Buying off-plan property in Spain – investing in a home that hasn’t been built yet – can be an exciting opportunity, offering sometimes lower prices, modern designs, and the chance to tailor your future home. For many expats and investors, it is a strategic move with the potential for strong returns and a foothold in one of Europe’s most desirable real estate markets.
But with opportunity comes risk. From construction delays to legal complexities, buying off-plan in Spain requires a clear understanding of the process and due diligence at every stage.
In this guide we will walk you through the step-by-step process of buying off-plan property in Spain, highlighting the legal and practical considerations unique to international buyers. This article will help you make informed decisions as you build your new life abroad.
Under Spanish law any property developer must provide a bank guarantee in relation to any payment received towards the price of the property. This means that if for whatever reason the property developer fails to conclude the project on time, or if the development is left unfinished, the property developer must refund the monies received and, if that is not possible (for instance, the company went bust), the bank guarantees a full refund to the buyer.
It is worth noting that although there were laws in place with effect from 1968 (Ley 57/68) requesting any property developer in Spain to provide bank guarantees, this was systematically ignored over the years. To ensure that the buyers of off-plan property are fully protected, the Ley 57/68 has been replaced by Ley 20/2015 de Ordenación, Supervisión y Solvencia de las Entidades Aseguradoras y Reaseguradoras of 14 July 2015.
The new Law sets out the following obligations for any property developer in Spain:
- To secure under a bank guarantee the refund of the amounts paid plus the legal interest on those amounts if the property is never built or delivered on time.
- To pay the amounts received into a special bank account opened with a bank or building society. This account must be a separate account from the developer’s other bank accounts. The funds in this special account must be exclusively used for expenses related to the development.
- To reflect the obligations 1) and 2) above in the purchase contract. The purchase contract should also state that there is a bank guarantee or insurance policy in place and the name of the bank or building society holding the amounts received towards the price.
- To provide the buyers with the documentation confirming the bank guarantee together with the purchase contract.
If you are purchasing off-plan property in Spain, you should ensure that the property developer complies with the obligations listed above and that any payment that you make towards the property is therefore fully guaranteed. Ensuring that the above obligations are complied with forms part of the due diligence checks we provide.
From initial reservation to completion, our team of lawyers will provide dedicated support to ensure your peace of mind when buying off-plan property in Spain. With our expert guidance, you can confidently navigate complex legal procedures, carry out essential due diligence on developers and projects, avoid common risks, and secure your future home in Spain with clarity and confidence.
For further information on buying off plan property, please contact us on (+34) 951 552 254 or complete an online enquiry form, and a member of the team will be in touch.