Estate Agency Definitions

Understanding the vocabulary and abbreviations of the real estate sector can be confusing. Below you will find a definition of the most frequent vocabulary and abbreviations.

NOTARY RECORD

A file where a Notary bears witness to a fact.

CLAIM

Submission of a document with evidence, pleas, defence or justification about something.

RENT

Agreement drawn up between an owner and a tenant in order that the latter can enjoy the use a property or premises for a limited period of time in exchange for an agreed amount of money.

SIGNPOSTING

It is the action of placing signs or markings on the dividing line between two properties as points of reference of the boundaries and surface of a property.

REPAYMENT

Amortization in instalments of the capital loaned. That is, it is about reducing interest by paying a monthly quota on account of the outstanding capital.

REAL STATE AGENT

Real estate agent; qualified agent that acts as intermediary in estate conveyances and that belongs to the official group of Real Estate Agents and who, in exchange, charges a commission for the services rendered. Furthermore, he or she can provide assessment and advice about the whole process.

CHARGE

Administrative procedure to enforce the payment of debts.

ARBITRATOR

Extrajudicial mediator in a legal action between two parties. The decision made by a referee is called a laudo, that is, an arbitration award.

SECURITY DEPOSIT

Amount of money to be deducted from the property’s final price, that the buyer pays to the vendor as a security that the agreement will be settled in the fixed period of time. If the buyer can not settle the agreement in the established period, the vendor will be entitled to keep such security deposit given by the buyer. If, on the contrary, the vendor was to blame in not settling the agreement, he or she will have to give back the buyer twice the amount paid by the buyer.

LESSOR

Person who gives the right of use of a property of his or her ownership to a third party in exchange for a rent (the owner).

LESSEE

Person committed to pay a rent for the right of use of a property that does not belong to him or her (the tenant).

CONSULTANT

The sales agent working for an estate agency and who, with experience and training, attracts more business and sells and or rents such properties.

GUARANTOR

Person that appears as backer of a loan and becomes liable in the event that the borrower (debtor) does not settle the amount or interest due.

REAL STATE

Property on a fixed location that cannot be moved without damage being inflicted on it.

LAND REGULATION

Current urban planning law consisting of detailing or establishing further the use of the land as previously classified. The use and building potential are set out here.

RELEASE OF MORTGAGE

Discharging of a mortgage by means of settlement of the whole outstanding debt.

CAPITAL

Amount of the mortgage. Total amount of outstanding debt less interest.

PRE-AMORTISATION

Period of time available for the duration of a loan or mortgage during which only interest is paid not capital.

ENCUMBRANCES

They appear on the public deeds and are registered in the Land Registry. They are not always related to financial rights and are frequently cancelled with the termination of the right they represent.

CADASTRE

Official system of property registration.

OCCUPANCY PERMIT

Compulsory document to convey a property and apply for the basic supplies, which certifies the safety and health conditions of the house to be used as a dwelling.

ENERGY CERTIFICATE

This is a document in which the energy efficiency standard of the property (either commercial or dwelling) or of an entire building, according to the law in force, is shown. The owner or constructor who wants to sell or rent a property must have this energy certificate.

CERTIFICATE OF TITLE

This is the official document where the Land Registry certifies the situation of a property and records any existing charges or encumbrances, where appropriate.

COMMISSION FOR EARLY REPAYMENT

Commission for early repayment; this is payable only if early repayment is made. The charge refers to an extra payment which a client wishes to make to reduce the mortgage, thereby reducing either the monthly payments or the term of the operation.

ARRANGEMENT FEE

The percentage of a mortgage which is a one-off payment made when the mortgage monies have been credited to the bank account.

CONDOMINIUM PROPERTY

This expression is used when the right of ownership over a certain asset is exercised by more than one person by means of shared quotas.

COUNTER-OFFER

An offer made in response to an offer which has been received.

PRIVATE CONTRACT

This is the document signed by the interested parties when agreeing a sale or a rental. It is not necessary for this be done in the presence of a Notary for, as it name suggests, it is a private and not a public agreement. A private contract is perfectly legal and enforceable before the Courts.

ALTITUDE

A number on a topographical plan which indicates the height of a point above sea level.

DECLARATION OF NEW BUILDING

Declaration of new building; a public Title Deed which is recorded at the Land Registry and where a description of the new work is made.

DEPRECIATION

Loss of value in a property. This can happen over time or for reasons beyond ones control.

RIGHT OF WITHDRAWAL

A right which assists a person to resolve the sale made by a third party, and subrogate the legal position of one of the parties who has not been offered his preferential right.

RIGHT OF USE

A real right of use by which the owner of something transfers the right and use of the same to a third party with the condition that he retains custody and conservation.

DELINEATION

To show and mark the boundaries of a piece of land.

ACCRUAL

The moment when the liability to pay becomes effective.

DIFFERENTIAL

A percentage which is added to the value of the benchmark reference interest rate at the time when the mortgage interest rate is revised.

HORIZONTAL PROPERTY DIVISION

Division of a property into several registered independent ones, each of which is assigned a coefficient of co-ownership or share of the total property. This is recorded at the Land Registry.

DEVELOPMENT POTENTIAL

Defined as the square meterage of the height of the roof divided by the square meterage of the plot. The constructed surface area above ground level.

