Building and rebuilding in Mallorca

The following article describes the legal framework and consequences of construction and conversion of real estate in the Balearic Islands.

1. the building contract
Spanish law assigns the construction contract to the work contracts. There are different types of construction contracts:

Either the owner develops his land himself and uses an architect, building contractor and building craftsman or a developer builds a property on his land to sell it later. If the developer sells the property to finance the construction project even before construction begins, this is known as buying property according to the construction plan. If he sells the property after completion, it is called turnkey construction (“llave en mano”).

The content of construction contracts can be freely agreed by the parties. It is not unusual in the Balearic Islands for contracts for the construction of detached houses or for major conversion or renovation work to be concluded verbally without a specification. Often the building contract is also awarded on the basis of a more or less precise estimate.
In order to avoid later disputes, however, a lawyer should always be called in to check the building contracts when a building contract is concluded. Do not accept a global construction contract, but ask the architect for a list of the individual trades (preparation of the building, sanitary facilities or painting). Construction work should not be carried out without a fixed written price agreement. In practice, however, instead of a fixed price, it is often stipulated that the contractor receives a percentage of the construction sum (for example 15%) as a wage.

2. the execution of construction work
The parties involved in the construction are:
– the first lead architect, who has drawn up the construction plans and specifications and construction plans. He is the one who starts and completes the construction.
– the second technical architect (the so-called “aparejador”), who is responsible for the concrete construction supervision and technical monitoring.
– the building contractor, who is responsible for the execution of the construction.
– the developer (“promotor”), who acquires an undeveloped land plot in order to build on it.

When the work is finished, the architect issues a certificate that the construction is finally completed (“certificación final de obra”).

This document is a prerequisite for the so-called certificate of habitability (“cédula de habilitad”), which is issued by the Consell de Mallorca (Island Council). Subsequently, the responsible municipality issues the licence for the first-time habitability of the property (“licencia de primera ocupacion”).

3. submission of a new building declaration
The so-called “Declaración de obra nueva”, the declaration of new construction, is about having the buildings erected on the property or the extensions or conversions carried out registered in the land register with a precise description and indication of their value.
The registration is carried out on the basis of a declaration of new construction to be submitted to the notary public and recorded by him in a public deed. The land registry must be informed of the existence of a new building. The new building is subject to a document tax of 1.2 %, which is calculated on the basis of its value according to notarisation.

The declaration of new construction is of legal significance if the entry of the building located on the property in the land register is a necessary prerequisite for subsequent entries. For example, the registration of a usufructuary right cannot be made if it is not clear from the land register that a building exists.

The declaration of a new building, however, has above all a great practical significance if the acquisition of real estate is financed by a mortgage. The buyer receives a mortgage from a Spanish bank only if the entries of the house to be encumbered in the land register are correct, i.e. in particular if the declaration of new construction is entered in the land register.