Are you buying a house and worried it might be repossessed? Not sure how to check if it has any charges? It’s clear that buying a property is one of the most important steps in our lives, and it’s essential to make the purchase with caution. In this article, we explain how to find out if a property has charges and what steps to follow to ensure a secure purchase.
What is a charge on a property?
A charge is any right or limitation that affects the ownership of a property and may hinder or restrict its use or transfer.
For example, imagine the following scenario:
Rachel took out a loan for her shop, but due to financial difficulties, she had to close the business and was unable to keep up the payments. The bank initiated proceedings to recover the debt, and her assets were repossessed. She owns a house in Barcelona, and a repossession has been registered against the property in the Land Registry. To settle the debt, Rachel decides to sell the house, and she needs to cancel the repossession first in order to transfer the house free of charges. Otherwise, the buyer would inherit the charge.
Therefore, a charge is a debt, a right in favour of a third party, or a restriction that the property has, preventing the buyer from using it freely.
Knowing if a property has charges is essential, as it can completely change the price and conditions of the purchase.
Main types of charges that may affect a property
The most common property charges are:
– Mortgage. It is very common for the seller to have the property mortgaged, having taken out a loan with a mortgage guarantee to purchase the house and not yet fully repaid it. In some cases, the mortgage may be fully paid off but still appear in the Registry. In these cases, it is advisable:
1. For the owner to request a debt-free certificate from the bank.
2. For the seller to register the cancellation of the mortgage or for the buyer to withhold the necessary amount from the purchase price to manage the cancellation.
– Repossession. If the seller has a debt that has been legally claimed, and an asset repossession has been ordered, the property may be repossessed. Repossessions typically stem from debts with banks, public administrations (HM Revenue & Customs or National Insurance), or even individuals.
– Easements. This type of charge grants a third party certain rights over the property, such as the right of way or the use of certain facilities.
– Usufruct rights. If the property has a usufructuary, that person has the right to use or “enjoy the benefits” (e.g. rental income) from the property.
– Leases. If the property is leased, the buyer must honour the existing tenancy agreement and verify the tenant’s pre-emption and withdrawal rights under the contract.
– Tax liabilities. These arise from taxes such as the local capital gains tax, the Stamp Duty Land Tax (SDLT), or the Council Tax (IBI). They usually appear on all properties and simply mean the property is liable for paying these taxes.
Where can you request information about a property’s charges?
To obtain reliable information, you must request it from the Land Registry. This body is responsible for registering and making public the information on properties. Any person with a legitimate interest can request information about the property.
Specifically, you can request several types of information:
– An extract. This document contains basic information about a property: location, size, layout, ownership, and charges. It can be requested in person or online.
– A certificate of ownership and charges. This is a public document signed by the Registrar of the Property, which certifies the content of the registry and is legally binding: in other words, it proves the registry’s details on a property.
The cost of an extract ranges from €3 to €9, and it is usually available within 24 to 48 hours. The certificate is more expensive but offers legal assurance regarding the accuracy of the information provided and can serve as evidence in legal proceedings.
Can you request further information from other sources?
In addition to the information from the registry, you can request details from:
– The homeowners’ association where the property is located. You should request a certificate confirming that the community fees are up to date.
– Utility companies. You can also request information from water, electricity, or gas suppliers to check that all bills have been paid.
– Owner. You can ask the owner for proof of payment of taxes such as Council Tax (IBI) for the past few years. If any bill remains unpaid, the seller must settle it before the purchase.
How to check if a house is repossessed online?
Thanks to modern digital tools, it is possible to find out if a house is repossessed online without needing to visit the Land Registry in person.
To do so, you must request an extract online through the Property Registry’s website. Simply complete the form, provide the cadastral details or address of the property, and pay the fee.
Once the request is complete, you will receive the extract by email in a matter of hours. This document contains information about any charges or encumbrances that the property may have.
Along with the registration information, data can be requested from:
– The homeowners’ association where the property is located. You should request a certificate confirming that all community fees are up to date.
– Utility companies. You can also ask the water, electricity, or gas suppliers to confirm that all bills have been paid.
– Property owner. You can request proof of payment for taxes such as property tax (IBI) from recent years. If any tax bills are unpaid, the seller must settle them before the sale.
How to check if a house is repossessed online?
Thanks to the digital tools available today, it is possible to check if a house is repossessed online, without the need to visit the Land Registry in person.
There are two ways to obtain this information online:
1. Check through the Land Registry. As mentioned earlier, you can request a simple note or a domain and charges certificate through the Land Registry’s website.
2. Check the Official State Gazette (BOE). Repossessions are published in the BOE, so you can visit the BOE website and search for repossessions on the property you are interested in. You only need to enter the owner’s details or the property address to find out if there are any registered repossessions. This is the official website of the Official State Gazette: https://www.boe.es/
Can you buy a property with charges?
The answer is yes, but you should be aware of the following:
– If the charges are not cleared before the sale, those charges will be transferred to the new owner.
– If there is a mortgage and it is not cleared before the sale, there are several options:
1. The buyer can take over the mortgage, with the bank’s authorisation.
2. The remaining mortgage balance and the cancellation costs can be deducted from the sale price.
– The property might be bought as an investment with a tenant. In this case, the existence of the rental contract is stated in the sales contract, and the buyer will become the new landlord.
However, it is essential to check that the tenant has expressly waived the right of first refusal and retraction, regulated by Article 25 of the Urban Leasing Law. The waiver can appear in the contract or a separate document signed by the tenant can be drawn up.
Therefore, before buying a property, it is crucial to ensure it is free of charges that could affect its value or the buyer’s ability to use and enjoy it. If you have any doubts, contact us and we will help you with all the necessary procedures.
