When you buy a new build on plan in Spain, the price is basically fixed. However, since this year, we occasionally see a price review clause in a purchase contract for new builds in Spain. How should you deal with this?
What is the usual situation?
When buying on plan in Spain the price is fixed. You buy the property at a fixed price plus the then applicable VAT rate. The promoter may not change the base price. There are a number of exceptions.
If you have a additional work requests, there may be an impact on the base price. Both buyer and promoter must agree on the additional works and their prices.
In addition, in case of a force majeure situation a building amendment be imposed. In that case, you will have the option to accept the price increase or call on your bank guarantee to recover the sums you have already paid.
Finally, the prices in general rise or the delivery times run out. Then the promoter should initially recommend equivalent alternatives to continue safeguarding the anticipated quality of the project. If alternative solutions (e.g. a different type of material) are not possible, you can again invoke the bank guarantee.
What is a price review clause in new builds in Spain?
A price review clause defines the circumstances and conditions under which the agreed price can be changed. In a recent case, we saw a clause whereby the price is increased by a percentage if the Spanish consumer price index increases by more than 3.5% year-on-year from the signing of the contract.
We try to remove such clauses in the first instance. If the promoter demands that the clause be retained, we should work out the clause as precisely as possible. That way, you do not sign a blank cheque.
In practice, we still see very few contracts with a price review clause. We suspect that because of high inflation, price increases and long delivery times, a few promoters are taking their precautionary measures. However, the majority of promoters raise their prices before new sales or temporarily do not offer certain projects and wait and see.