Invest in real estate to protect your capital and generate medium- to long-term income—it's still one of the most popular strategies among investors. The Spanish real estate market is going through a period of steady growth, especially in the residential segment. Investment volume saw a notable increase, with a 22% rise in the first half of 2025, according to data from CBRE.
However, to truly profit when you invest in real estate, it’s not enough to simply find a well-located or reasonably priced property. There’s one essential step that many investors overlook: thoroughly reviewing the legal and technical condition of the property before buying. This due diligence process helps uncover hidden risks and supports more confident decision-making. In this article, we’ll walk you through the key aspects and required documents to review before you buy a property for investment purposes.
Key legal aspects when you invest in real estate
One of the most important steps when you invest in real estate is making sure the transaction complies with all legal requirements. Any oversight at this stage can lead to hidden costs, legal disputes, or even prevent you from using the property as intended. This legal review applies to both individual homes and entire buildings, in cases where the investment targets larger assets or joint-return projects.
Property title
It’s essential to verify that the seller is the legal owner of the property. To do so, you’ll need to request a land registry extract (nota simple), which confirms that the property is properly registered and free of ownership disputes. This applies to both individual homes and entire buildings. In the case of buildings, it’s also important to ensure that all units—residential apartments, commercial spaces, and parking spots—are correctly registered and listed under the seller’s name.
Registered charges
It’s very important to check whether the property has any mortgages, liens, usufruct rights, or other encumbrances. These registered charges can be transferred to the buyer if not properly cleared before the sale is finalized. To identify them, an updated land registry extract (nota simple) should be reviewed. When purchasing an entire building, it’s also crucial to examine each individual unit, as they may carry different or specific charges.
Land use and urban planning regulations
Before you buy a property, it’s important to make sure it can be used for the intended purpose after purchase—whether residential, tourist, commercial, etc. Some areas have urban planning restrictions, short-term rental limitations, or specific usage conditions that could impact the profitability of the investment.
Licenses and certificates
You must verify all the required documents—both legal and technical—to ensure a successful outcome when you invest in real estate:
First Occupancy License
It certifies that the property meets the conditions to be inhabited or used according to its intended purpose.
Energy performance certificate (EPC)
Required in any property sale to indicate its energy consumption rating. It must be valid, as failure to present it can lead to fines or delays at the notary stage. if the property is renovated, a new certificate can be issued after works is completed, potentially improving the rating and increasing the property's value.
Habitability Certificate
If applicable, this document confirms that the property is legally fit for habitation according to current regulations.
Consistency between cadastral and land registry records
The information in the Land Registry, the Cadastral Register, and the physical state of the property should all match. If there are discrepancies, it's best to resolve them before signing the deed.
Outstanding debts with the homeowners association
It is advisable to request a debt certificate from the property manager confirming that the property is up to date with community fee payments and that no extraordinary charges have been approved.
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What should you review technically before you invest in real estate?
A thorough technical analysis is essential when you invest in real estate, as even properties that appear to be in good condition may hide issues that could affect their long-term value. These are the key points to evaluate:
Structural condition of the property
Inspect the structural integrity of the property, including the foundations, facade, floors, and roof. Structural defects—such as cracks or fissures—may require costly repairs and jeopardize the viability of the investment.
For individual homes, it is sufficient to identify any visible issues and, if in doubt, consult the Building Inspection Report (ITE). For entire buildings, a comprehensive technical inspection with professional support is necessary before finalizing the purchase.
Basic installations
Check the condition of plumbing, electrical, HVAC, and thermal-acoustic insulation systems. Outdated or faulty installations may require costly renovations that impact profitability.
For individual homes, it’s advisable to assess the overall condition, the age of the installations, and compliance with current regulations. In entire buildings, this review should extend to all units and common areas (stairs, meters, downspouts, service connections, boiler room, etc.), as upgrade costs can be significant and affect project viability.
Building inspection report (ITE)
When you invest in real estate located in an older building, it’s essential to verify whether the property has passed the Building Inspection Report (ITE) and if the report is current. This inspection is mandatory once the building reaches a certain age (approximately 45 years in most autonomous communities) and assesses its state of conservation, structural safety, habitability, and sanitation. It identifies structural or functional deficiencies and determines if rehabilitation works are needed to comply with regulations.
Although the ITE does not apply to individual units, if you buy a unit within an affected building, you can request the full report from the homeowners association. This way, you will know if there are pending deficiencies or extraordinary charges that could impact your investment. For entire buildings, the ITE is even more relevant, as it may involve immediate intervention obligations and affect both the budget and planning when you invest in real estate.
Energy efficiency
The energy performance certificate provides information about the property’s energy consumption and emission levels. A property with a low energy rating (F or G) may result in higher operating costs and less market appeal, while improving energy efficiency can increase its market value and attractiveness to tenants.
Feasibility of renovations
Before you buy a property, it is crucial to verify that the planned renovations are technically feasible and legally authorized according to local urban planning regulations. Unplanned or poorly executed renovations can increase the total investment cost. Consult with a technician or architect about the urban planning feasibility of the project and request a basic compatibility report from the local council if there are doubts. This phase also requires reviewing all the required documents to avoid legal or technical obstacles during the renovation process.
Conclusion
Due diligence is one of the key factors for success when you invest in real estate. Being meticulous in reviewing the legal and technical aspects of an asset is essential to avoid risks and ensure a solid and profitable investment.
At balize, we understand the importance and complexity of this process. That’s why all real estate investment opportunities available to our private investor club undergo comprehensive management by a specialized team, including a complete due diligence. This thorough analysis of the required documents guarantees that every investment has been carefully evaluated, offering our investors the confidence to make informed and secure decisions.
Discover our success stories and how we have achieved returns of over 20% in real estate investment in Barcelona and Madrid.
If you’re interested in exploring investment opportunities that have passed a rigorous review process and are located in the best areas of the Spanish real estate market, learn more here.
