Before you put your flat on the market: what we check and why

Many sales that run into trouble at the notary's do so because of a document nobody asked for in time. A mortgage that was paid off but still appears in the Land Registry, an enclosed terrace that isn't recorded anywhere, or a special levy approved by the owners' association that the buyer finds out about the week of completion.

None of this stops you from selling. But if it comes up late, it gets negotiated in a hurry and almost always downwards. That's why, before a flat goes on the market, we look at it layer by layer.

Land Registry

The first step is an up-to-date Land Registry extract (nota simple). It's used to check two things: who is registered as the owner and what charges the property carries.

Problems with ownership come up more often than you might think: an inheritance that was never registered, a spouse who isn't listed, or a co-owner whose signature is needed.

As for charges, the most common case is a mortgage that has been paid off but is still registered. Repaying the loan doesn't remove it from the Registry: a deed of cancellation is needed. This can be done at the same signing as the sale, but it's best to know beforehand so the buyer and their bank are clear about it.

Cadastre

The cadastral reference, floor area and use recorded in the Cadastre should match the Land Registry and reality. They often don't: square metres gained by enclosing a terrace, a mezzanine, or a layout that changed years ago.

A discrepancy doesn't prevent the sale, but the buyer will see it and so will their bank, because the valuer works with that data. If something needs correcting, it's better to start before the listing goes live.

Planning

Here we check whether what's in the flat is what was authorised. Works carried out without a permit (enclosures, layout changes, two flats knocked into one) and uses other than the permitted one, such as commercial premises converted into a home, are what complicate a sale most.

This layer also covers two documents that are always requested:

• The occupancy certificate (cédula de habitabilidad). In Catalonia it's standard documentation for a sale, and the buyer needs it to connect the utilities. You need to check it's still valid.
• The energy performance certificate. It's compulsory in order to advertise and sell, and the rating has to appear in the listing.

If the building's technical inspection (ITE) is outstanding or found defects, that's also worth knowing before discussing price.

Owners' association

To sign, the notary asks for a certificate of debts to the owners' association, issued by its secretary or the property administrator. An unpaid bill is quickly sorted out; what deserves a closer look is the recent meeting minutes.

They show any special levies approved for works, legal disputes involving the association and changes to its bylaws. A levy that has been approved but not paid must be settled in the deposit contract (arras): who pays it and how it's deducted, in writing.

Taxes

Selling has a tax cost, and doing the sums beforehand avoids surprises:

• Municipal capital gains tax (plusvalía). It's calculated by two methods and you pay whichever is lower. If you sell without a real gain, you may not have to pay, but you must be able to prove it.
• Income tax (IRPF). The gain between what the flat cost and what it sells for is taxed in the following year's return. There are exemptions, such as reinvesting in a main residence, each with its own conditions and deadlines.
• If the seller isn't resident in Spain, the buyer withholds 3 % of the price and pays it to the tax authorities on account of the tax.
• That year's property tax (IBI) is paid by whoever owned the property on 1 January, unless the parties agree to split it.

What we do with all this

Review it before setting the asking price. Anything that comes up in time can be corrected, explained in the listing or factored into the price. Anything that comes up at the notary's gets negotiated with the buyer across the table and a deadline looming.

At HabitaRetail this review is carried out by a practising lawyer before the property is marketed. It's the second phase of Plan Habita 5.