Difference between grandfathering and legalization

Grandfathering
(“Fuera de Ordenación” / “Situación de Asimilado a Fuera de Ordenación”)

The protection of grandfathering in Mallorca (often referred to in Spanish as “fuera de ordenación” or “situación de asimilado a fuera de ordenación”) means that an illegally constructed building or part of it does not have to be demolished because the deadline for the authorities to prosecute the building infringement has expired.

When does grandfathering apply?

• Statute of limitations: According to Balearic building law, building violations generally expire after a certain period of time, which in most cases was eight years (for buildings constructed before December 31, 2017). Since January 1, 2018, building violations on rural land (suelo rústico) in Mallorca are generally no longer time-barred. This means that an illegal construction built after this date can never be grandfathered.
• No ongoing proceedings: There must be no active proceedings (demolition order, fine proceedings, etc.) against the building violation pending with the authorities.

What does grandfathering mean in practice?

• No risk of demolition: The main feature of grandfathering is that the municipality or building authority can no longer order the demolition of the illegal building or part of the building.
• Restricted use and alteration: This is the greatest restriction. Although a building under a preservation order is safe from demolition, it may not be legally altered, converted, extended or modernized beyond mere maintenance. It can be difficult to obtain the necessary permits for major repairs or renovations. This means:
  • No new roof if it changes the structure.
  • No new extensions or additional storeys.
  • Often no new windows or facades that significantly change the original design.
  • No permission for the installation of a heating system or other modernizations that would require planning permission.
• No certificate of habitability (Cédula de Habitabilidad): As a rule, existing, originally illegal buildings do not receive a new certificate of habitability. This is a major problem, as this certificate is necessary for renting (especially for tourism) and sometimes also for registering utility connections.
• Difficulties when selling: Properties with grandfathering are often more difficult to sell, as many buyers want legal certainty and the option to modernize. Banks can also be more hesitant to grant loans for such properties.
• No tourist rentals: As a rule, protected properties cannot be legally rented out to tourists, as this requires a valid certificate of habitability and a tourist license, which only legal buildings receive.

Legalization (“Legalización”)

Legalization is a process in which a building that was originally constructed illegally is subsequently fully adapted to the applicable building regulations and thus made legally sound. This is a much more comprehensive and desirable state than the mere protection of existing buildings.

Current possibility of legalization (Decree 3/2024):

The Balearic government has issued a new decree (Decree 3/2024), which offers a temporary option for the extraordinary legalization of illegal buildings on rural land. This is an important development as it gives owners a chance to get their properties out of the “gray zone” of grandfathering.

Important points on legalization under the new decree:

• Limited in time: The application for legalization must be submitted within a certain period of time (often 3 years from the decree coming into force, with staggered fees). After this period has expired, such a possibility is unlikely to return.
• Only for rural land (suelo rústico): The regulation only applies to illegally constructed buildings on rural land.
• Statute of limitations of the building violation required: The original building violation must also be time-barred for legalization under this decree.
• Comprehensive examination: The application for legalization requires a comprehensive technical project drawn up by an architect. All buildings and facilities on the property must be taken into account. As a rule, “partial legalization” is not possible – either everything is legalized or illegal parts have to be demolished.
• Costs and conditions: Legalization is associated with considerable costs:
  • Architect’s fees: For the creation of the project.
  • Fees and taxes: Permit fees, tax on buildings, installations and construction services (ICIO), as well as additional fees that increase depending on when the application is submitted (e.g. 10% of the construction value in the first year, 12.5% in the second, 15% in the third year).
  • Environmental requirements: Measures must be taken to improve energy and water efficiency (e.g. new installations, solar systems), to reduce light pollution and to implement suitable water purification systems (septic tanks).
  • Adaptation to current standards: The legalized buildings must comply with current construction and safety standards.
• Ban on tourist rentals: A crucial point is that properties legalized under this decree may not be rented out to tourists on a permanent basis. This restriction will be entered in the land register. This is one of the most important political objectives of the decree in order to curb the overuse of rural areas by tourism.
• Entry in the land register: After successful legalization, the new, legal status of the property is entered in the land register, which ensures full legal certainty.

The importance of the difference

The difference between grandfathering and legalization is immense:

• Grandfathering is a passive condition that merely protects against demolition but severely restricts the development and value of the property. It is a “tolerated state”, not complete legality.
• Legalization is an active process that takes the property out of the grey area and gives it full legal security and the possibility of future legal conversions (within the framework of the regulations then in force). The exception here is tourist rentals, which are explicitly excluded.

It is therefore crucial for property buyers and owners in Mallorca to know the exact status of a finca. A local lawyer or architect specializing in construction law should always be consulted to check full legality and determine the best strategy for dealing with existing or potential building violations. The current opportunity for legalization offers a rare chance to create legal certainty, but should be examined carefully, taking into account all costs and conditions.