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Spanish Real Estate Crisis - Demolition of Illegal Buildings


Demolition of Illegal Buildings in SpainThe Spanish real estate crisis took a new turn recently, with the demolition of a house in Vera (Almeria) owned and occupied by British pensioners. Vera (Almeria) Demolition.

The couple, Mr and Mrs Prior, are stated to have bought in good faith and the Vera Town Hall are reported to have admitted that they issued a building license in 2003.

The Regional Government claims that, less than a year later, they successfully petitioned the court for a demolition order, which the Vera Town Hall refused to carry out. Eventually they were ordered to execute the demolition order themselves and the house house was demolished  on 9th January 2008.

According to press reports there are hundreds of thousands of illegal homes in Spain, many of them owned by foreigners and this article examines the background and history of the problem.


Article Overview and Bookmarks

The Vera Demolition - Review and Comments

Spanish Politics and Local Administration

Town and Country Planning in Spain

Development in Rural Areas

Municipal Corruption and Disobedience

State Intervention to Resolve Construction Irregularities

The Future for Spanish Real Estate

Good Advice for Buyers of Spanish Property

Advice for Owners of ALL Spanish Property



The Vera Demolition - Review and Comments

Looking at all the news items published so far, which can be seen in other articles -

Extracts from Various Press Items.

Translation of Information Provided by the Regional Government to the European Parliament.

- some important facts emerge:

1. The Various Orders from the Court:
According to the press reports the Mayor of Vera stated that the demolition was carried out whilst appeals were pending.
Whereas the Regional Government states that the court ordered the demolition three time and makes no mention of appeals.

2. The Validly of the Building License: Vera Town Hall states that the property complied with all the necessary conditions.
The Regional Government claim that the license was not valid because the only building permitted on the land was for agricultural purposes, furthermore they claim to have informed Vera and obtain the first court judgement in less than a year.
It is not when the Town Hall actually informed the owners (the Priors) - perhaps they would have had time to prevent the construction!

3. The Regional Government suggested that the Priors should claim for damages against Vera Town Hall.
Meanwhile it is reported that the Town of Vera has made a property available for them for as long as they need it.



Obviously it is too early for the real truth to be revealed but I would imagine that the Priors are considering a claim for damages.
The Regional Government of Andalusia is one of the Spanish autonomous states, has a delegate in the European Courts and an expert legal department.
Their report meticulously cites articles of state law and the Spanish Constitution. However, there may have been omission.
Initially it would seem that the Priors are blameless, acted in good faith and the issue relates to a conflict between the Town of Vera, the Regional Government and perhaps the State.

Sadly, the Priors have lost there home and have had to witness the distressing spectacle. Fortunately Mr Prior seems to be none the worse after his trip to the clinic and, at least, the Town is temporarily looking after them by providing temporary accommodation.

Nevertheless, if the Priors are not to blame, then someone has to pay, be it the Town of Vera, the Regional Government or the State, and this has to be resolved quickly.
It also has to be remembered that there are reported to be 11 other properties pending demolition in the same area and many, many more throughout Spain.

What we have at stake now is both the State's reputation as "a global champion of freedom" (1) and it's administrative credibility.


Spanish Politics and Local Administration

Spain is a democratic kingdom and the king is head of state, parliament is elected by national vote and the prime minister forms a cabinet - very much like the UK!

Unlike the UK, there are 17 semi-autonomous regional communities and 2 autonomous cities.
Within each community are municipalities, which elect a council (headed by the mayor) and the regional delegates to the local parliament.

Foreign (European) residents may vote in municipal elections but not national or regional.

The law is decided by the Madrid central government, within the parameters of the Spanish Constitution, and passed down to the regional governments who decide how to administer the law.

Wikipedia: Autonomous Regions of Spain


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Town and Country Planning in Spain

As far as town and country planning are concerned the legal structure is similar throughout Spain.
Each municipality decides on its urban plan (PGOU - Plan General de Ordenación Urbanística) and this comprises different zones e.g. urban, rustic etc.
The municipality is free to decide on its own development, in compliment with state and regional regulations, and submits the PGOU to the regional government for approval.
Important to remember here is the "pecking order" - state, regional, municipal.

There are some important land classifications to be considered -

a) Casco Urbano: This is the main town area where a certain infrastructure network is obligatory and there certain regulations which specify plot size, height and usage.

b) No Urbanizable: Rural land outside the main town area.

c) No Urbanizable Protegido: Protected rural land outside the main town area.

Houses may still be constructed on b) and c) and regulations have changed over the years. The minimum plot size was 2,000 metres, which was later increased to 5,000 and is now 10,000.
Currently habitable houses may only be built if the usage is for agricultural or similar purposes.
Sheds, barns, stores etc. may also be built for agricultural purposes.

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Development in Rural Areas

Over the years many habitable houses have been legally built that currently do not comply with the planning regulations, even on protected land.
In some cases even agricultural buildings have been made habitable and ruins restored.

Currently many rural properties do not comply as far as infrastructure is concerned. Many do not have water or electricity, waste disposal is via a septic tank & soak-away and poor roads make the properties inaccessible for refuse collection.

One function of the PGOU is to resolve this lack of infrastructure and the municipality may decide to urbanise a rural area.
Generally this only happens if a developer is interested in building because the existing infrastructure has to be brought up to date and this is what caused the so-called "Land Grab".
Normally, when a rural area is urbanised, there are existing buildings and owners are obliged the give up land (for roads, public buildings, etc.) and partly fund the cost of providing the infrastructure.

