on which they are located.

Properties with a watertight tank habitually require (monthly or more frequently, depending on their use) a tanker to visit the property and empty the contents of the tank, which are then transferred to an authorised waste facility.

What is the alternative?

Allowing the use of septic tanks with a biological filter as a treatment system, as it would not be necessary to empty the tank and water would come out clean and purified. It may be necessary to request authorisation for the discharge point of this clean, filtered water, which could even be used for irrigation but, with this treatment system, a company would only need to clean the tanks once a year, which represents significant savings for owners.

What is happening?

The problem that we find with watertight septic tanks is the economic cost of each emptying, which leads many homeowners to resort to other illegal methods, to avoid inconveniences and economic costs. In many cases, they choose to install a watertight septic tank and, once the technician certifies it, a small hole is drilled at the bottom, through which faecal water is poured into groundwater, thereby dispending with the need to have a truck empty it and making it very difficult for this to be sanctioned.

It is appalling that, in some cities, it has been accepted or assumed that owners will not empty their watertight septic tanks and will drill a small hole in them. I would even dare to say that owners are given such a “solution” to prevent the inconvenience of emptying, as the DAFO only requires having a technician certify the installation of the watertight septic tank and, if a hole is drilled later, no one will notice.

However, with thousands of homes in the countryside, thinking that a truck would need to go empty the septic tank in each of them on a frequent basis, requires being naive or means that the Andalusia Council cares little about these discharges (I lean more towards the latter). I am also not very sure of where these trucks discharge the faecal waters they do collect.

Do not pollute the environment if you process the DAFO for your property

To prevent the situation above, which is absolutely filthy, in some of the DAFO we have processed, we have found this problem and, to prevent faecal waters from being discharged directly into the ground, we have advised owners that, once the watertight tank is installed and certified to process the DAFO, they install one with a biological filter next to it. This way, at least, the water they dump will be clean and not pollute the ground, while the owner will avoid all the financial cost and disruption entailed by emptying the tank periodically.

At least, with the second option, despite not being accepted officially by the Junta of Andalusian and many municipalities, faecal discharge is prevented, which is the main goal when it comes to the environment.

Conclusion

As you probably understand, this issue goes a long way but I believe that, with these few brushstrokes, you can see the general lack of environmental awareness in the administration as well as among many citizens. This is the sad reality.

Tourism in Malaga and the entire Mediterranean area is also not viewed with a perspective for the future, as we live in the short term and do not care for essential things for investors and tourists to continue to come to Malaga, as well as foreigners wishing to purchase a home to enjoy a high quality of life or just spend their holidays in Span.

Meanwhile, those of us who reside and live here most of the time are unaware of the large amount of pollution we generate and the damage we cause to the sea, rivers and streams (which are increasingly polluted). I do not see many complaints or movements among citizens protesting this situation.

Some of the damage is already irreparable but there is some that can be fixed.

Author: Gustavo Calero Monereo, lawyer at C&D Solicitors Torrox (Málaga, Andalusia)

 

 

Expenses from the renovation and improvement of a property can reduce the tax

RENOVATING YOUR HOME? DO IT RIGHT AND PAY LESS TAX WHEN YOU SELL

Renovating house in Andalusia: tips & save on Capital Gain Tax

One of the first things many people do when buying a property is renovate it.

The expenses from the renovation and improvement of a property can reduce the tax on capital gains in the event that it is evidenced in the future sale of the existing or new build property. It is important to clarify that repair or preservation costs for the property are not deductible. Deductions only apply to renovations or improvements that increase the value of the property compared to before they were made.

The cost of improvements would be added to the price paid in the sale, resulting in lower capital gains tax due to the difference between the price to transfer the property and the purchase price, which means less tax would be paid to the Tax Agency. This will be so provided that such renovation and improvement works can be evidenced so that the Tax Agency can accept them. Below, you will find what I consider to be the most important aspects to be able to prove the works carried out for tax purposes.

TECHNICAL PROJECT

Having an architect draft a project and oversee the execution of the works is not a minor issue. If the works to be carried out are of a certain scale, it is always best to have a professional perform follow-up and control since he or she would be liable if something goes wrong. Likewise, having carried out the works with a technical project and a final works certificate can be used to evidence the improvements made in be property before the Tax Agency.

