Irish Property Buyer – Article featuring Alvaro Blasco

Alvaro Blasco –  Blasco Solicitors

Spain has drawn adverse publicity in recent years over what has been called the “land grab law”. The message has been that local authorities can take your land if they need it, more or less without appropriate restitution. As with many “scare” stories, there has been much misunderstanding about the purpose and effect of this law, particularly in the legislative region of Valencia. In this article we want to set the record straight and to clarify any confusion that people may have about this topic.

Valencian law 6/94 on the Regulation of Urban Development (Ley Reguladora de la Actividad Urbanistica, or LRAU) applies only in the Autonomous Community of Valencia, i.e., in the provinces of Valencia, Castellon and Alicante. Although it has been very controversial (with as many opponents as proponents), it may be said that this law has achieved what it set out to do. That means it is having a major influence on urban development in Spain, but has not caused problems for most property owners in the region. The law mostly applies to rural undeveloped land, so rarely a concern for residential purchasers.

The main objective of this law was to provide incentives for the private sector to participate in urban investment. It also intended to combat growing speculation in the real estate sector, especially among inactive landowners “sitting on” land instead of freeing it up for development.

The law classifies land in three ways: land already developed (urbano) land suitable for development (urbanizable) and finally rural land (rustico). The process of urban development is an issue mostly in the last two categories, as it is in these cases services such as roads, electricity and water have to be established. These increase the value of the affected properties; the owners of these are required to pay for the new services, whether or not they requested them.

The LRAU views urban development as a function of the regional Administration, performed by it either directly or indirectly. In the latter case, development is put out to tender, and the government selects a company to carry it into practice. It is not necessary for the affected landowners to be involved in this process. In other words, the Administration reserves for itself the management and supervision of the development while the company becomes the material executor of its instructions.

All landowners who wish to join a development scheme may do so on terms agreed with the developer. It is in the developer’s interest to reach such agreements to speed up the commencement of construction work. The law gives priority in the selection process to those developers who offer the most incentives to landowners, provided they are not contrary to public interest. In addition, the landowners may present an alternative development plan, which will always take precedence if it represents 51 per cent of the lands affected.

In practice, however, there are reports of corruption and abuse by some developers. Indulged by the municipal authorities, with whom they maintain excellent relations, some have undervalued the land and inflated the development expenses, then charging the resultant excessive payments to the landowners(both Spanish and foreign). Alternatively, where landowners have opted out of the scheme, developers have set very low compensation rates for expropriation. Such cases have received much media coverage, have been brought before the Spanish courts, and have been elevated to European level, reaching the Petitions Committee of the European Parliament, which approved a report drawn by a delegation of MEP’s. The LRAU has been reformed and amended on a number of occasions to protect property owners. Hence, it is now compulsory to publish development plans and to inform owners of properties. The Autonomous Government of Valencia is expected to pass a law designed to replace the LRAU in the next few months. This draft law includes the “Statutes regarding the Rights and Obligations of Owners”.

PRACTICAL ADVICE
If you have a property in Valencia on developed land (urbano), there is no cause for concern. If, however your property is on rural land, you should go to the Urban Development Unit of the local town hall (Ayuntamiento) and request information on your area. You should bring all documentation relating to your property (such as the public deed with a statement of new construction where applicable, occupancy certificate, mortgage documents). You can then obtain the Planning Record with all basic planning information for your area. If you have any doubts, consult a lawyer – and talk to your neighbours.

Alvaro Blasco is a Spanish Abogado and Irish Solicitor who has his own law firm based in Maynooth, Co. Kildare. www.blascosolicitors.ie