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Municipal Corruption and Disobedience

A municipality is semi-autonomous in the respect that it's funding is provided by the local rates (IBI), value added tax (from the increasing value of properties in the town) and from building licenses (typically 5% of the building costs).
Building license fees are vital for expanding municipalities as, unfortunately, are bribes and favours required by dishonest councillors.

The Spanish building boom got underway during the early 90's and was fuelled by the availability of cheap mortgages and interest from foreign property investors.
Many municipalities decided to get in on the act and over-zealous and corrupt councils issued building licenses for rural land that was outside the jurisdiction of their PGOU, probably with the idea that these illegal licenses could be resolved eventually.

Another issue affecting the problem is the Coast Law (Ley de la Costa). This was enacted in the late 80's and set up a 100 metre control zone. In many cases this law has not been observed and the state is now examining a revision, increasing the control zone to 350 metres.

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State Intervention to Resolve Construction Irregularities

Overall there has been a deluge of disobedience at municipal and even regional level and finally the state has started to act.
A special prosecutor has been appointed to investigate urban corruption, some local councillors have been charged with accepting bribes or favours and there are many more cases under investigation.
The most serious so far is Marbella (also in Andalusia), where most of the town council are facing prosecution and the state have replaced them with a team of administrators.

The state has also insisted that the regional governments investigate all case of illegal building and regularise or demolish them.
Properties without building licenses or with illegal ones can often be regularised retrospectively but the main issues here are:

a) Who pays for the demolition if the illegal building license cannot be regularised?

b) The owners of the property may well have acted in good faith throughout and be entirely blameless. In which case they can sue those responsible for compensation. In the worst cases small municipalities could be faced with compensation payments for €millions but the only way they could pay would be to increase the rates, so that the burden fell on other ratepayers. This could cause massive depopulation of the town and devaluation of all the properties.

c) In the case of regularisation and establishment of a new urban area, who pays for the infrastructure?
This could lead to another round of "land grab" with owners having to contribute towards the cost and having land appropriated for roads etc. - there seems to be no other solution!

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The Future for Spanish Real Estate

Although planning irregularities are fairly widespread along the Mediterranean coast it has not happened in every town and, in lots of cases illegal building licences can be resolved.
Most certainly, now that the regional governments have made it clear that they intend to impose discipline, the municipalities concerned will be rushing through revisions to their PGOU's.

With so much in the international press about "Spanish Property Bubbles" and "Falling Real Estate Values in Spain" the industry has taken a tremendous hammering and, with the falling value of £sterling against the Euro, it is getting little respite.

Will news of more demolitions and further development scandals provide the last nail in the coffin for Spanish real estate?
I think not because there is still a tremendous amount of interest in real estate in Spain and buyers seem reluctant to commit until falling real estate values level out.
In some areas these values already seem to have levelled out and nearly all of the problems, of illegal building and falling values, are unique to developing areas
My own area exhausted land for new building more than 10 years ago and most properties available are resale up to 35 years old.
This is the Moraira (Costa Blanca) area but there are other towns where development is well established.
Details of Property for Sale in Moraira.

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Good Advice for Buyers of Spanish Property

Legal issues concerning the conveyance of Spanish property are very complicated. Most foreign buyers would not contemplate property purchase in their own country without employing a lawyer.
This is even more important in Spain. Some further advice -

a) Buying in an urbanised area, within the town, is fairly safe, especially if the property is resale. Nevertheless, proper searches should be made for debts and the registration validated.
Even so there is still the risk of land appropriation for road widening, which is common in most countries, and costs for updating the infrastructure, which seems unique to Spain.

b) Rural properties are very risky, especially if the property in new and there are other similar properties around.
Additionally there is always a risk that the area might be developed in the future, involving land appropriation and extra costs for infrastructure.
It is difficult to see how anything but a fairly old rural property could be legal bearing in mind,  that in recent years, these could only be built for agricultural purposes.

c) Bank surveys are very thorough because they don't want to lend money on a property that has the risk of demolition.
Even for those who don't really need it, getting a small mortgage would make sense.

d) Always employ a lawyer (abogado) or API (agente de la propiedad inmobilaria). Always get a bill and or contract with IVA (VAT) and don't ever let anyone convince you otherwise.
It is not possible to sue for negligence or non-performance if the IVA has not been paid.

WikiHow | Avoid Investing in Illegal Spanish Property


Advice for Owners of ALL Spanish Property

If you have the slightest suspicion about the legality of your property then find a good lawyer or API as soon as possible.
Remember that an escritura means no more than that you own the property.

If you own a rural property, built within the past 10 years or if you have knowledge of any doubt over the legality of the building license then do it immediately.

Don't listen to anyone who tries to convince that it won't ever happen!

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© 2008
Links to other articles about the Vera (Almeria) Demolition.

The Vera (Almeria) Demolition. British pensioners, Len and Helen Prior, have had their home demolished in Vera (Almeria) after having been allowed two hours to remove their furniture and belongings. Mr Prior, who has a heart condition ......

The Regional Government Report to the European Parliament The Regional Government claims that, less than a year later, they successfully petitioned the court for a demolition order, which the Vera Town Hall refused to carry out. Eventually .....

The Vera Demolition - Review and Comments Looking at all the news items published so far, which can be seen in other articles, some important facts emerge. 1. The Various Orders from the Court: According to the press reports the Mayor .....