Legal Report on the Draft Housing Act of the Autonomous Community of the Balearic Islands
Real Estate and Tax Law
At Bufete Frau we take care to keep our clients and collaborators up to date with the most important legislative developments, especially in real estate matters. For this reason we are pleased to inform you of, and summarise, the draft of the new Housing Act of the Balearic Islands which, although not yet enacted nor in force, we believe will not be long in coming. Now is the time to do our homework and, at the very least, to understand how it will affect us in our day-to-day dealings.
Given the significant changes to our practice that this act will entail, it is necessary to begin studying it today in order to analyse how this law — which will enter into force three months after its publication in the Official Gazette — will affect us.
First of all, nine titles, seven additional provisions, two transitional provisions, a single repealing provision and three final provisions are envisaged.
Title I develops the general provisions applicable, the guiding principles for interpreting the act, and incorporates a set of definitions, as well as the consideration of housing policy as a service of general interest. It also incorporates a provision intended to guarantee the presence of housing in public policies and, among others, in urban planning instruments.
Title II sets out the competences of the various public administrations in housing matters, guided by the principle of collaboration. A principle which is further reinforced in the seven additional provisions of this act.
Title III specifies everything relating to housing conditions, assuming a commitment to the quality of life of the inhabitants of the Balearic Islands.
Title IV contains all the actions that make up a policy of housing protection and promotion. It includes regulation intended to protect purchasers and users, mechanisms to be adopted by the Government to assist the population with difficulties in accessing housing, the creation of the Housing Support Service, the problem of unoccupied dwellings, as well as cases of energy poverty.
Title V regulates the Regional Housing Board and Title VI covers the Board for the Fight against Energy Poverty.
Title VII regulates the obligation to deposit rental guarantees (contracts predating the entry into force of this rule are excluded from this obligation), and creates the Register of Guarantees for Urban Property Lease Agreements.
Title VIII addresses the legal regime of publicly protected housing and Title IX establishes a penalty regime relating to the content of the Act.
The supplementary nature of State legislation is established for everything not regulated by the region’s own legislation. In addition, legal rules or rules of lower rank that conflict with anything provided for in this Act are repealed. The Governing Council and the competent Department are also authorised to issue all secondary legislation, and a review of the Consumer Act in relation to housing is entrusted.
After this brief structural summary of the rule, we shall analyse the aspects we consider most important for the practical purposes of real estate dealings between buyers, sellers and estate agents:
1) First of all, the objective of this Act is to give effect to the constitutional right of access to decent and adequate housing, a matter which, we believe, has been necessary for years following the period of crisis we have been through.
Note that at all times we shall be speaking of housing and not of plots, commercial premises, parking spaces, etc. According to art. 3, letter a, of this draft, «housing» is «any permanent habitable building intended for the residence of natural persons, provided that compliance with the habitability conditions required by the applicable regulations is accredited».
2) On the other hand, the figure of the «large housing holder» appears, defined (art. 3, letter h) as «natural or legal persons who, by themselves, directly or indirectly through participation in other companies or groups, hold ten or more dwellings under ownership, lease, usufruct or any other legal arrangement enabling them to determine their use, and whose activity is construction, real estate development, intermediation, management, investment, purchase and sale, letting or financing of dwellings».
In view of this act’s particular concern with unoccupied dwellings, large housing holders will be required, pursuant to art. 33 of this act, to send to the «department competent in housing matters the list of unoccupied dwellings so that they may be entered in the Register [of Unoccupied Dwellings]» and will have the «obligation to notify the department competent in housing matters of any change with respect to their situation».
Furthermore, according to art. 36, large holders included in the Register «shall transfer their management to the Balearic Housing Institute (IBAVI) for a minimum period of three years».
Finally, they have the obligation (First and Second Transitional Provisions), within three months, to report an inventory of the protected dwellings forming part of their balance sheet in Balearic territory, as well as those which are unoccupied.
3) Art. 12 is extremely important in that it makes it compulsory, in any transfer by sale, letting or assignment of use, to include a copy of the valid certificate of habitability or, where applicable, the definitive qualification. Should neither of these be available, this fact shall be stated in the contract or public deed.
4) Another of the key articles of this draft is art. 17, whose first paragraph states that «offers, promotion and advertising aimed at the sale or letting of dwellings shall comply with the principles of truthfulness, so that they do not conceal fundamental data about the objects to which they refer or may lead the recipients into any kind of error with economic repercussions».
5) In addition (paragraph three), «the data, characteristics and conditions relating to the construction, location, services, installations, acquisition, use and payment of the dwellings included in the offer, promotion and advertising are subsequently enforceable by the purchaser, even if they do not expressly appear in the transfer contract».
In other words, the information in advertising, offers and promotion will be binding and may be demanded by the purchaser, and must moreover be truthful, transparent, clear and free of obscurity. Therefore, liability will arise not only in civil terms: administrative penalties are also envisaged from the moment this act is approved, without prejudice to possible penalties in consumer matters.
6) Art. 18 provides for the application of the Consumer Act also in cases of housing acquisition, although this is already in force for individual purchasers.
7) Chapter III of Title IV creates the Housing Support Service (art. 27) whose function is (art. 28) «to offer voluntary and free advice to individuals and families in the processes of accessing and defending housing», and its collaboration with various professional associations is envisaged, among which will possibly be the Illustrious Bar Association of the Balearic Islands.
8) Chapter IV of the same Title deals with unoccupied dwellings, on which we have already touched at some points concerning large holders. An unoccupied dwelling is understood to be one which remains uninhabited continuously for more than two years without justification. One way of proving that a dwelling is unoccupied will be (art. 35) through low consumption, which may be evidenced by water, gas and electricity bills.
9) As we noted previously, the deposit of guarantees is made compulsory and, in fact, art. 54 specifically requires proof that the legally established guarantee has been provided in order to formalise a rental agreement as a public deed.
10) In the Title devoted to the Penalty Regime, career civil servants entrusted with carrying out inspection duties in everything provided for in this Act are considered agents of the authority.
11) The Second Additional Provision is especially important, in that it provides that «notaries, land registrars, credit institutions, estate agents and the remaining parties involved in the process of transferring dwellings shall ensure the application of the provisions of this Act».
In other words, an obligation is imposed on all participants to ensure compliance with this Act and, therefore, we understand that the corresponding liabilities will arise in the event of non-compliance or lack of transparency in the transactions undertaken.
12) It also defines the property administrator and the estate agent, although it does not say «registered estate agent», which raises the question of whether it refers to professionally registered estate agents or not.
As this is a draft, we shall have to see the definitive text in order to know what the legislator intends. In any event, it may have to be the implementing regulations that establish the requirements for practising as an estate agent and, in particular, registration in the aforementioned public register of estate agents. We do not believe that, once the act enters into force, the Regulation will take long to be developed.
13) The need to enter into a letter of engagement between the professional and the user of the service is envisaged as compulsory. Particular attention should be paid to this document, since it should be recalled that the offer will be binding (art. 17) and the purchaser may demand the data, characteristics, conditions, etc., of the offer.
14) Finally, estate agents or agencies must be registered in the administrative register that will be created for this purpose, as we mentioned earlier.
As you will have been able to observe, new regulatory changes are on the horizon which must be addressed immediately so that they do not cause any problems. At our law firm in the Balearic Islands we shall be more than delighted to offer you our best legal advice on this matter, although we must wait for the publication of the legal provision to see the definitive text of the Act.
