SPAIN Law and Practice Contributed by: Marta González-Llera, Toni Barios, Jorge del Castillo and Rafael Baena, Cases & Lacambra
The title can be a sale and purchase agreement, a donation, or an inheritance, among other legal documents that establish the right of acquisition over property. Regarding registration in the Land Registry, it is not compulsory (except for certain rights such as mortgages or surface rights), but it is common practice and highly recommended to register the granting of a public deed. Such registration grants public protection to any good-faith third- party purchaser who acquires their title from a registered owner. The system is so effective and secure that recourse to title insurance is often not required and only necessary in certain circumstances. Evidence of the effectiveness of the system is the fact that it has remained unchanged since the COVID-19 pandemic. 2.4 Real Estate Due Diligence The prospective investor often conducts a due diligence review to check legal, technical, envi - ronmental and other matters affecting the tar - geted real estate. Such review usually includes issues such as: • title of ownership of the asset; • charges and encumbrances; • cadastre information; • leases and occupancy status; • co-ownership rules; • urban planning status and licences; • payment of property taxes; and • third-party rights (including those of public administrations). 2.5 Typical Representations and Warranties The Spanish Civil Code automatically provides legal warranties against any dispossession
regime (“eviction”) and a warranty against hid - den defects in the sold asset. An alternative or complementary regime of rep - resentations and warranties (“R&W”) may be agreed upon by the parties. Some examples of the most common seller’s R&W include: • the seller’s capacity to execute the transac - tion; • the asset is free of charges, encumbrances, tenants, and occupants, up to date with tax payments, expenses, and free from any litiga - tion or administrative procedures; • compliance with current regulations; and • confirmation that there are no third-party rights such as preferential acquisition or right of first refusal. Sellers often seek to limit their liability arising from the R&W regime, which is initially unlimited, by methods such as: • establishing a threshold for compensation; • limitation periods (12–24 months, except for tax and urban planning representations); and/ or • liability caps. Buyers’ remedies against the seller for misrep - resentation include contract resolution, return of any reciprocal benefits, compensation for dam - ages to the buyer, or mandatory execution of the agreement. Furthermore, it should be noted that some of the most common R&W are also mandatory con - tent in sales contracts, such as those related to environmental status, the existence of rights of first refusal and the existence of urban charges.
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