Is your deposit for a Spanish new build safe without the Breyne Act? No. Because in Spain you only become owner upon completion (and not during construction as in Belgium), a bank guarantee in Spain is your only legal safety net. Without this document, if the promoter goes bankrupt, you will lose your money.
Buying a property on plan (off-plan) in Spain differs fundamentally from the procedure in Belgium or the Netherlands. Whereas in Belgium, you can go through the Breyne Law and the right of accession become direct owners of the land and structures, this is not the case in Spain. You finance the construction for 30% to 60%, but legally own nothing until the key transfer. This makes the bank guarantee in Spain (Aval Bancario) not an option, but an absolute necessity.
Listen to our podcast episode on the steps of buying new construction in Spain. Or read about the Different steps of a purchase of new construction in Spain.
What exactly does a bank guarantee in Spain mean?
A bank guarantee is an insurance product or financial deposit that guarantees that you will get your advances back if the property developer does not fulfil its obligations. Spanish law (Ley de Ordenación de la Edificación) requires promoters to take out this guarantee for residential projects, whether it is your main residence or holiday home.
The guarantee includes two crucial safety mechanisms:
-
Coverage of payments: The insurer or bank guarantees repayment of all your deposited amounts, plus statutory interest.
-
The 'Special Account' (Cuenta Especial): The promoter must open a segregated bank account that is solely for the construction of the project. The bank is jointly and severally liable to check that funds in this account are properly spent.
Expert Insight: "Please note that a bank guarantee is a financial guarantee, not a completion guarantee. It ensures you get your money back in case of problems, but it does not force the contractor to lay the tiles straight or improve the construction quality."
Why is the bank guarantee often missing in practice?
Despite the legal obligation, we see, especially at the Costa Blanca and Murcia, that promoters often do not offer a bank guarantee. The reasons are mostly economic:
-
Cost: A bank guarantee costs money, which reduces the promoter's margin.
-
Solvency: The bank does not consider the promoter capital strong enough to bear the risk.
-
Licences: The project is at too early a stage and planning permission is still pending.
Arguments such as "we are a family business" or "we have been doing this for years" have no legal value. Without a warranty, you run the full risk.
If you are considering buying a flat or villa in Spain on plan, Confianz can help you with the legal screening of the construction promoter and requesting a bank guarantee.
Read more tips on buying on plan in Spain.
No bank guarantee? These are 3 safe alternatives
If the promoter is unable or unwilling to provide a bank guarantee, Confianz recommends that no direct payments to do. Use one of the following strategies to protect your assets:
1. Deferred payment (Extended reservation)
You pay nothing until the promoter can present the building permit as well as the bank guarantee, or even only upon formal completion.
-
Advantage: No financial risk.
2. The lawyers' third-party account
You deposit the funds into our third-party account. A contract is drawn up stating that the money will be released only if the promoter provides certain supporting documents (such as the bank guarantee).
-
Advantage: You have a binding purchase agreement and your money is safely parked.
3. The notarial trust account
You deposit the funds in a notary's trust account, recorded in a notarial deed of deposit. This contains strict conditions for release.
-
Advantage: Maximum security for both parties.
-
Disadvantage: The notary will charge for this (ideally borne by the promoter).
Read more about the alternatives of a bank guarantee here.
When can I cancel the purchase and request a refund?
You can rescind the purchase agreement and call in your bank guarantee if there is a legally valid reason. Personal reasons (such as divorce or "no longer feel like it") give no right on repayment.
Valid reasons for invoking the warranty are:
-
Bankruptcy of the promoter.
-
Non-starter of the works.
-
Late delivery: The law talks about exceeding the contractual date. In practice, you should expect a "reasonable delay" of 6 to 12 months before a court will allow dissolution.
Roadmap: How does reimbursement work in practice?
Recovering your money is rarely automatic. The process usually involves four stages:
-
Negotiation: Your lawyer will start discussions with the promoter about repayment of principal, interest and possible damages.
-
Settlement (Settlement): A settlement agreement is concluded in which the sale is officially terminated and payment terms are fixed.
-
Claim to Bank/Insurer: If the promoter does not pay, you appeal directly to the financial institution that issued the guarantee. You need to not waiting for the promoter to go bankrupt.
-
Disbursement: The bank or insurer disburses the funds to you (or through the promoter), after which the property is released for sale to third parties.
Here you can read more about the procedure to recover your money in new construction.
Note: The bank guarantee will not expire until the property is formally delivered by the architect and the Licencia de Primera Ocupación (residential licence) has been obtained.
Frequently asked questions (FAQ)
Is a bank guarantee required for a second stay in Spain? Yes, Spanish legislation makes no distinction. For any new construction project with a residential purpose (main residence, holiday home or rental), the promoter is obliged to take out a bank guarantee or insurance for the advances received.
What if the promoter refuses to provide a bank guarantee? If the promoter refuses, this is a "dealbreaker". Don't pay. Suggest working through a notarised third-party account. Does the promoter also refuse this? Then the risk of insolvency is too high and we advise abandoning the purchase.
Will I also get my paid interest back through the bank guarantee? Yes, legally, the bank guarantee covers not only the principal amount (advances) paid by you, but also the legal interest on that amount from the time of payment until repayment.
Can I sue the bank if I don't have a physical guarantee certificate? In certain cases, yes. If you can prove that you deposited money in the promoter's 'Special Account' (Cuenta Especial), the receiving bank is jointly and severally liable, even if the promoter failed to give you the physical certificate. This does require legal representation.
About the author: Glenn Janssens is a lawyer specialising in Spanish real estate transactions and tax regulations. Since 2017, he has been helping Belgian and Dutch individuals and entrepreneurs to safely purchase and structure real estate in Spain. He guides files from A to Z: from due diligence, ownership and tax control to estate planning and optimisation for residents and non-residents. Thanks to his years of experience, hundreds of handled files and focus on transparent communication, Glenn makes complex Spanish legislation understandable and practically applicable for every property buyer.
The video below is a summary of this blog created using artificial intelligence.
Update: December 2025
