What are the declaration of new building (“escritura de obra nueva”) and the division into units (“división horizontal”), and how much do they cost?

Question

José Manuel Alburquerque · Accepted Answer

The declaration of new building (“escritura de declaración de obra nueva”) records before a notary that a building has been built, or is being built, on a plot of land, so that it appears in the “Registro de la Propiedad”, the Land Registry. The deed of division into units (“división horizontal”) describes the common parts and divides the building into separate flats and commercial premises, each with its participation share, so that each flat becomes a property that can be sold or mortgaged separately. They are usually signed at the same time and are paid for by the owner of the building, which in a development is the developer. The biggest cost is stamp duty (the “impuesto de actos jurídicos documentados”), 1,5 % in Catalonia, which is calculated on the cost of the building work and, for the division into units, also on the value of the land. The notary and the Land Registry cost considerably less, although the Land Registry fees rise with the number of flats. What each one is The declaration of new building describes the building and adds it to the property at the Land Registry. It can be made when the work starts, with the building permit and a certificate from a qualified professional stating that the description matches the project. When the work is finished, this is recorded with the certificate of completion of the works. For a residential building, the notary and the Land Registry require proof of the ten-year structural defects insurance (the “seguro decenal”), which covers structural damage for ten years. That is why the deed declaring the new building, or the one recording its completion, is where you look later to find out who the insurer is. The division into units, which the law calls the “título de constitución” (the constitutive deed), describes the building with its common parts and each flat or commercial unit with its number, floor area, boundaries and participation share, the percentage it holds in the building. If it does not match the flats provided for in the building permit, for example because it creates more of them, the town council's authorisation is also needed to register it. Who needs them If you are buying a new flat, the developer must have executed both deeds for your flat to exist as a separate property and be registered in your name. These are the developer's costs and, if you are buying as a private individual, the law does not allow them to be charged to you. If you own an entire building, for example because you have inherited it or built it, you need them in order to sell or mortgage the flats separately. If the building belongs to several people, dividing it into flats does not in itself end the co-ownership. It only ends it if each of them takes whole flats in proportion to their share. Otherwise, they will remain co-owners of each of the flats. How much they cost Stamp duty is paid by whoever executes the deed. In Catalonia it is 1,5 %, the general rate set by the Generalitat de Catalunya (the Catalan government) for notarial deeds. It is calculated as follows: For the new building, on the actual cost of the building work. For the division into units, on the cost of the building work plus the value of the land. They are two separate transactions and both are taxed even if they are in the same deed. For example, if constructing a building has cost 600.000 euros and the land is worth 200.000, the tax is 9.000 euros for the new building, 1,5 % of 600.000. For the division into units it is 12.000, 1,5 % of 800.000. In total, 21.000 euros. Outside Catalonia, the rate is set by each autonomous community. The notaries' official scale of fees has no specific rule for these deeds. Its general scale based on value applies, so a new building worth 600.000 euros comes to about 530 euros, plus the per-page charges, the copies and VAT. If the deed includes the division into units, ask the notary's office for a quote. At the Land Registry, the new building is registered and a separate property entry is opened for each flat or commercial unit. Under the land registrars' scale of fees, the first registration of each flat is discounted by 30 %. For a flat valued at 200.000 euros it costs about 124 euros, plus VAT.