BUILDING PERMIT

If you are going to renovate a property, it is always necessary to get a building permit for both major and minor works. It is true that this is often not requested to save money, for instance when renovating the inside of a home or a room, as there are less chance you will be found out.

Having a building permit will help you on three important aspects:

  • To evidence the lawfulness of the works –provided that it complies with the permit granted–. Likewise, it is important for you to know that, if there is an accident at the building site, not having a permit may entail consequences of criminal liability for the owner.
  • When it comes to works where the distribution of the property will change, the constructed area will be enlarged or a new home will be built, the building permit –among other documents, such as the final works certificate and the permit for initial occupation– will be necessary to register this new construction in the Property Register.
  • When selling a home with profit, the building permit will serve to prove to the Tax Agency that improvements were made so as to request that these are taken into account as part of the purchase price of the home.

Having a building permit is more important in terms of urban-planning and criminal law than in terms of taxes.

CONSTRUCTION CONTRACT

It is very important to sign a contract for the works to be carried out with the builder. The construction contract will mainly evidence which is the construction company that performs the works, the type of works to be carried out, their estimated cost and the location where they will take place.

INVOICES AND PROOF OF PAYMENT

Without a doubt, in terms of taxation, this is the most important requirement for the Treasury to recognise this improvement or renovation.

We often find homeowners who have spent a lot of money on improving their properties but who have no invoices issued by the builder or proof of payment for these works. It is essential to prove to the Tax Agency that these amounts have been paid by bank transfer or personal cheques made out to the construction company. If you have no way to prove these payments, it will be impossible for you to include these improvements in the purchase price of the property. You must always request an invoice and keep proof of payment.

The costs of the improvements will be added to the purchase price because of which you will pay less Capital Gain tax. The Capital Gain tax of this moment is 19% over the profit between the purchase and sales price minus the deductions.

WORKS WITHOUT A PERMIT THAT CANNOT BE LEGALIZED

It is possible that, for the works you intend to carry out in your home, it is not possible to obtain a building permit, for instance in works to enlarge a home in non-urban land –rural land–, increasing the surface area beyond the development potential –such as when enclosing a balcony– or building to a height higher than that allowed. The first thing you should take into account is that, as the owner, you will assume the legal liability that may arise if legal proceedings are brought in connection with these works without a permit.

If you will be carrying out such works, it is important for you to sign a construction contract with the builder, for you to obtain an invoice for each payment and for payments to be made by bank transfer or cheque. Even if you do not have a permit, it would be possible for these improvements to be taken into account when selling the property.

The Tax Agency cannot reject improvement works for not having a building permit –inspecting urban planning law is outside their jurisdiction–, for which reason it is important for you to be able to evidence the works that were effectively carried out, what their cost was and submit payment documents.

In these cases, it would not be a bad idea to have a technician draw up some type of report –not a project– explaining how the property was before and the works that have been performed, providing photographs and documentation from the owner. This is an additional document that can be used to prove improvement works.

NEW CONSTRUCTION DEED

The New Construction Deed is a document signed before a Notary Public to register a building in the Property Register in Spain. Even when the construction does not have a building permit, it is possible for it to access the Property Register in Spain –which does not mean it is legal– provided that a series of requirements are met.

If you have built a pool, garage, storeroom, etc. in Andalusia without a licence, it is possible for you to get an architect to issue a certificate of age six years after completion, to evidence the new construction and its age. This certificate can be used to sign a Deed of Declaration of New Construction before a Notary Public and register the construction in the Property Register. In some cases, it would not be possible to register it in the Register, such as when the land is especially protected.

VALUE OF THE CONSTRUCTION DECLARED IN THE DEED

The value of New Construction assigned in the Deed cannot in itself be used to prove to the Treasury how much was spent on the property at the moment of selling.

For instance, if you declare, in the Deed, that you have spent 50,000 euros on the pool and garage you built, unless you have proof of payment and invoices from the construction company, the Treasury will reject this expense. This is so because what you do before the notary is nothing more than a statement, which means that the Notary does not check if you really spent that amount or if it was more or less –and isn’t required to do so–.

