New Construction Deed: Essential Guide

Buying a home is one of the most significant steps in a person’s life, and when it comes to acquiring a new property, it is crucial to understand the process of the new construction deed. 

In this essential guide, we will explore all aspects related to the new construction deed, from its definition to its practical operation.

The New Construction Declaration Deed: What Should You Know?

The new construction declaration deed is an important legal document used to certify the construction of a new building or the execution of a significant renovation on a property. Therefore, it is essential to understand all the legal and administrative aspects involved to ensure that it is carried out properly and in accordance with current regulations. 

In this post, we will teach you everything you need to know about the new construction declaration deeds.

What is the Deed of a New Construction?

It is a notarial document that certifies that a new construction or building complies with all current regulations and grants legal validity to the existence of the work, establishing the details related to it. 

This deed is commonly used in the construction and real estate sector and is essential for formalizing the ownership of a new building.

Who Can Execute a New Construction Deed?

The new construction deed can generally be executed by different types of people, depending on their relationship with the property and the construction carried out.

Real estate developers: Those who build buildings or homes with the purpose of selling them.

Builders: Professionals or companies that build buildings or homes commissioned by an owner.

Individual owners: People who build their own home for personal use.

Is the New Construction Deed Mandatory?

The requirement to execute a new construction deed can vary depending on the jurisdiction and local laws. In many countries, the new construction deed is a legal requirement when building a new property or carrying out a major renovation. This is done to legally register the property and ensure it meets legal and construction requirements.

The new construction deed may also be necessary to access public services, such as water, electricity, and sewage, and to obtain construction permits. 

Moreover, it is mandatory, especially if the homeowner is a builder or developer and they want to sell or rent the house, while if it is an individual who has built the home for their own use, it would not be necessary.

How Much Does the New Construction Deed Cost?

The cost of formalizing the declaration of work before a notary varies according to the total cost of the work and includes three components: the tax on documented legal acts, notary fees, and Property Registry fees.

The tax on documented legal acts: also known as the mortgage tax, is a levy applied to the formalization of notarial, commercial, and administrative documents made public before a notary. This tax is calculated based on the declared value in such documents, which would be between 0.5% and 1.5% of the material execution budget of the work.

Notarial expenses: Fees are the compensation paid for notarial services. These fees are uniform throughout Spanish territory and are established by the Government through a royal decree. Neither notaries nor notarial colleges have the power to alter these fees, as they are mandatory and generally applicable.

After calculating the initial amount, a 5% discount is applied, and an additional cost of 3.005061€ per folio is added. From page number 12, the cost per page is halved, as stipulated in Royal Decree 1426/1989, which establishes the Notaries’ Tariff.

Property Registry fees: The price of registration is not fixed; it varies according to the number and type of actions to be carried out, as well as the fiscal value of these. These fees are regulated by Royal Decree 1427/89 of November 17, which establishes the tariff of the Property Registrars’ rights. Although they are not fixed as such, it is usually 0.03% of the value of the building.

New Construction Deed and Horizontal Division: Key Aspects

The cost of carrying out a horizontal division of a plot involves various expenses that may arise during the process. This division consists of separating a plot into two or more parts, thus creating new lots or independent properties. The budget required for this horizontal division deed can vary depending on certain factors, such as the size of the plot, the complexity of the division, and the legal procedures required.

When a horizontal division is carried out, a professional in law or a public notary must be hired. This person is responsible for drafting and carrying out the necessary legal procedures to formalize the division. This involves the drafting and signing of deeds, as well as registrations in the Property Registry. In addition to the professional’s fees, the cost of the horizontal division deed may include other expenses such as municipal taxes, fees, Property Registry registration costs, and notarial fees.

Old New Construction Deed Model: How Does It Work?

The old new construction deed involves declaring an old construction or building that has not been previously declared and registered in the property registry. The following documents are required: Certification issued by the City Hall or by a competent technician.

The process generally involves the presentation of a technical document that certifies the characteristics of the construction, such as plans and descriptive report. This document is used to process the old new construction deed before a notary. Once the deed is completed, the property is registered in the Property Registry, which legalizes the construction and establishes its official existence. This is essential to be able to sell, mortgage, or carry out any type of legal transaction on the property.

It is important to keep in mind that this process may vary according to local legislation and the specific circumstances of each case. Therefore, from Gilmar Off plan, we recommend consulting with a legal professional or a notary to obtain specific advice on how to proceed in each situation.