Decree 218/2005. The one about rentals and properties for sale in Andalusia

Raymundo Larraín Nesbitt, August, 8. 2016

Regular legal-contributor Raymundo Larraín Nesbitt explains Andalusia’s Decree 218/2005 law that regulates the information real estate agencies and developers need to provide to consumers on renting or selling properties, before any deposit is paid, in the region of Andalusia.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of August 2016

Original article: 29th August 2.008

 
 
Photo credit: Idealpropertyspain.com

 

Introduction

This month’s article features a law that was passed in 2005. It acts as a gentle reminder of an article I published well over a decade ago. The reason I republish it this month is because sales are picking up again and we are at the peak of the rentals season.

The concept of Documento Informativo Abreviado (DIA, for short) pervades this law and is the cornerstone of this decree. It is the Spanish equivalent of the UK’s HPI, Home Purchase Information, or Seller’s pack.

DIAs will contain different information contingent on whether we are dealing with property for sale (off-plan or resale) or else a rental.

The idea behind Decree 218 is that when a consumer (tenant or buyer) walks into a developer’s sales office, or else a real estate agency (whoever is marketing the property), they are handed key legal information in the shape of a detailed booklet (DIA) before any deposit is paid, which proves most useful.

I have structured my article as a FAQ and use bullet points for ease of comprehension rather than list and comment its sections one by one which would be rather tedious and off-putting.

Where is it enforced?

Only in the region of Andalusia. All properties located in that region are subject to it.

What properties does it apply to?

Properties being rented or sold (whether off-plan or resales).

What does it rule on?

It rules on the documents and information that is mandatory to be supplied to prospective tenants and property purchasers (consumers) on the sale and let of properties located in the autonomous region of Andalusia.

Basically this law is part of the Consumer’s legislation which has been enacted to further protect and ensure the rights of all consumers in Andalusia. It complements the national Consumer Law embodiment.

Who does it apply to?

It applies to all professional intermediaries such as Real Estate Agencies, sole Estate Agents and developers on selling and letting properties located in Andalusia.

Exclusions

It does not apply in administrative, public or judicial property auctions.

It only applies to main homes. So plots of land and commercial properties are excluded.

Who is the beneficiary of this law?

Consumers at large and the broader real estate market ultimately. Would-be buyers and long-term tenants of properties in Andalusia will do so in a safer legal framework.

Where can I find a copy of this law in Spanish?

Here, just follow this link.

Sorry, no English version.

 

Brief Legal Overview of Decree 218/2005

 

 

It is a fairly short law of only 15 articles.

The information supplied must cover the following points

The following is shared amongst all three DIA classes.

  • Specify if the dwelling is under construction (off-plan) or else is a resale.
  • Dwelling’s exact location.
  • Developer’s identification details.
  • Number of dwellings built.
  • Number of bedrooms, detailing the usable surface each have.
  • If the sales price is mentioned then it is mandatory that all taxes and other expenses are included in a detailed breakdown alongside the sales price.
  • If the rental is mentioned then it is mandatory to supply as well the community fees for which the property is liable for. You can read further on Community of Owners in my article.
  • When buying off-plan property, and stage payments are involved, it is mandatory to include in the contract that said amounts will be secured under law, the name of the bank, number of the insurance policy or bank guarantee, the existence of a special bank account where the funds will be allocated and the client code. It must be specified if the funds are handed over as a stage payment or else as part of the price and as a deposit to strike the property off the market.

 

The Documento Informativo Abreviado (DIA, for short)

Developer’s or intermediaries, such as estate agents, are obliged to deliver free-of-charge in Andalusia a copy of a DIA for every property on their books.

DIA’s will include the following information:

  • Full name and social address of the developer as well as the company registrar details or that of any physical or company that is acting as an agent.
  • Details of the architect, and construction company.
  • Detailed and scaled plan of the development with a minimum scale of 1:100
  • Usable surface of the dwelling and its annexes (such as garage and store rooms).
  • Physical description of the dwelling and its annexes as well as that of the utility connections (water, electricity, gas, sewage grid etc.) and fire protection.
  • General description of the building and or development, the communal areas, and the available services.
  • Memorandum of Quality (memoria de calidades) which gives a detailed breakdown of the materials used in the construction.
  • Dwelling price as well as the associated expenses and applicable taxes, means of payment and deadlines to comply with them.
  • Breakdown of expenses and taxes available at the consumer´s sole request.
  • When stage payments are involved (applies only to off-plan or new-build property) it is mandatory to mention the existence of a bank guarantee.
  • Mention of the plot of land’s Title deed, of any leans and encumbrances on it and the Building Licence under which they are entitled to build on site.
  • Mention of the availability of a copy of the Building Licence at the sole request of a consumer.
  • Mention of the stage of construction of the development.
  • Mention of the expected delivery date of the property, it’s annexes (garages, store rooms) as well as those of the development’s communal areas. Said deadline must be referred to quarterly within a calendar year.
  • Mention of liens and charges on the dwelling or annexes or it’s access points (i.e. a Right of Way or Right of Views).
  • Mention that the consumer does not have to pay for not taking on the developer’s mortgage if he decides to take another. More on this in my article Abusive Mortgage Clauses.
  • Consumer’s right to elect a Notary on whom one cannot be imposed by the vendor. More on this in my article Abusive Mortgage Clauses.
  • The capacity for both parties to compel each other to complete the contract before a Notary Public.
  • The right of a consumer to be handed free-of-charge a draft of the Private Purchase Contract to be signed for their perusal (applies only on buying).
  • Place where all the documents included in this list are available for inspection at the Consumer’s sole request.
  • Place, date and signature.