In my opinion, if you are going to do a Declaration of New Construction for works without a licence, you should include a copy of the invoices and/or proof of payment to the constructor in the Deed, as this would evidence the value you declared and make it easier for the Treasury to accept it when selling the property.

Lastly, if you are thinking about doing any work on your property, I wish you all the luck in the world and, most of all, lots of patience; I almost ran out of it myself when I renovated mine…

Author: Gustavo Calero Monereo, lawyer at C&D Solicitors Torrox (Málaga, Andalusia)

HOME BUYERS ACTING IN GOOD FAITH, MORE PROTECTION IN THE CRIMINAL FIELD

Spanish home buyers acting in good faith
Spanish home buyers acting in good faith

Yesterday Thursday 26 March, the Lower House of the Spanish Parliament ratified the amendment to article 319 of the Spanish Penal Code, approved by the Senate last 12 March. A paragraph has been added to section 3, which reads:  “In any event, the Judges or Courts of Law may issue a reasoned order to demolish the works and restore the physical reality altered at the expense of the principal thereof, without prejudice to the compensations due to third parties in good faith, and, assessing the circumstances and after hearing the competent government body, shall temporarily subject the demolition to the constitution of guarantees that ensure their payment. In any case, the seizure of the earnings from the offence shall be available, regardless of the transformations that these may have undergone”.

This new regulation will be into force next 1st July.

Until now, in proceedings regarding an Offence against Town and Country Planning, the judgment ordered the demolition of what had been built illegally and compensation was set by way of civil liability for the developer, in favour of buyers acting in good faith. The problem is that, in most of these cases, collecting said compensation was very complicated since the developer was either insolvent or had disappeared. However, enforcement of the demolition was not stopped, for which reason we could find ourselves before an unfortunate scenario where a buyer acting in good faith and recognised in a judgment could have his home demolished without being effectively compensated.

From now on, in criminal proceedings for Offences against Town and Country Planning, the judge may stop the demolition of the home until due compensation to the third-party acting in good faith is guaranteed.

From the literal wording of the amendment introduced, it seems that the judge will be the one who, after assessing the specific situation in each case, will stop said demolition, for which reason I understand that it will be an essential requirement to prove that the buyer is really a third party acting in good faith.

Likewise, it seems interesting that, in assessing whether to stop the demolition, it is required for the competent Government Body, which I take to be the City Hall, to be heard in the proceedings. I suppose that, in these cases, the City Hall can provide relevant details leading to stopping the demolition. Also, since the City Hall is the one responsible for executing the demolition, it may argue on the suitability of stopping it until it can ensure compensation for the third party acting in good faith.

Lastly, this amendment refers to stopping the demolition temporarily, i.e., a specific period of time is not established but, in any case, it should not perpetuate over time. However, the concept of “temporarily” is very wide and it may be interpreted as sufficient time to guarantee compensation to buyers acting in good faith.

I can say, with full knowledge, that this amendment of the Penal Code has been possible mainly thanks to the work of two associations in Andalusia that have been working on protecting buyers acting in good faith for several years: SOHA and AUAN, especially noting the great work done by Gerardo Vázquez, a colleague of mine, attorney and legal adviser at AUAN. The efforts of these organisations and their mobilisation have made this amendment possible.

The aforementioned organisations, along with many others that have been created, are justified by the great problem faced in Andalusia, which has 300,000 homes built in non-developable land (NDL). On the Andalusian coast, due to foreign residential tourism, many buyers are foreigners and this has led these owners, facing the legal problems with these homes, to move to defend their interests, to strengthen and to tell authorities about the existing situation.

The main problem, at least in Andalusia, has been the complete inactivity and inefficiency of Urban Planning in Andalusia, which has led to a failure in regulating non-developable land in Andalusia and to the existence of many homes built on non-developable land.

Regulations with very fixed and strict criteria governing construction on non-developable land were approved. However, Autonomic and Local Governments have completely neglected to provide the necessary oversight to enforce these regulations.

From the beginning of the years of the housing bubble, the competent government bodies have shown no predisposition to initiate and solve disciplinary procedures against offenders, with all the legal consequences that this entails, such as demolishing what has been illegally built. The governing party in City Hall should have assumed the “feared” political price that these unpopular measures may have entailed.

