20 Feb How the Land Registry Works in Spain

At Navarro Llima Abogados, we understand that purchasing a property in Spain involves much more than simply signing a deed. One of the key elements to avoid unexpected issues is the Land Registry, an essential tool for both domestic and international buyers.

Without prejudice to our other article on the characteristics of the Land Registry in Spain, we would like to further explain its functions. We will now focus on outlining the importance of the Land Registry when purchasing a property in Spain or making any type of real estate investment.

What is the Land Registry in Spain?

The Land Registry is a public institution primarily dedicated to the registration and recording of the various acts and contracts that affect real rights over real estate. This includes any type of property, whether residential homes, rural estates, or other kinds of real estate such as garages or storage units.

It could be said that the Land Registry collects the essential information of a property, functioning as a guarantor of public information both for the owner of a property or real right and for anyone wishing to engage in legal transactions related to such assets.

1. Useful Information from the Land Registry for Purchasing a Property in Spain

The Land Registry contains a series of data that are particularly useful for any third party intending to engage in a legal transaction involving a property in Spain. Among other things, one can find:

• The identifying details of the property, such as the property number (número de finca) and the Unique Registry Code (Código Registral Único).
• The description of the property, which sets out information regarding its nature, boundaries, and size.
• The encumbrances affecting the property, which may include, for example, mortgages established by the owner, liens arising from enforcement proceedings, or tax obligations.
• Datos de los titulares del inmueble con referencia al título y la fecha de adquisición, así como del resto de derechos reales que operen sobre el mismo.

All this information is particularly relevant, for example, when carrying out a proper Due Diligence.

2. What is the Practical Use of the Land Registry?

When purchasing a property or any other type of real estate in Spain, the Land Registry becomes an essential tool to reduce risks and make well-informed decisions. This is even more important in the case of international investments, where the buyer—who may have granted us power of attorney to carry out the acquisition procedures—has often been unable to verify the physical reality of the property. The Land Registry plays a crucial role at all times.

Prior to the Transaction

First, before signing any documents or making any payments, it is important to request a simple extract (nota simple) of the property from the Land Registry. This allows us to verify whether the person claiming to be the owner is indeed the rightful owner, or if there are any undisclosed encumbrances. In such cases, we can request explanations from the seller and consider options such as, among others:

• Negotiate a lower price.
• Require additional guarantees during the negotiation.
• Withdraw from the transaction

(It should be noted that, while the Land Registry is one of the key elements to consider during the Due Diligence process for a real estate acquisition, it is not sufficient on its own. Additional measures must be carried out to verify and mitigate the risks of the transaction.)

At the Time of the Transaction

Once a proper Due Diligence has been conducted and the price and various clauses of the acquisition contract have been negotiated, it is standard practice for the notary to review the Land Registry records again to ensure that no new encumbrances or situations have arisen that could affect the subject of the purchase.

After the Transaction

Once the deed of sale has been executed, it is submitted to the Land Registry, which will record, among other things, any changes in ownership.

In this way, the Land Registry accompanies the entire acquisition process, from the initial verification to the definitive consolidation of the acquired right.

3. Usefulness and Limitations of the Land Registry in a Real Estate Acquisition

As we have seen, the Land Registry is an essential tool for understanding the legal status of a property and mitigating risks. However, it has clear limitations, as consulting it alone does not guarantee that the transaction will be entirely secure.

Among other things, the Land Registry does not provide information about the physical condition of the property, such as:

• Whether renovations are needed.
• The condition of electrical and water installations.
• Urban planning status.
• The presence of unauthorized occupants or unregistered tenants.

For this reason, a responsible acquisition requires complementing the Land Registry consultation with other checks: review of the cadastre, property plans, urban planning analysis, the status of the homeowners’ association, technical inspections, and more. Only by integrating this set of measures can a real estate investment in Spain be carried out properly, while minimizing potential risks.

At Navarro Llima Abogados, we have a specialized platform for acquiring real estate in Spain, handling every step of the process to ensure your project is completed efficiently, comfortably, and successfully. We therefore invite you to contact us at info@navarrollimaabogados.com.