What does it mean if a flat has charges (encumbrances)? Can you buy it with them?

Question

José Manuel Alburquerque · Accepted Answer

Charges are rights of other people or restrictions registered at the “Registro de la Propiedad”, the Land Registry, that affect the flat and stay with it even if it changes hands, such as a mortgage, an attachment (seizure) or an easement. You can buy it like that, because the sale is valid, but you would be buying it subject to those charges. If the seller does not pay the debt secured by a mortgage or an attachment, the creditor could go after the flat even though it already belonged to you. That is why the usual practice is to pay those debts off with part of the price and have the charges discharged. The deposit agreement (“contrato de arras”), the one signed when the down payment is made, should state which charges are to be discharged, how this will be done and who pays for it. The most common charges A mortgage, which secures a loan. You do not become liable for the seller's loan, but if the seller does not repay it, the bank can enforce the mortgage and auction the flat, whoever owns it. An attachment, which a court or a public authority, such as the “Agencia Tributaria” (Spain's tax authority) or the “Seguridad Social” (the Spanish social security system), records at the Land Registry for a debt owed by the owner. The flat can be sold, but the creditor keeps its rights over it. An easement, a right that another property has over this one, such as a right of way or a right to light. It is not discharged when you buy. You need to know about it and assess whether it is a problem for you. A tax lien (“afección fiscal”), a note in the margin of the registration entry that leaves the flat answerable for a few years for the tax on a previous sale or inheritance. If that tax was paid in full, it does not usually cause problems and the note is cancelled over time. But if the person selling to you paid less tax when buying it, thanks to an exemption or an allowance that requires certain conditions to be met afterwards, the flat is liable for the difference if they are not met. If the land registry extract (“nota simple”) shows a tax lien, ask about it before buying. How a flat with charges is bought The usual practice is to pay off the debts with the purchase money. This is how it is done: Before signing, the seller asks the creditor for a certificate of what is owed as at that date. At the notary's office, you pay the creditor directly what it is owed, by banker's draft or bank transfer. The rest of the price goes to the seller. Afterwards, the creditor signs the deed or document of discharge, which is registered at the Land Registry. The contract should state who deals with this and who pays for it. If a charge cannot be discharged on the spot, such as an attachment that depends on a court, the necessary part of the price is withheld or deposited with the notary until the discharge comes through. Easements are not discharged. If they are a nuisance, what is negotiated is the price. If a charge you were not told about comes to light In Catalonia, the “Código Civil de Cataluña”, the Catalan Civil Code, requires the seller to hand over the flat free of third-party rights that you have not accepted. If, after the purchase, a charge comes to light that the seller did not tell you about, you can require the seller, for example, to discharge it or to compensate you. Do so in writing as soon as you discover it. Before suing, the law requires you to try to negotiate. In the rest of Spain, the Spanish Civil Code (“Código civil”) allows the sale to be undone or compensation to be claimed if the flat had a charge that was not visible and was not mentioned in the deed, generally within one year of signing.