Most of these buildings have everything: registered deed, pay IBI (Property Tax), are registered in the Property Register, have electricity and water, and have paid autonomic taxes such as ITP (Tax on Asset Transfer) and AJD (Stamp Duty).

Many of the properties have changed owners, meaning that the person responsible for construction is no longer the owner of the home. When these properties enter legal proceedings, third parties acting in good faith appear, affected by this situation that the Local and Autonomic Governments, with full knowledge, have allowed due to their complete inaction in the field of Urban Planning.

The regulations provided in the Urban Planning Law of Andalusia (LOUA) to govern the very strict use of non-developable land were based on environmental protection and on maintaining the rural value of a large portion of the Andalusian territory so as to preserve this environment and its values.

However, its lack of application due to a lack of real and effective control of what was being done on non-developable land has given rise to the failure of regulations on the use of non-developable land provided in the LOUA.

In reality, this has resulted in large rural areas becoming full of unregulated buildings, achieving the opposite effect, as the lack of protection of the rural environment is clear in these cases.

In practice, a total lack of protection of rural land has occurred in some areas under greater urban pressure, where, without controls or any type of criteria regarding what was being built at the architectural level, construction has been allowed, of palaces, warehouses, terraced houses, one-storey homes, towers and everything in between. There has also been no control of the necessary infrastructure or facilities for these homes to be used: discharge of sewage, illegal wells to obtain water, etc. Furthermore, many of these homes did not pay local building taxes, as the majority were not eligible to obtain a licence under the LOUA.

However, as we explained in a previous post, it should be noted that, in some cases, the licenses for segregation, building and initial occupancy were indeed granted for some of these homes. The fact that the Government is responsible in these cases is more than obvious and the damages suffered by owners, who purchased the homes in good faith, are completely reprehensible.

This situation of deregulation of non-developable land has an undesirable effect on citizens, as there is a feeling that there are citizens who ignore the law and go unpunished and that there are others who are required to comply with it.

If the urban planning disciplinary proceedings had been started quickly and efficiently at the beginning of that frenzied period of real estate development on non-developable land, the message that citizens would have received would have been very clear and many buildings would not have been built. There would still be homes on non-developable land but the magnitude of the problem would be quite different.

Faced with this situation, the legal response to solve this problem should be consistent with the reality that exists and that has been tolerated by the Government itself for so many years. This is why the necessary legislative reforms in this area must be tackled rigorously and without propaganda messages, avoiding a focus on the debate on “amnesty for everyone” or “offenders must pay” because the situation is much more complex.

In the administrative field, the majority of these homes should be regularised as, in many cases, penalties for using land illegally would have expired and many of the developers-builders are not the current owners.

In the future, there should be a debate regarding the effectiveness and efficiency of Urban Planning under current regulations, as well as regarding whether the regulation of non-developable land in the LOUA is adequate for the purpose it intends to fulfil.

 

Author: Gustavo Calero Monereo, C&D Solicitors (lawyer)

Torrox-Costa (Malaga/Costa del Sol/Andalucia)

 

 

 

 

PROPERTIES ON NON-DEVELOPABLE LAND AFFECTED BY RECENT FIRE IN COSTA DEL SOL

PROPERTIES ON NON-DEVELOPABLE LAND AFFECTED BY RECENT FIRE IN COSTA DEL SOL

Legal risks rural house Spain fire
Legal risks rural house Spain fire

As a result of the terrible fire initiated last Thursday 30th in Coin, an estimate of 100 to 200 properties built on non-developable land within the municipal area of Coín, Mijas, Marbella, Ojén and Alhaurín el Grande were severely damaged and some of them completely ruined.

In this year 2012 the Decree 2/2012 for the regulation of buildings and scattered rural settlements on non-developable land in Andalusia was passed by the Andalusian Regional Government in January to put a stop to the problem of thousand of properties on non-developable land. However, this Decree does not currently apply nor does it mean the legalization of these properties, as it was already discussed on once of our previous article

According to the above mentioned Decree, most of these fire-affected properties are considered assimilated to out of ordination housing, as they were built without construction permits or infringing their condition and the municipal General Plan for Urban Planning PGOU. Therefore, no measures can be adopted to recover their legality, which has been disrupted over time and they cannot either be legalized. The only permission authorized by this Decree is “…works for the repair and maintenance which may require the strict maintenance of the security, occupation and health standards of the property” (Article 8.3 of the Decree).

