Problems with a property whose registered size is smaller than the actual size

The article we present below relates to a case that recently came to our office and, frankly, reflects a situation we never thought could occur.

Typically, real estate sales that involve a different reality from what is reflected in the Land Registry or result from illegal urban planning actions are relatively common for the former and very common for the latter. However, seeing this happen with an urban property within a development is something we had never seen before.

Once again, we emphasize the importance of seeking legal advice from a specialist in real estate law when conducting a real estate transaction, especially when there is anything “unusual” that one does not fully understand.

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ACQUISITION OF URBAN PROPERTY WITH A REAL SIZE LARGER THAN THAT INDICATED IN THE LAND REGISTRY

Although discrepancies between the Land Registry and the legality of rural properties are not uncommon, especially before the new regulation that requires the alignment of the Land Registry with the Cadastre, what is more unusual is acquiring a property with a real size larger than what is registered. This increase in size may be due, for example, to the existence of an additional room of more than 20 m², which does not appear in the Land Registry.

The importance of identifying discrepancies before purchase

This situation should have alerted the buyer to the abnormality and the need to investigate the reason for this discrepancy before signing any documents.
Unfortunately, the sellers, a developer who had acquired this urban property through an auction, assured the buyer that there was no problem and that the City Council could not demolish the extension. The buyer, trusting them, purchased the property without considering that while illegal constructions on rural properties are often larger than authorized, a similar situation on an urban property, such as a house or bungalow in a development, is very different.

Since the New Construction declaration determines the configuration of the development and each of its components or homes, which is then passed to the Land Registry, it was evident that the additional square meters must belong to another element of the development, whether private or common, which could cause problems.

The buyers, trusting the seller’s words, acquired the property through a notarial deed and began making improvements until they were informed by the Homeowners’ Association that there were issues with the property.

THE DIFFERENCE IN SQUARE METERS CORRESPONDS TO ANOTHER REGISTERED PROPERTY

They were informed by the Homeowners’ Association that part of their house belonged to another registered property within the same community and that there were unpaid community fees for this property. This prompted the buyers to investigate further to understand what was happening.

The reality behind the discrepancy in the registry

What they discovered was that the additional room of about 20 m², which did not appear in the Land Registry, actually, according to the New Construction deed, corresponded to a different registered property from the one they had acquired. Furthermore, this property was listed as a commercial space.
The developer, although having divided the community and its various elements, created this commercial space next to one of the homes as an independent property. However, for reasons unknown, they connected it to the house, enlarging it without making the necessary modification to the New Construction declaration, which would not have been possible due to the significant difficulties and complexities involved.

Eventually, the developer sold most of the development, while the remaining properties were auctioned off by the bank that had financed the homes and foreclosed on unpaid mortgages.

THE SALE IS OF ONE REGISTERED PROPERTY BUT IN FACT, IT IS TWO

When the buyers went to the notary to purchase the home, they bought exactly one registered property, but not the other registered property, which was a commercial space. Despite this, they were given possession of both the home and the commercial premises.

Problems arising from the sale of two registered properties

We find that the seller, a developer who had acquired the properties as-is from a court auction, sold something they could not sell: the square meters corresponding to the commercial space. The buyers, unaware of the situation, acquired not only the specific registered property but also some additional square meters that did not belong to them. This left them in a very delicate situation, having bought something from a third party who could not sell it.
They are now facing demands to pay community fees corresponding to the commercial space, which have been in arrears for many years. However, they are resisting this, arguing that they are not the owners.

This is precisely what the developer argued before selling, stating that they had acquired the property with those extra square meters but were not the registered owners of the property. Therefore, although they were possessors, they were neither legal nor titular owners and were not obliged to assume fees that did not correspond to them.

This information is crucial in resolving the problems this situation has created for the buyers. The sale was conducted with full knowledge that they were selling, in fact, two registered properties instead of one, and that they were also selling something that, in part, did not belong to them as they were not the titular owners.

THE SECOND PROPERTY BELONGS TO ANOTHER OWNER

As mentioned, the registered property, a commercial space, belongs to a developer who, due to non-payment of the mortgage loan, caused many of the homes in the development to be auctioned.
As a result of these debts, the said commercial space has many annotations of embargo due to existing debts, for which prior certification has been requested before the auction, not only of this registered property but of several others.

Therefore, the problem for the purchasers is compounded because not only have they bought something that does not belong to them, they have also bought something from someone who is not the seller. Moreover, this commercial space is listed in the Land Registry with several annotations of embargo, with the purchase occurring long after these embargoes were registered.

THE SECOND PROPERTY IS ENCUMBERED BY DEBTS OF ITS REGISTERED OWNER

As mentioned, the situation of the registered property, a commercial space, is legally burdensome, as it has several encumbrances. It was auctioned off, and the buyer or holder of the embargo may take action against the purchasing clients since they possess something they acquired from someone who is not the owner and did so very recently.
In this situation, we believe the buyer can pursue several legal actions but must always file a lawsuit against the developer, who was fully aware of the legal status of what they were selling. Therefore, they cannot claim good faith as sellers; on the contrary, they committed a serious act by selling something that did not belong to them.

We understand that the developer acquired the property from the court and may argue that they inherited the situation. However, in our opinion, what attributes legal reproach to their conduct is their subsequent knowledge of the situation, yet they sold it without informing the buyers of the actual circumstances, causing significant harm to the purchasing clients.

SOLUTION TO THE PROBLEM

In our opinion, the buyer has a clear criminal action against the developer for knowingly selling something that did not belong to them, thus committing one of the fraud offenses under Article 251 of the Penal Code. Given the characteristics of fraud actions, the buyer has a double recourse for damages: they may either request the nullity of the entire operation or limit themselves through civil liability action to the refund of the reduced value of their property, as a significant portion of the square meters sold to them was without the capacity to do so.
This second option would involve relinquishing possession of this commercial space, which was converted into a room, by sealing it off so that the commercial space and the property they purchased are fully distinguished, ultimately corresponding to the square meters of the registered property according to the Land Registry.