First Occupation Licence (LFO)
What is a Licence of First Occupation?
A Licence of First Occupation (also known as Habitation Licence or Certificate of Habitation and in Spanish, Licencia de Primera Ocupación or Cédula de Habitabilidad), is a licence issued by the Town Hall (Ayuntamiento); granted once the building works have been completed, which allows the purchaser to dwell in the property legally. The property developer is responsible for applying for this licence, once the Certificate of End of Construction has been issued. Each newly built dwelling will have an individual Licence of First Occupation (LFO); although in large developments the LFO are normally grouped for economies of scale. Resale properties will already have an LFO granted.
If a long period of time has passed since the building works were completed and the developer has failed to obtain this licence, it may be a sign of serious underlying legal problems. Although it is not illegal to complete at the notary without a Licence of First Occupation, not having one will prevent you from having access to water and electricity supplies for the property. It will also mean that no bank will be willing to grant you a mortgage.
It is always recommendable to complete with a valid Licence of First Occupation in place; however, there are special circumstances in which it may be advisable to complete without one, specifically if there is no bank guarantee securing your down payments and the developer is at risk of going into administration, provided there’s no ruling affecting the building licence due to planning issues.
There is quite a strict process that operates in Spain to ensure that any commitments that the developer made during the planning of the property are put into operation. This might include infrastructure around the development or repairing any damage that has been caused.
You should obtain the licence at the time when you purchase your property. If you are wanting to purchase your property with a mortgage, then it will be expected that there is a first occupancy licence in place. You also need it to enable the connection of main services such as electricity, water and telecommunications. If your builder hasn’t secured one then you can end up only having a builder’s supply which is not sustainable in the long term.
What is the Difference Between an Ordinary LFO and one Granted by Administrative Silence?
Both LFOs are equally valid. Under Law 30/92 if a Town Hall does not reply to a licence petition within a given period of time it is automatically considered granted by positive silence. This is called Administrative Silence Rule and is a special administrative procedure which enables licences to be obtained after a certain period of time (currently 3 months), if no response has been obtained from the Town Hall. If a LFO is obtained through Administrative Silence it is just as valid as an ordinary one obtained expressly through the Town Hall under Spanish Administrative Law. It is pointless to challenge a licence obtained by Administrative Silence as it is perfectly legal in our system, provided it wasn’t obtained breaching any laws.
Duration of a licence
It is important to note that the original first occupancy licence is only valid for ten years. After this time it must be renewed. Once your utilities are in place, you might not see any reason to renew the licence when it expires. You don’t have to. But when it comes to wanting to sell your property or it passing to someone else through inheritance, then another licence will have to be applied for if the first occupancy licence is over ten years old.
The replacement licence is no longer called the first occupancy licence but the habitation licence (Licencia de Habitabilidad).The habitation licence takes the place of the first occupancy licence and is needed so that the new owner can change the name on the utility bills. You can obtain one from the town hall but will need to have a habitation certificate signed by an architect to get one. If the new owner does not transfer the contracts to his name then they will be unable to make changes to electricity and water arrangements in future.
A new purchaser will also want to satisfy themselves by seeing the licence that the property fulfils the habitation laws. They will need this when they come to sell the property again. In the current climate buyers can afford to be choosy and will quickly drop any property that looks as though it might bring ‘problems’ with it. Don’t leave it to chance but make sure that you have everything in place.
All is not lost if you discover that you don’t have a habitation certificate. You can obtain another one from the town hall but do have to pay for this replacement. An important detail that a good lawyer should have checked out for you at the time of purchase.
It’s in everyone’s interest that strict laws exist when it comes to approving buildings for habitation. There is a logical reason why both the first occupancy and habitation certificates exist. If you aren’t sure if you’ve got one and think you might need one soon, then our legal department will be happy to help out.
How to find your first occupation licence
If you own a property in an urbanisation or complex, check with your administrator to find out if a first occupation license exists for your community, or speak with the lawyer who handled the purchase of your your property as if a first occupation license is in place it will have made up part of the purchase paperwork along with your title deeds.
Alternatively your local town hall will be able to provide you with a copy of the first occupation license. You will need to provide copies of your title deeds (Escritura) and catastral reference and may be charged a small administration fee.
If no first occupation license exists for your property you will need to apply for a habitation certificate which is a little more complex.
Applying for a habitation license (Cédula de Habitabilidad)
Firstly the property will need an architects report stamped by the Collegiate of Architects of Andalucía and, depending on the age of the property, a Certificado de Antigüedad. The Ayuntamiento will then process the application subject to a charge which varies from one town hall to another but can be up to 1.5% of the construction value in Marbella and Estepona.