In the event of some fire-affected properties considered out of ordination—properties built in accordance with the municipal PGOU, but considered “out of its ordination” after the PGOU modification, the permitted construction works shall be provided by the municipal PGOU, which is currently under development in most of the municipalities. The Andalusian Town Planning Act L.O.U.A. shall be also considered as it provides that “…only repair works for the strict maintenance of property occupation or usage…” as well as “…exceptionally partial and circumstantial works may be permitted for the property consolidation…”. It is worth mentioning that only a few of these properties may be under the “out of ordination” condition.

This restriction or limitation to alter or renovate properties on non-developable land is provided by the definition on the Decree for “scattered rural properties”, which are included within the “out or ordination” concept and its variant “assimilated”. In accordance with the case law, this concept has been defined as “constructions to disappear once their useful life possibilities finishes—the “out of ordination” condition aims the usage of property until it finishes over time, ends up as a ruin and naturally disappears. For this reason, the Andalusian regulation always provides the granting of permits for this type of constructions for the strict maintenance and under exceptional circumstances.

The Decree does not provide the legalization of these properties. In fact, part of the status for these “assimilated to out of ordination” properties considered as illegal, makes them to be given a definition and their use limited, since no measures can be taken to protect their legality, so that they are “attacked”, as too much time has elapsed since the were built.

In the event of a disaster as fire, flood, earthquake, landslides, etc…, in which a property is in ruins or very damaged and cannot be used again for the purposes to be occupied as a residence, if we abide by the current regulations on these events, it would be very complicated to grant a construction o repair permit for these properties, since it is against the concept of “out of ordination” and “assimilated to out of ordination” provided by the Decree.

The problem lies in a Decree which does not give any solution to the current legal condition of these properties, which have been tolerated by the Andalusian Regional Government and Town Councils for many years. During all these years, nobody has done anything at all on this matter and for that reason no legal measures can be legally adopted to restore their legality.

According to the first political reactions read on the papers about the burned properties, it seems that each particular case may be studied. In some cases, a forced and exceptional interpretation out of the legal framework would be adopted, so that those families with just one house would be allowed to rebuild and live on their non-developable lands as they did before the fire. The problem of this “shortcuts” to implement what the legal regulations do not provide is that a precedent is set, so that in the future event that any of the owners of the more than 100,000 properties built in non-developable land in Andalusia had a disaster of this kind, aren’t they also entitled to receive a similar treatment from the Public Administration? For this reason, the problem lies in a Decree for appearance’s sake, which does not solve the problem and is currently open to doubt in this type of situations.

 

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

 

DRAFT OF THE DECREE ON THE LEGALIZATION OF HOUSING ON NON-DEVELOPABLE LAND OF ANDALUSIAN REGIONAL GOVERNMENT

DRAFT OF THE DECREE ON THE LEGALIZATION OF HOUSING ON NON-DEVELOPABLE LAND OF ANDALUSIAN REGIONAL GOVERNMENT

Three weeks ago, we received in our offices a copy of the draft implementing Decree of 20th of June 2011, which regulates building and scattered rural settlements on non-developable (non-urbanizable) land in Andalusia.

This draft is supposed to be created as an attempt to regulate the situation of a large number of properties located on non-developable (non-urbanizable) land in Andalusia, where criminal or administrative proceedings cannot be filed against them for land development liability, because the offense or infringement is extinguished by prescription. The Andalusian Regional Government is partially responsible for this situation, as they have not protected or controlled the legality regarding land developments of municipalities for many years. Meanwhile, they have collected the profits from the transfers of title ownership by means of the transfer tax.

Regarding the draft of the Decree, the concept of constructions assimilated out of ordination is not understood. The use and enjoyment of these constructions can be exercised, but a complex administrative procedure is established, so that the city councils certify the security and necessary facilities for the use and enjoyment of these properties. However, the resolution to this procedure shall never mean the grant of the First Occupancy License, neither the owner’s rights shall be recognized to be exercised before any administrative or criminal proceedings (article 7, section 6 of the Decree).

