Buying a property that already has a tenant or occupant

Terms used

• Nota simple — The nota simple is a Land Registry extract showing the owner, mortgages, embargos and any registered lease or usufruct.
• Nuda propiedad — The nuda propiedad is bare ownership: you own the property but someone else keeps the right to live in it.
• IBI — The IBI is the yearly local property tax paid on a property.
• ITP — The ITP is the regional transfer tax paid when you buy a resale property.
• Tanteo — The tanteo is a tenant's right to buy the rented home first, at the price offered to others.
• Retracto — The retracto is a tenant's right to take over a completed sale if proper notice was not given.

Key rules

• Registered lease: A lease registered before the sale binds you for its whole term.
• Tenant's first-buy right: A housing tenant has 30 calendar days to match the price once formally notified.
• Vacant possession: Put in the contract that the home is delivered free of occupants, with a penalty and part of the price held back.
• Evictions: Never force occupants out yourself; only a court order can remove them.

The bottom line

Do not assume a home will be empty when you get the keys. A lease can survive the sale, a tenant may have the right to buy first, and a bare-ownership purchase leaves someone living there on purpose. Establish who lives in the property, and on what basis, before you pay a deposit.

Does the lease survive the sale?

For a housing lease, it depends on whether the lease is registered at the Land Registry (Registro de la Propiedad) before the sale.

• Registered lease: you must respect it for its whole term.
• Unregistered lease: a buyer who acts in good faith can end it, but the tenant can generally stay until the minimum term runs out. That is 5 years, or 7 if the landlord is a company.
• Commercial and seasonal leases: different rules apply. You may be able to end an unregistered one.

The 2019 reform set these terms and applies to leases signed from 6 March 2019. Older leases can follow different rules, so check the lease date and wording with a lawyer.

Can the tenant buy first?

A housing tenant has a right to buy first (tanteo) if the home is sold during the lease.

1. The landlord must notify the tenant formally, by a method that records receipt, such as a burofax. The notice must give the price and sale terms.
2. The tenant has 30 calendar days from the day after notice to buy at the same price.
3. If no notice was given, or the real price or terms are lower than notified, the tenant can undo the sale after the fact (retracto). The tenant has 30 days from being notified of the sale, usually by a notarised deed.

This right does not apply if the whole building is sold, or if all its units are sold together by one owner. A lease can also waive the right, but a waiver may not hold in leases of 6 years or less. The Land Registry will not register your purchase without proof of notice or of a waiver, so ask for one of them before you sign.

Buying only the bare ownership

In a nuda propiedad purchase, the seller (often elderly) keeps the right to live in the home, usually for life. You cannot move in or rent it out meanwhile. Full ownership passes to you when the usufruct ends, normally on the usufructuary's death, once you register proof of death.

• The price is a discount on full value, based on the occupant's age.
• The occupant normally pays ordinary expenses, IBI and utilities. You pay structural repairs.
• You pay transfer tax (ITP, which varies by region) on the bare ownership, or VAT and stamp duty on a new build. Consolidation is generally taxed in your favour, but this varies by region. Ask a lawyer or tax adviser.

Buying at auction

An auction listing tells you if the property is occupied. Once you hold the decree of award, you can ask the court to order out the debtor or anyone without a valid title. Occupants with a title valid against you, such as a lease, can stay.

Expect weeks to many months, and you bear the legal costs and the delay. If the debtor's main home is involved, the court sets a period to leave. Vulnerable occupants can get evictions suspended under housing protection rules. Never force anyone out yourself: that is a crime. Squatters (okupas) can be removed by a faster route.

Securing vacant possession in a normal resale

• Get a nota simple and visit to see who actually lives there.
• Get the seller's written declaration on occupancy.
• Make the contract say the home is delivered free of occupants, leases and charges ("libre de cargas y de ocupantes"). Add a penalty, or a right to cancel and recover your deposit, if it is not.
• Agree a retention: part of the price held back until keys and vacant possession are handed over. The amount is negotiated.
• Have the deed include the seller's statement that no tenant lives there. Take the keys at the notary, and do a final inspection just before signing.

