License of First Occupation explained
A License of First Occupation (LFO) is a crucial document when purchasing a property in Spain, especially for off-plan properties. It confirms a property's compliance with building regulations and its readiness for habitation. Here's why an LFO is important:
1. Legal Compliance: An LFO ensures that the property adheres to town hall Building Licenses and Planning laws, both nationally and regionally. It verifies the legality of the property's construction.
2. Utility Access: Utility companies require an LFO to provide official supplies such as water, electricity, and gas. It's necessary for connecting the property to the supply grid.
3. Financing: Lenders, including banks and potential property buyers, often request an LFO. Without it, property transactions may face complications or even fall through. Additionally, property owners may need an LFO to secure financing against the property.
4. Holiday Rentals: If you plan to use your property for short-term holiday rentals, regional Tourist Authorities demand an LFO. Without it, you cannot legally rent out your property and may face substantial fines if caught. Non-compliance fines can be significant in some Spanish regions.
For off-plan purchases, it's advisable not to proceed without an LFO. When buying resale properties, check if the seller possesses an LFO. Note that older properties built before 1980 may not have an LFO available. Lenders often require an LFO for mortgage-backed loans, so it's essential to consider its presence when buying property in Spain.
Source: Summary made from an Idealista article.