If the use of housing is recognized and regulated to preserve the rural area, the environment and the scenic value where the construction is located, then, why the First Occupancy License is not granted when the owner is enjoying the property? What does “non-recognition” mean before any court proceedings? As a result, it could be understood that in the event of court proceedings, this recognition of assimilated housing shall not have any legal “value” for these proceedings, that is to say, legalization or regulation does not exist.

Maybe, the problem is based in the creation of the concept “assimilated to out of ordination, which was incorporated by the Decree on Urban Discipline of Andalusian of 2010 and its implementation.

Furthermore, an additional problem arises, as the Land Registry jurisdiction belongs to the Spanish Government. As a result, the State legislation should firstly include this legal concept of “assimilated out of ordination” within its rules in order to authorize the registration in the Land Registry of any administrative action which establishes a construction under the consideration of this concept. Nowadays, the only existing concept is “out of ordination”, but nothing is referred to constructions “assimilated” to these ones. Then, the Regional Government is not authorized to establish the access or registration in the Land Registry, as this jurisdiction belongs to the Spanish Government.

Lastly, in many Andalusian municipalities as the Axarquía region, thousands of isolated houses have been built on non-developable land under the corresponding construction permits. Then, it does not seem coherent that differences in treatment are not considered for these owners acting in good faith, regarding these municipal permits they were granted. This draft of the Decree does not include any reference to them; therefore, the legal situation of the constructions with permits equates with these other constructions without permits.

In conclusion, regarding the content of the draft, legalization or regulation of properties located on rural land is not incorporated; no legal novelty is provided to solve out the problem resulting from the lack of control of Public Administrations regarding the use of land; this law only complicates even further the current situation of this issue.

 

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

 

NEW URBAN SCENE IN LA AXARQUIA

NEW URBAN SCENE IN LA AXARQUIA

Complex urban planning in Andalucia: PGOU, LOUA & POT
Complex urban planning in Andalucia: PGOU, LOUA & POT

Due to the urban complexity that most of the municipalities of La Axarquía are immersed because of the Spanish local elections held in May, the changes in the local governments could mean changes in the way of managing each municipality and in the solutions that such local governments could propose in view of the complex urban development in this area.

We have to take into account that, nowadays, most of the municipalities are working in the production and approval of their new General Plans for Urban Zoning (PGOU) to adapt them to the Urban Zoning Code of La Axarquía (LOUA) and to the Plan for Town Planning in La Axarquía (POT), and so as to offer a final solution to all those housing developments built upon non-urban areas as well as to the thousands of isolated buildings within each municipality.

Apart from the several actions carried out by the town halls, it is worth mentioning the announcement made by the Junta de Andalucía about the approval of a Decree to legalize the large number of houses in La Axarquía. Besides, the Junta de Andalucía has made an inventory about houses built upon non-urban areas and which is being sent to each of the town halls so that they could know the situation of all those mentioned houses.

The PGOU is the main instrument in the planning of each municipality and it provides the characteristics and nature of the area that comprises such municipal district. So, it is very important that those owners with properties built upon non-urban areas, whether it is an isolated house or a house within a development, appear before the municipal offices as soon as possible, preferably with a specialized lawyer, in order to study the situation of the houses and the possibilities of legalizing them or declaring them houses out of regulation.

It is worth mentioning all those housing developments partly or totally built upon non-urban areas, but with different situations in their basic infrastructures (lighting, roads, sewer systems, water, etc). In those cases, it is necessary that each Community of Owners or, if it is not established, one of their representatives, enquires in the town hall about the situation of the housing development and its possible inclusion in the new PGOU.

If we take into account that it seems that possible mid-term solutions and measures may arrive, it is important that owners ask and take part in such “regularization” process that will be born within each town hall, so as their property or housing development could be part of this new plan, or in order to find a solution for each conflict or situation.

Obviously, regularizing each house will have a charge for the owners, depending on their situation, but we think it is a “minor wrong” if this situation of legal insecurity upon many rustic properties comes to an end.

