The definitive guide to understanding property encumbrances

When you decide to buy a home, there’s one key detail you can’t overlook: the property’s encumbrances. These can become an unexpected surprise if not properly researched.

Do you want to avoid changes at the last minute? From KM2 Real Estate Services we explain everything you need to know, below.

The burdens of a house

The charges of a house are economic debts associated with a house. Even if they have been generated by former owners, they are transferred to the new buyer at the closing of the transaction. That is why – before signing – it is essential to know them and agree on who will take care of them.

The most common types of encumbrances

What are some of the encumbrances you might encounter when purchasing a property?

• Mortgages: the most common burden. Homes are often sold before the mortgage is paid off. This is resolved by cancellation at the closing of the sale or by a subrogation, where the new owner assumes the loan.

• Liens: If the home is subject to a judicial or administrative lien, the liability will also fall on the new owner.

• Taxes: back taxes can be a major burden. The most common are:

a) Municipal Capital Gains Tax (IIVTNU).

b) Real Estate Tax (IBI).

c) Property transfer tax (ITP).

• Debts for supplies: even if you change the ownership of services such as electricity or water, the outstanding debts for non-payment of supplies are still linked to the house and must be paid.

• Lease contracts: if the house is rented, you must respect the current lease contract until it ends, even if you are the new owner.

• Usufruct and easements: the usufruct gives you the right to use and enjoy the property without being its owner. This means that you could buy the property without being able to live in it. Easements – such as rights of way – must also be respected.

• Community of owners’ fees: unpaid fees or outstanding payments are transferred with the house. It is essential to request a certificate of debts from the community to verify that everything is in order.

This is how to check the charges of a property

Before closing any transaction, investigating the charges is crucial. The best way to do it is requesting a simple note in the corresponding Property Registry. This document details the registered charges and can be requested in person or through https://www.registradores.org.

For a more detailed analysis, you can request a certificate of ownership and encumbrances, which provides a complete history of the property. In addition, ask the owner for the last IBI receipt and a certificate from the community of owners to ensure that there are no outstanding debts.

We are your reliable real estate agency in Barcelona and Madrid

Do you have any doubt to solve? In KM2 Real Estate Services we have an extensive experience in the marketing of properties in the best areas of Barcelona and Madrid.

We will be delighted to receive you in our real estate agencies to continue talking about the charges of a property and offer you a comprehensive support that covers all your needs in a personalized and close way.

We are waiting for you at:

• C/ de Balmes, 150, 2º1ª, Barcelona.
• C. Serrano, 51, 4ª Pl. Derecha, Madrid.