Why Real Estate Due Diligence in Spain Is Essential Before Buying

Buying a property in Spain, whether as an investment or as a future residence, is a significant decision both financially and emotionally. It’s not just about choosing a home you like, but also ensuring that all legal and urban planning documentation is in order. This is where a fundamental concept comes into play: the due diligence process.

In this article, we explain exactly what the due diligence process is, why it’s so important in real estate transactions, how long it can take, what documentation it includes, and what role your lawyer plays. We also share practical tips and an emotional perspective on what it means to buy with confidence.

What is the due diligence process?

The term due diligence may sound technical, but its purpose is simple and crucial: it is a comprehensive report prepared by the buyer's lawyer, based on information and documentation provided by the seller or public authorities. The goal is to determine the legal, financial, and urban planning status of a specific property.

It is not a general analysis of a neighborhood or a community (unless the client requests it). It is a thorough investigation of a specific property to confirm that there are no hidden risks before completing the purchase.

What does the due diligence include?

A proper due diligence report should cover several key aspects. Among the most relevant are:

• Registry status: Confirmation of property ownership and review of encumbrances, liens, mortgages, or other recorded limitations. This is obtained through a land registry extract (nota simple).

• Urban planning status: Verifies if the property complies with current urban planning regulations, has valid construction and occupancy licenses, and whether it is located on consolidated urban land or non-developable land.

• Cadastral information: Checks whether the cadastral data matches the physical and registered reality of the property.

• Debt certificates: Includes certificates from the homeowners' association (for properties in shared ownership), the Town Hall (regarding property tax and local fees), and utility companies (electricity, water, gas).

• Tax status: Review of tax payments related to the property.

• Technical and construction status: Review of technical reports, building inspections (ITE), and any construction defects.

This process can also include other checks depending on the type of property, its location, or the specifics of the transaction.

Check here an official example of a Spanish land registry extract (nota simple)

Who provides the documentation?

The lawyer in charge of the due diligence obtains the information from several sources:

• The seller or owner of the property, if they have all the documentation.

• The seller's lawyer, if they handled the previous purchase.

• The public administration, such as Town Halls, for urban planning licenses, occupancy permits, or urban development certificates. Many of these documents are public, although some must be formally requested by a registered professional.

This task requires experience, as the information is not always well organized or up to date. It is common for the lawyer to have to request part of the documents themselves.

How long does a real estate due diligence take?

The timeline depends on how quickly the documentation is provided. Ideally, if the seller supplies all documents immediately, the due diligence report can be ready in about a week.

However, if licenses or certificates need to be requested from public entities, or if the information is delivered piecemeal, the process may take two to three weeks.

Therefore, it's advisable to start the process as early as possible once you’re seriously interested in a property.

Why is due diligence so important?

Buying a property without proper due diligence is like signing a contract blindfolded. Even if the home is appealing, modern, or in a prime location, hidden problems may complicate or even invalidate the purchase.

For example:

• The property may have been built without a construction license.

• It may lack an occupancy license, essential for utility connections or legal rentals.

• There could be an unpaid mortgage that prevents the buyer from registering the property.

A simple land registry extract is not enough. Only a comprehensive review by a qualified lawyer guarantees that the transaction complies with all legal requirements.

Real cases that show its importance

According to an article published by Idealista, many foreign buyers skip due diligence due to lack of awareness or trust that the seller or developer will disclose everything. However, this is not always the case, and the consequences can be severe. Read the full article here.

Another notable example involves illegal developments on the Costa del Sol, where homes were sold on non-developable land. Many buyers faced long legal battles to legalize their properties.

Practical tips for buyers

Here are some helpful recommendations if you’re considering buying a property in Spain:

1. Start due diligence as early as possible

Don't wait until an offer is accepted or a contract is signed. The sooner the analysis begins, the sooner you’ll identify potential risks.

2. Don't make payments without legal review

Even if it’s just a reservation deposit, don’t transfer money until your lawyer has reviewed the legal situation of the property.

3. Always request copies of all documentation

Don’t settle for verbal assurances. Request documents such as the building permit, community debt certificate, or registered floor plan.

4. Also consider the surroundings

While due diligence focuses on the property, it’s wise to assess the surrounding area: access, infrastructure, public services, and local regulations.

An emotional decision with legal implications

Buying a home is not just a rational investment. It’s an emotional decision: the start of a new life, the fulfillment of a dream, or the desire for a retreat under the sun.

However, that dream only makes sense if it’s supported by legal certainty. Due diligence doesn’t kill the emotion—it protects it. It gives your excitement solid foundations. It lets you move forward with confidence.

Therefore, don’t see it as an added expense, but as an essential tool to make a sound decision.

Conclusion

The real estate due diligence process is an essential part of any safe purchase in Spain. Far from being a formality, it is a protective shield that detects risks, validates promises, and ensures that your investment is backed by solid legal documents.

Whether you’re buying in Marbella, Madrid, or the Valencian coast, remember: the best investment is one made with full information and expert guidance.

Frequently Asked Questions (FAQ)

1. Who pays for the due diligence report?
The buyer, as part of their verification process before signing any contract.

2. Is due diligence mandatory?
It’s not legally required, but it’s highly recommended to avoid risks.

3. Can I do due diligence after signing a contract?
Yes, although it’s better to do it before to negotiate terms or withdraw if needed.

4. Does it include neighborhood or community analysis?
Only if the client requests it. The main focus is the specific property.

5. Can I do the due diligence myself?
It’s not recommended. Only a specialized lawyer has access to databases and technical knowledge.