Is this a scam?

Fiscal and legal advice from Webster Asesores

Dear Sirs,

In 1998 we purchase a plot of land and had a house built. We did everything correctly with the notary and had it all registered properly in the land registry.

A few years later, we decided to extend it, as it wasnt´ large enough for our needs.

We engaged the services of a very reputable builder and an architect, and extended another floor and a larger living room. We were assured that everything would be done legally, with all the licences and everything in order.

We now want to sell it, and the buyers´ lawyer insists that the correct description of the house has to be registered in the land registry.

Because we did everything correctly from the beginning, we feel that we have been badly let down by the builders and the architect. We feel we have been scammed.

ANSWER

We have to consider two separate matters in this case.

The first one, is what the builder and architect have done. I presume that you are happy with the work done on your house by the builder, so this doesnt´ seem to me an issue. The architect would have designed and planned the extension correctly and in accordance with local building regulations, in order to have it approved by the College of Architects for the Town Hal to issue the relevant building licence. I dont´ think there is any scam here, or anything esle that isnt´ completely normal.

What neither the builder or architect are supposed to do, or can legally do, is to register the extension in the land registry. This can only be done by yourselves or your legally appointed legal representative.

The registration of the extension is done by signing a document at the Notarys´ office. This document is called “Ampliación de Obra Nueva”.

In order to be able to sign this document, in your case, you will need the architect to issue a certification describing in words what has been extending. A copy of the Town Hall building licence, ideally, should be included in this certification.

Once you are in possession of all the documentation, an appointment will have to be made at the Notarys´ office and all the relevant documentation presented. The document will be read to you and if you are in agreement, it will be signed.

A Stamp Duty will have to be paid, prior to the presentation to the land registry. This Stamp Duty is 1.5% of the cost of the extension. Presumably you have kept the receipts for the work done, which will be useful as they are a deductible when calculating the Capital Gains tax due in the sale.

Once the tax has been paid, the complete set to document has to be presented to the corresponding land registry and a few weeks after that, it should be duly registered in the land registry.