RECORD A PUBLIC DOCUMENT

To incorporate a public document into a Notary’s protocol (file), thus converting it into a public document which may then be recorded at the Land Registry.

PUBLIC TITLE DEED

Is the instrument drawn up by a Notary and recorded in his Protocol ( a book in which all deeds effected by him are registered) and which consists of one or several legal acts which have the signature of the appearing parties as well as the stamp and signature of the Notary who attests such act.

DISCREPANCY IN SURFACE AREA

Occurs when there is a discrepancy between the area recorded at the Land Registry and the area which actually exists.

ORIGINAL PROPERTY

Land or building from which the estate originates. It is the master property (original).

PROCESSING CHARGES

Are those generated by the processing and management fees charged by the Notary, the Land Registry, and the Tax Authorities.

MORTGAGE

Concept used as guarantor for a loan. In this case, the property is used as a guarantee for payment of the debt. The payer becomes liable for this and should he default, the entity which has made the loan has the right to sell the property and keep the proceeds.

DOCUMENT DUTIES

Document duties; this is the tax which is imposed on public deeds, and it is a percentage on the value stated on the same.

PROPERTY TAX

A municipal tax which is imposed on the ownership of the land and the dwelling. It is calculated as a percentage of the asset’s rateable value. The seller must be up to date with payment of this tax before he is able to sell his property.

REGISTRATION

Recording at the Land Registry. The registrations can be made up of several categories, such as the registration of the property, recording of the mortgage, guarantee, etc.

PROPERTY TRANSFER TAX

Property transfer tax, stamp duty; this is a tax on all asset transactions, both movable and immovable property on which VAT is not levied. Currently in the Balearic Islands there are three levels: 8% up to 400.000 Euros; 9% between 400.000 and 600.000 Euros, and 10% from 600.000 Euros.

OPENING PERMIT

A permit issued by the municipal Authorities which is required for the commencement of a commercial activity which is open to the public

BUILDING LICENCE

Municipal permission which is required for the commencement of building or architectural work at a property.

LICENCE OF FIRST OCCUPATION

This is issued by the Town Hall and confirms that the property fulfils all security and building requisites. It is essential for securing the certificate of occupancy.

UNDEVELOPED LAND

Land under some kind of legal protection (rural, historic, environmental) meaning that it cannot be built on.

MARGINAL NOTE

An additional entry shown in Land Registry records which shows changes to the registration situation of the property to which it refers.

SIMPLE REGISTRATION CERTIFICATE

Document issued by the Land Registry in which the property is described and where the existence or not of any charges on the property are shown.

NOTARY

Is the public official who attests documents and who is able to record acts and legal facts such as purchase-sales, setting up of civil and mercantile companies, wills, powers of attorney, certification of facts, donations, probate, etc.

OFFER

This is understood as the verbal or written statement by which a future purchase or lessee shows how he is able to pay and the method of payment.

EXCHANGE

Is the contract by which each party agrees to exchange one thing for another. Should money be involved this should be less than half of the value of the operation, otherwise it will automatically be converted into a purchase-sale.

TAX ON INCREASE IN URBAN LAND VALUE

Tax which is levied by the Town Hall where the property is situated and when a property is transferred or sold. By law, it is the vendor who should pay this tax. The amount payable is the difference in value which the property has undergone since its last transfer

MORTGAGE LOAN

A contract by which a financial entity gives a fixed amount of money with the commitment that this will be returned in the time scales and conditions agreed between both parties. The property will act as a guarantee of payment. The loan which is documented before a Notary is called a mortgage.

CONDOMINIUM PROPERTY

A property in which each of the owners shares and enjoys the communal elements and is the sole owner of the private elements.

LAND REGISTRY

It is the body whose main object is to make public the acts signed between private individuals or legal entities, through the registration of the titles containing the conveyance, alteration, termination or encumbrance of the ownership or possession over any property.

DETACHMENT

Division of a part of a property so that it becomes an independent one.

ENCUMBRANCE

This is an encumbrance on a property in benefit of another that belongs to another owner; in this case it will always be a property called “dominant estate” and another called “dominated estate”, that is, the first has the ownership over the encumbrance of the dominated property.

PUBLIC RIGHT OF WAY

Right of way by which a property with no access can claim from the neighbouring property a passage by means of compensation to make this right of access possible. When any work to place telephone lines or electric cables or pipes are necessary, the dominated property is obliged to accept the access to such lines or cables and the passage for their surveillance and maintenance.

ASSUMPTION

A method of transferring liabilities. Replacement of a creditor for another one concerning rights and duties.

FLOOR AREA

In this area all square meterage within the dwelling perimeter or indoor area is included.

FREE AREA

The percentage of land that remains free of construction.

USABLE FLOOR AREA

The sum of all surfaces of the property regardless of the thickness of the walls. Balconies and verandas are not included.

VALUATION

Assessment by an expert to ascertain the factual value of a property from its physical features, location, use and according to the situation of the real estate market at the current time.

URBAN

Plot that is accessible by car, with water, sewage, electricity supply. That is, it is ready for a property to be built on it.

URBANIZABLE

Plot neither considered urban nor non-buildable, but that can become urban if it has the minimum urban services to build on it.

CADASTRE VALUE

Rateable value of a property registered in the cadastre.