Buying a house on plan in Spain (compra sobre plano) means you are investing in a property that is yet to be built. While this offers financial benefits, it carries risks, such as promoter bankruptcies or delays. The golden rule for security is the presence of a bank guarantee (aval bancario) and a valid building permit. Without these two elements, you risk losing your advances.
This article covers the five essential legal checks and due diligence steps you should take as a buyer to protect your investment in Spanish new-build properties.
Read more about the buying process in new construction.
1. What is the developer's financial reputation and track record?
Do thorough due diligence on the developer's solvency and previous projects before signing. A nice sales office does not guarantee delivery.
In the Spanish property market, it is crucial not to blindly rely on marketing material. During the initial interview, ask specifically about:
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History: Which projects have been successfully delivered in the last 5 years?
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Partners: Which contractors and banks are being partnered with?
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Ownership structure: Does the developer own the land, or is there only an option to buy?
"A bank guarantee is essential to recover your payments to the construction promoter. - Expert Tip from practice.
2. Does the project have the final building permit (Licencia de Obra)?
Never sign a private purchase contract or pay large down payments if the Licencia de Obra (building permit) has not yet been issued by the municipality.
The developer is legally obliged to show this permit. A verbal assurance that the permit is "on its way" is insufficient. Confianz checks with the city planning department (Urbanismo) of the municipality to check whether the plans conform to the urban planning regulations.
Check specifically for:
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Construction zone: Is the plot located in urban area (urbano) and not in protected agricultural areas (rústico)?
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Future developments: Are there other construction projects planned that may affect your view or the value of the property?
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Cadastral match: Does the proposed project match the registration in the Catastro? Ask the Certificación Catastral and the Plan Parcial on.
3. Are your payments secured by a legal Bank Guarantee?
The legislation (Ley 57/68 and subsequent amendments) requires developers to guarantee advances from buyers through a bank guarantee (Aval Bancario) or an insurance policy.
This is your main safety net. If the developer goes bankrupt or fails to deliver the property (on time), the bank guarantees that you will get your money back.
The financial checklist:
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Ownership of land: Ask the Escritura de Compra on to prove ownership by the developer.
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Charges and debts: Check via a Note Simple in the Registro de la Propiedad (Property Register) whether there are any attachments or mortgages on the land.
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Taxes: Does the developer have the IBI (Impuesto sobre Bienes Inmuebles) paid? Tax debts can pass to the buyer.
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Ten-year liability: Is the contractor insured through the Seguro Decenal? This covers structural defects for 10 years.
- Bank guarantee and special bank account: Get the bank guarantee documents from the promoter. Read more about the bank guarantee in Spain.
4. Which clauses are indispensable in the Contract of Sale (Contrato Privado)?
A balanced sales contract includes a fixed completion date, clear payment schedules and a detailed technical description (Memoria de Calidades).
Be wary of one-sided contracts that only serve the promoter's interests. Make sure the following elements are explicitly included:
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Technical specifications: Add the Memoria de Calidades and the building plans as an appendix. This avoids discussions about materials used (e.g. marble vs ceramic).
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Common costs: Ask for an estimate of future Comunidad costs.
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Suspensive conditions: Be careful with 'special conditions'.
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Example: We see clauses passing where facilities (such as a swimming pool) are built only if 80% of the flats are sold. Do not accept this.
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Promotions: Are free appliances or furniture promised? Put this in black and white in the compromise.
5. Are all certificates present at handover (Escritura)?
The transfer at the notary can only take place once the Licencia de Primera Ocupación (LPO) and the Certificado Final de Obra (CFO) are present.
Without the LPO (licence of first occupation), you cannot legally live in the property, you cannot take out contracts for water and electricity, and you cannot rent out the property as a holiday home.
Essential documents on delivery:
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Certificado Final de Obra: The architect confirms that the building is ready.
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Licencia de Primera Ocupación: The council confirms that the house meets building standards and is safe. Read more about the certificate Cedula de Habitabilidad.
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Declaración de Obra Nueva: The declaration of new construction must be registered.
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Guarantees:
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1 year: Finishing errors.
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3 years: Defects affecting liveability.
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10 years: Structural defects (Seguro Decenal).
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Frequently asked questions about buying a new property in Spain (FAQ)
Is a bank guarantee mandatory for new builds in Spain? Yes, under Spanish law, a property developer is obliged to insure all down payments made by a buyer via a bank guarantee (aval bancario) or insurance. This protects your money in case of bankruptcy or non-delivery.
What is the difference between Licencia de Obra and Licencia de Primera Ocupación? The Licencia de Obra is the planning permission required to carry out the works. start. The Licencia de Primera Ocupación (LPO) is the permit issued by the municipality after the works, to confirm that construction has taken place according to the plans and that the property is habitable.
Can I sell my newly built property before it is finished? Yes, this is called "selling contract rights" (cesión de derechos). However, the developer often has to give permission for this and there may be tax implications. Read more about visible and hidden defects.
What if the completion of my Spanish property is delayed? If there is a clear completion date and penalty clause in your contract, you are entitled to the rescission of the contract with repayment of your deposits (covered by the bank guarantee).
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.