The documents, checklist, timeline and warnings below cover each step in detail.

Timeline and deadlines

• The landlord formally notifies the tenant of the price and sale terms by a method that records receipt, such as a burofax: before the sale is completed

• The tenant decides whether to buy at the same price: within 30 calendar days, starting the day after notice

• If notice was not given, or the price or terms were lower than notified, the tenant can redeem the sale, usually by a notarised deed: within 30 days of being notified of the sale

Documents you need

• Nota simple from the Land Registry, showing the owner, mortgages, embargos and any registered lease or usufruct

• Proof that the tenant was notified of the sale price and terms by a method that records receipt, such as a burofax, or a written waiver of the tenant's right to buy first. The Land Registry will not register the sale without one of them.

• The seller's written declaration on who occupies the property

• Latest utility bills, the IBI receipt and the community-fee certificate

• Purchase contract (arras or private contract) stating the property is delivered free of occupants, leases and charges (libre de cargas y de ocupantes), with a penalty or termination and return of your deposit if it is not vacant, and part of the price held back until keys and vacant possession are handed over

• Deed with the seller's statement that the home is free of tenants

• For a nuda propiedad purchase, proof of death of the usufructuary when the usufruct ends, to consolidate full ownership at the Land Registry

Checklist

• Get a nota simple from the Land Registry and check for any registered lease, usufruct, mortgage or embargo

• Visit the property and see who actually lives there

• Ask the seller whether a lease exists, whether it is registered, and when it was signed

• Ask for the seller's declaration on occupancy, the latest utility bills, the IBI receipt and the community-fee certificate

• Check whether the property is a housing lease, a commercial lease or a seasonal lease, because they follow different rules

• Ask for proof that the tenant was notified of the sale, or a waiver of the tenant's right to buy first

• Make sure the contract says the property is delivered free of occupants, leases and charges, with a penalty or termination if it is not

• Inspect the property just before signing the deed, and collect the keys at the notary

What to watch out for

• An occupied auction property can leave you with occupants for months: Tenants or occupants with a title valid against you can stay. Removing others needs a court order, which takes weeks to many months, and you bear the legal costs and the risk of delay. Vulnerable occupants can get their eviction suspended. Read the auction listing for occupancy, budget for court time and costs, and take legal advice before bidding.

• Never force occupants out yourself: Forcing occupants out without a court order is a criminal offence, even if you own the property. Use the court route. For squatters (okupas), ask a lawyer about the faster criminal or summary civil route.

• The seller may hand over the property with someone still inside: If the contract does not say the property is delivered vacant, you may have little recourse when a tenant or occupant is still there at the deed. Put a free-of-occupants clause in the contract with a penalty or termination, hold back part of the price until the keys are handed over, and check the property just before signing.

Frequently asked questions

Can I remove the occupants if I win an occupied property at auction?

Yes, if the occupants have no valid title, because the winning bidder with the decree of award can ask the court to order them to leave. Tenants or occupants whose title is valid against you may stay. Never force anyone out yourself, as that is a criminal offence.

How long does it take to evict occupants after an auction?

A lawful eviction goes through the court and usually takes weeks to many months, depending on the court. If the occupants are vulnerable, social services can get involved and the eviction can be suspended. You carry the legal costs and the risk of delay.

Does a tenant's right to buy first apply if the whole building is sold?

No, the tenant has no right to buy first or to redeem the sale when the whole building is sold, or when all its units are sold together by one owner. The lease may also waive these rights, though a waiver in a lease of 6 years or less may not apply.

Who pays the costs and taxes if I buy only the bare ownership (nuda propiedad)?

You pay transfer tax (ITP, which varies by region), or VAT and stamp duty for new builds, on the value of the bare ownership. The usufructuary normally pays ordinary expenses, IBI (the local property tax) and utilities, and you pay for structural repairs. When the usufruct ends, full ownership consolidates in your favour, and the tax treatment varies by region.