On the Costa Blanca, a large share of new homes is sold before it is built. You sign a contract, pay 20–40 % of the price during construction, and get the keys a year or two later. Most of the time it works. But during that period you have paid out substantial sums for something that does not yet exist, and the developer is often a company set up specifically for that one project.
Spanish law gives you concrete protection against this: every euro you pay in advance must be guaranteed by a bank or an insurance company. The problem is that many buyers never ask for the guarantee – and nobody reminds them.
What the law actually requires
The rule is in the First Additional Provision of Law 38/1999 on Building Regulation (LOE), as amended by Law 20/2015. Since 1 January 2016 it has replaced the old Law 57/1968. The developer (promotor) must:
- guarantee repayment of all amounts you pay in advance, including taxes, plus statutory interest, if construction is not started or is not completed within the agreed time;
- provide that guarantee through a surety insurance policy (seguro de caución) or a bank guarantee (aval);
- receive your money into a special account, separate from the company’s other funds, which may only be used for the construction.
The obligation applies from the moment the building licence (licencia de edificación) has been granted. That has a practical consequence: if a seller wants money before the licence exists, you are outside the area the law protects. In that case the amount should be small, clearly regulated in the contract, and preferably held by a third party.
The guarantee is individual – ask for your own certificate
It is not enough for the developer to say that “the project has a bank guarantee”. You should receive an individual guarantee certificate in your name, stating your amount, your unit and who the guarantor is. Ask for it in writing every time you make a further payment, not only for the first one. If the certificate is missing, do not continue paying until it appears.
Seven things to check before you sign
- Nota simple for the plot or property: who owns it and what charges are registered?
- The developer’s mortgage (hipoteca del promotor): will it be divided between units or cancelled at completion? The contract must say so.
- The building licence: granted, not merely applied for.
- The payment schedule: amounts, dates, and the number of the special account.
- A delivery date with a clear consequence for delay – not just an “estimated” one.
- Memoria de calidades, the specification of materials, attached to the contract.
- Licencia de primera ocupación and the certificate of completion as conditions for handover. Without them you may struggle with utilities and with renting the property out.
To this you should add the ten-year structural damage insurance (Article 19 LOE), which is compulsory for new residential buildings and whose documentation you should see at completion.
What does a new-build cost? A €200,000 example
New-build homes are taxed with VAT (IVA) at 10 % plus stamp duty (AJD) – not with transfer tax ITP, which applies to resale property. In the Valencian Community, AJD was reduced from 1.5 % to 1.4 % on 1 June 2026 by Law 5/2025.
- VAT at 10 %: €20,000
- AJD at 1.4 %: €2,800
- Notary, Land Registry and legal fees: approximately €2,500–3,500
So you are looking at roughly €225,300–226,300 in total, plus any mortgage costs. You can run the figures for your own property with our purchase cost calculator.
If the property is not delivered on time
If construction is not finished within the agreed period, you may choose: terminate the contract and claim back everything you have paid plus statutory interest, or grant the developer a new deadline. The claim is directed at the guarantor – the bank or the insurer – which means you do not have to wait for the developer to become solvent.
The Spanish Supreme Court (Tribunal Supremo) has also held, in settled case law since 2015, that a bank which accepted buyers’ advance payments without requiring the special account and the guarantee to be in place may itself be liable for those amounts. In many cases this makes recovery possible even where the developer has gone into insolvency. These claims are subject to time limits, so do not delay in taking legal advice.
Our advice
Never sign an off-plan contract without having it reviewed independently first – that is, not by the seller’s or the agent’s lawyer. Keep every receipt, every guarantee certificate and all correspondence about the delivery date. That documentation is what decides the outcome if the project runs late.
Contact us
If you have signed an off-plan contract and are not sure whether your advance payments are actually guaranteed, send us the contract and we will go through it with you.
Kontakta oss / Contact us / Contáctenos:
Email: [email protected]
Phone: +34 629 549 430
Web: www.colas-abogados.com
Hugo Gutiérrez Colás – Lawyer no. 6.539 ICALI – Colás Abogados / Advokater, Alfaz del Pi (Alicante).