Investment approach
Due diligence checklist before arras: what to check before the deposit
Checking a property's legal position before the arras are signed is the last chance to find a problem at no cost. What the checks cover and who carries them out.
Due diligence has to be finished before the arras are signed, because after that, pulling out of the deal costs money: under arras penitenciales the buyer may withdraw but forfeits the deposit. Checking before signing costs less than a deposit lost once a problem turns up. Below is exactly what gets checked and who does it.
Why the checks come before arras, not after
Arras penitenciales let you walk away from the deal, but for the buyer that right costs the amount of the deposit. Hence a simple rule: the earlier the checks, the cheaper it is to get out of a bad deal. Finding a charge or an unauthorised layout change after signing means choosing between losing the deposit and buying someone else's problem.
What the basic check covers
- Nota simple registral: the current owner and any charges.
- Cédula de habitabilidad (habitability certificate), and whether the property as it stands matches what is registered, i.e. whether there are any unauthorised layout changes.
- A certificate confirming there are no debts to the comunidad de propietarios (owners' association).
- Current licences, if the property is commercial.
- The status of the energy performance certificate (certificado de eficiencia energética).
- Where required, the ITE (technical building inspection) if the building is more than 45 years old.
Extra checks for properties bought for renovation
If the property is being bought for renovation, its planning status goes on the list too. Is the building heritage-protected? That limits the kinds of work allowed. What type of licence will the planned changes need? Does the previous owner have permit applications already lodged, or permits that have expired? The licence types are covered in our article on llicència d'obres majors and menors.
Who carries out the checks
Due diligence is a joint job for a property lawyer and a technical specialist, either an architect or an aparejador (building surveyor), who assesses the condition of the building. DNPI Capital runs these checks on every property before any deposit is paid; how the process works is set out on our legal due diligence page.
Questions and answers
How long does full due diligence take?
Anything from a few days to a couple of weeks. The slowest part is checking the planning status of buildings in the protected areas of central Barcelona, and tracing the licence history if it has not already been compiled.
Can due diligence be done after signing arras, to save time?
Yes, if the arras contract sets out a due diligence period in advance, with the right to withdraw without losing the deposit if problems are found. By default there is no such clause, and you cannot assume there is one.