Nowadays, our legal firm, which represents some clients that have houses or are part of a housing development built upon non-urban areas, has already started to deal with several town halls about the situation and regularization proposals of their properties. It is important that the owners are the ones who look for solutions with the town halls.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)

Torrox-Costa (Malaga/Costa del Sol/Andalucia)

 

NEW STANCE ON DWELLINGS BUILT ON RUSTIC LAND IN LA AXARQUÍA

NEW STANCE ON DWELLINGS BUILT ON RUSTIC LAND IN LA AXARQUÍA

Legalizing process of rustic land Axarquía Málaga (houses without building license or with invalid building license)
Legalizing process of rustic land Axarquía Málaga (houses without building license or with invalid building license)

In la Axarquía, as well as in many municipalities in Málaga and Andalucía, there are at present thousands of properties which are built on land not designated for construction. These properties have been built without any building permit whatsoever and no responsibility may be claimed as the criminal or administrative actions that would have applied, have lapsed. We refer to thousands of dwellings which will remain built for many years, and their use and enjoy will never change.

From a logical point of view, and why not mention it, from an ecological one, the most coherent thing to do, in these cases, would be to try to legalise them. This would imply setting minimum requirements for them to follow, and providing the dwellings with infrastructures, such as sewage systems, that would avoid damaging their surroundings, since regardless of whether they are legalised or not, they will remain occupied.

Regarding dwellings built on land not designated for construction, but where a building permit has been granted (those permits may be challenged and declared null at any time), we do not see the point in bringing hundreds of administrative and contentious actions to declare them void. As proceedings will take endless time to be settled, and whereas eventually a few orders may be enforced, some demolition orders will never be put into effect. In addition, it will affect many homeowners who will claim pecuniary liability to the Local Council, and also, in my view, to the Junta de Andalucía (Andalusian Regional Government).

However, given the current situation of insolvency of the government institutions and their tendency to delay proceedings, it will be very difficult for the homeowners to obtain compensation.

As we stated in our October article Málaga, Axarquía and Urban Problems, this situation has been reached due to a total lack of interest on the part of the Local Councils and the Junta de Andalucía, in the exercise of their duties in the last years, even when they were totally aware of the said irregularities.

And apart from all these consequences, it should also be added, the damage that starting hundreds of legal proceedings, with subsequent demolitions, and owners claiming compensation, etc, can do on residential tourism, mainly foreign, creating, thus, a situation of complete legal uncertainty. This kind of tourism and the economy of the area would be affected and probably driven to the wall.

Therefore, the decision of the Junta to approve a Decree in the next six months to legalise this situation of urban chaos, considering the starting point of the situation, is the most logical and coherent stance to adopt. And we think the cost “can be assumed” by the homeowners affected, as, at the end of the day, it will be to their own benefit, to the benefit of the government institutions involved, and on the ecological interest of the area where they are situated, it will also lead to the economic progress of this area.

We will follow this issue with expectation over the coming months. In any case, considering the circumstances, this change of stance of the Junta de Andalucía is a good piece of news.

Anyway, as everyone knows, when elections approach anything can happen.

 

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)

Torrox-Costa (Malaga/Costa del Sol/Andalucia)

 

FIGURE OUT OF REGULATION AND CONSTRUCTION ON UNDEVELOPED LAND

FIGURE OUT OF REGULATION AND CONSTRUCTION ON UNDEVELOPED LAND

Andalucian houses built out of regulation according to Town Hall´s urban law LOUA
Andalucian houses built out of regulation according to Town Hall´s urban law LOUA

Now that many municipalities in Málaga are approving their development plans in an attempt to regulate the urban chaos in relation to dwellings on undeveloped land, and to adapt those plans to the Law on Urban Planning of Andalusia (LOUA,) the obvious question is; what will happen to the irregular housing that cannot be legalized by the new urban plan adopted by each municipality?

A possible solution to these houses can be the designating them as homes “fuera de ordenación” (out of regulation), ie homes or buildings that do not satisfy the new municipality’s urban planning, therefore cannot be legalized, and it cannot be either asked any kind of responsibility to their owners or developers as any possible urban infraction has prescribed according to the LOUA or penal code, through the passage of over four years and five years respectively, since the buildings were finished.

