In this article we will explain the conditions and legal framework for construction work and building renovations in Ibiza.
 

According to the Civil Code, the contract for execution of work is considered as a service contract. There are different types of contracts for execution of work: the owner of a plot of land may build his own home by hiring an architect, a builder and workers or a developer might build a property on his plot of land with the intention of selling it when it is finished. If, in order to finance the project, the developer sells the property before starting the construction works, we are looking at an off plan sale. If, on the other hand, the developer sells the property once the work is concluded, we are looking at a turnkey purchase (“llave en mano”).

 
The contents of the works contract can be agreed freely by the parties. It is not uncommon in the Balearic Islands for a contract to be concluded verbally and without specifications when dealing with refurbishments and extensive renovation works or when building single-family homes. Many times these works are commissioned based on a relatively detailed budget. However, before signing a work contract, it is advisable for it to be reviewed by a lawyer in order to avoid possible future disputes. Do not accept a contract that does not outline the price in detail. Demand the architect to provide you with a budget that outlines all the different sections (land development, structures, plumbing, paints, etc.) and items. As a general rule, works should not be carried out without a binding agreement in writing about the price. In practice, however, often an agreement is made with the builder for their remuneration to be calculated on the cost of the work, for example 15%, instead of fixing a price.
 

The following professionals are involved in the execution of the work:
- The architect who prepares the project – the plans and specifications of the materials, items, equipment, etc. He initiates and ends the work.
- The building engineer (“aparejador”) who is responsible for directing the works and making the building safe and functional.
- The builder who is responsible for the execution of the work.
- The developer (“promotor”) who buys the plot to be developed.

 
Once the construction is fully completed, the architect issued the certificate of end of works (“certificación final de obra”). This document is essential to obtain the certificate of occupancy (“cédula de habilitad”) granted by the Ibiza Council. Following this, the corresponding Town Hall issues the first occupation license (“licencia de primera ocupación”).
 

The process involves adding all existing structures, extensions or modifications carried out to a property to the Land Registry with detailed descriptions and their values. The registration is made based on a public deed of declaration of new building works issued before a notary. The Land Registry must be informed about the existence of new buildings. The declaration of new building works is subject to Stamp Duty which amounts to 1.2% of the registered value.

 
The documentation of new work is of legal importance when it is an essential prerequisite for a later registration. For example, it is not possible to register the usufruct of a property if the existence of the building is not recorded in the Land Registry. The declaration of new building works is very important especially when one intends to finance the purchase of a property with a mortgage. Spanish banks will only grant credit if all registry entries relating to the building, especially those of the declaration of new building works, have been made correctly.