 

  1. DIA for Off-Plan properties

Besides including all the above, a full mention of all the administrative licences available must be included, chiefly:

  • Building Licence (BL).
  • Licence of First Occupation (LFO). More on this in my detailed article Licence of First Occupation (I cannot understate the importance a LFO has to the point of advising buyers not to complete on an off-plan property without it).

Other ancillary documents that must be supplied alongside the key ones above are:

  • Property’s delivery date (contractually binding).
  • Land Registry details of the properties if available as well as mention of any liens and encumbrances.
  • Community By-laws (which further develop Spain’s Commonhold Act AKA as Horizontal Property Division Law). You can read further in my detailed article  Community of Owners in Spain.
  • Internal community rules (not to be confused with community by-laws).
  • Libro del Edificio (concrete specifications on the building itself).
  • Ten-Year Building Insurance (Seguro Decenal). You can read further on the matter in my detailed article Off-Plan Construction Guarantees.
  • Energy Performance Certificate.

 

  1. DIA for resale properties
  • Property address.
  • General property description.
  • Sales price.
  • Construction year.
  • Community of Owner’s quota (if applicable as not all properties are included within a Community of Owners).
  • Mention of community of owner´s insurance policies (if applicable).
  • Mention of utilities which are connected at the time.
  • Certificate proving vendor’s IBI tax compliance.
  • Energy Performance Certificate.

 

  1. DIA for Rentals
  • Name, social address and Company Registrar details of the landlord or estate agency acting as intermediary.
  • Total built surface of the dwelling and that of its annexes (i.e. garage and store rooms).
  • General description of the property to be let including available utilities as well as fire protection devices.
  • Furniture inventory, kitchen appliances etc. found within the dwelling.
  • General description of the building or development where the property is located.
  • Specific mention of the agreed rental as well as that of the annexes, payments terms etc.
  • Spain’s Rental Law (LAU) obliges the tenant to a one-month deposit as well as the inclusion of any other guarantees the landlord may deem fit. More on this in my detailed article Urban Rental Act in Spain.
  • Full disclosure of the Estate Agency’s commission for their professional service as intermediaries.
  • Mention the property complies fully with all administrative licences mandatory under law (i.e. BL, LFO).
  • Availability of the Community of Owner’s By-laws at the tenant’s sole request.
  • Mention on how the contract will be formalised.
  • Community of Owner’s administrator contact details
  • Internal community rules (not to be confused with Community by-laws)
  • Energy Performance Certificate.
  • Place, date and signature.

 

The Rental DIA can be supplied prior to formalising the rental contract at the consumer’s sole request free-of-charge and in any case it is compulsory to supply it simultaneous to the signing of a tenancy agreement.

Miscellaneous

Art 12.- All premises in which a professional activity of intermediation, on selling or renting property (i.e. Estate Agents or developers), must have a very visible sign with the following message in Spanish: Consumers have a right to be handed over a copy of their dwelling’s DIA. This sign will be placed alongside the one that informs consumers that a Claims & Complaints book is available on request.

Art 13.- All Private Purchase, Sale & Let Contracts must comply fully with Royal Decree 171/1989 of Consumer Protection regarding information that must be made available in conveyance & property lets.

Art 14.- Consumer bodies will enforce this law. The Junta de Andalusia’s Inspectors can, without prior warning and without any need of identifying themselves previously, verify that an establishment open to the public is complying fully with all the obligations set forth in this Decree 218/05.

Art 15.- Fines may be imposed on non-compliance.

The Decree’s Annexes

I won’t go into detail on these as it only affects intermediaries, not consumers. Basically the decree sets out six different annexes which must be used by developers and real estate agencies as templates on marketing a property. So for example annex 3 is the template dealing with new homes (nine pages long!) and annex 6 is the template on rentals (five pages long).

Professional intermediaries must populate these templates to produce a fact sheet which is then handed over to a consumer in his DIA or Home Information Pack.

Conclusion

A well-meaning law which unfortunately falls flat on its face as in practice it is snubbed by many because it adds considerable red tape.

I am not only referring to intermediaries but to owners themselves who must supply the former with a long list of documents so these can elaborate a ficha informativa or fact sheet on a property following the templates in the decree´s annexes. This ungrateful task can prove to be quite laborious and time-consuming (as it must be done for every property on their books).

Suffice is to say that this decree is widely held as unpopular.

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, taxation, inheritance, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

 

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Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

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