Such classification of a property as “out of regulation” can be done by either the City Council or at the request of the owners, and entails certain limitations on the rights of the owners with respect to such property. Thus, the building can only undertake repairs work and maintenance for the strict conservation for the occupancy and use of such constructions, and such other works authorized under exceptional provisions of the Act. However, these properties can still be used by their owners, so that they can continue to enjoy their homes, do conservation work thereof and carry out any legal business on their property, acknowledging the existence of the above mentioned limitations in the property use and enjoyment but with the legal security that any legal liability can be required in the future because the housing has been declared by the City Council as out of regulation and, therefore, is now legally defined.

Given the numerous buildings that are not legalized in the Axarquia and over which there can not be imposed any liability, some municipalities are currently starting to open statement records of “out of regulation” in order to end up with this situation of legal uncertainty over these buildings that can not be legalized since they are located on undeveloped land according to the urban plan. The objective is also to give the owners legal protection letting them know what they can or cannot do on their properties but with the legal security that no responsibility will be claimed on them in the future regarding their properties. In fact our firm recently launched the first record of this type in one of the municipalities with more properties in this situation in La Axarquia, not having finished to this day.

According to the LOUA, the councils have the authority or power to define in their urban plans what can or can not be done on these out of regulation properties, so they can take this advantage of that power or authority to help solving the problem of all buildings that can not be legalized in the new general urban plan but over which there cannot be any imposed legal liability. Thus using their authority to help making this cataloging received positively among the affected property owners while helping to organize and regulate part of the chaos of the homes built on rural land, with the consequent benefit to the town Hall for new incomes and for the owners that will have legal security in their properties

Therefore, given the impossibility of legalizing the new urban plan on everything that has been built illegally, the legal definition of out of regulation may be of interest for the owner to give legal security to their property.

 

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)

Torrox-Costa (Malaga/Costa del Sol/Andalucia)

 

THE DEMOLITION OF THE BUILDINGS IN THE RUSTICS LANDS OF ANDALUCIA

THE DEMOLITION OF THE BUILDINGS IN THE RUSTICS LANDS OF ANDALUCIA

Do you own a Spanish property without a (valid) building license?
Do you own a Spanish property without a (valid) building license?

Following the news published recently in a local newspaper, the Provincial Courts of Jaén cancelled the demolition of a two storey house and its swimming pool that were built on rustic ground. This house had the circumstance that its grounds invade part of the bank of a river.

There are currently a series of penal judiciary procedures opened all over Andalucía for crimes against the zoning law due to houses built without license on common rural grounds, that is to say, grounds which lack specific protection.

It must be clearly stated that in a procedure for the prosecution of a crime against land planning, the sentence pronounced doesn’t necessary order the demolition of the illegal building. This is due to the fact that demolition is not a punishment held within the penal code in case the owner is found guilty for having started the building process without planning permission. Demolition is thus a compensating measure, a possibility for the jury to evaluate the circumstances of each case in question that will have to be explained once the sentence is pronounced.

Once we have established this, part of the jurisprudence establishes that not demolishing a building in a case in which the Council could have legalized this building by the administrative way; on those population nuclei built on rustic ground and constituted by numerous buildings that pay the common local tax, that have garbage pick up service, water, electricity, etc… that is to say: certain infrastructure with the appearance of a residential area; demolition of illegal buildings in this case would not apply in the court decision. This is due to the fact that it would not be logical nor understandable to reach a judiciary decision in which such an area with different constructions, since the objective of demolition within penal context is to protect and to make a rational use of the ground, little can be done to protect by demolishing one building when there are others around it, as it will not possible to totally recover that space left to its original rural status.

We could therefore conclude by saying that now a days among the multiple rustic areas with buildings without licences on them with the appearance of a residential area in themselves, he line that some sentences are following can be considered as more logic and coherent, since there is the impossibility to repair what was illegally built. This current situation is therefore the result of the Councils and the Andalusian Council in the neglect of their controlling functions on ground use for a long period of time, not having taken the appropriate measures in due time.

But let’s finally take into account that we are talking here about legal procedures against buildings that were not granted building permission. It is something very different to those buildings that were granted building permission despite wrongfully, in places where the General Building Planning would not allow them. These cases belong to the Litigious-Administrative jurisdiction. I will try to state the legal consequences to these cases in next article, although I assure you it won’t be an easy task.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

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