Buying off-plan

What buying off-plan means

Buying off-plan (sobre plano, literally ’on plan’) means agreeing to buy a home from a promotor (developer) before it is built or while it is under construction, and paying part of the price before you receive it. The developer is the person or company that decides on, plans and finances the building works; it must hold the right to build on the plot and obtain the licences (LOE, article 9). The purchase is completed by signing the escritura (the public deed of sale) and receiving the keys once the building is finished. In the Balearics a copy of the habitability certificate or occupation licence must be attached to the sale; a sale without one is possible only if the contract or deed says so expressly (Law 5/2018, article 16).

The risks differ from a resale purchase because the home does not exist yet. The developer could fail or run out of money, the works could be late or never finished, the finished home could differ from what was promised, or it could lack the documents needed to occupy it. Spanish law has specific rules for each of these, set out below in the order a buyer meets them.

Promotor

The developer: whoever decides on, plans and finances the building works, whether to keep or to sell what is built.

Licencia de obras

The building licence granted by the town hall (ajuntament) for the project.

Memoria de calidades

The written specification of the materials, fittings and finishes promised for the home.

Cuenta especial

The special bank account, kept apart from the developer’s other money, into which buyers’ advance payments must be made.

Aval bancario / seguro de caución

A bank guarantee or a surety insurance policy that repays your advance payments if the home is not built or delivered on time.

Licencia de primera ocupación

The town hall’s first-occupation licence, confirming that the finished building matches its licence.

Cédula de habitabilidad

The habitability certificate. In Mallorca it is issued by the Consell de Mallorca (the island council). For a new home, since 29 May 2024 the town hall’s occupancy licence takes its place until a renewal cédula is due ten years later.

How the law protects your stage payments

The protection is in the first additional provision (disposición adicional primera) of the Ley de Ordenación de la Edificación (LOE, Law 38/1999 on building). Law 20/2015 rewrote it with effect from 1 January 2016 and repealed the old Law 57/1968 on advance payments for homes. It applies to anyone who develops any kind of home, including through a community of owners or a cooperative, and wants buyers to pay money towards its construction.

• From the moment the building licence is granted, the developer must guarantee the return of the money you hand over, through a seguro de caución (surety insurance) from an insurer authorised in Spain or an aval solidario (joint bank guarantee) from an authorised bank.
• The guarantee covers what you pay including the taxes on it, such as IVA, plus the interés legal del dinero (Spain’s official statutory interest rate).
• It applies if building does not start, or does not reach a successful end, within the period agreed for delivering the home.
• Your payments must go through a cuenta especial (special account) at a bank, separate from the developer’s other funds and usable only for building the homes. The bank must require the guarantee, under its own responsibility, before opening that account.
• When you sign the purchase contract, the developer must give you a document proving the guarantee, made out individually for the amounts you will pay in advance.

Advertising for homes sold with payments before or during construction must say that the developer complies with these rules and name both the guarantor and the bank holding the special account. Failing to provide the guarantee is a consumer-law offence, with fines of up to 25% of the amounts that should have been guaranteed, or as regional law sets.

Checking the developer and the building licence

The checks below concern who the developer is, whether it has the right to build on the plot and whether the building has a valid licence. In the Balearic Islands the information a developer must give buyers of new homes is set mainly by the Balearic consumer law (Law 7/2014, article 28), because consumer protection is a regional power. The national rules (Real Decreto, or royal decree, 515/1989) apply here only where regional law is silent, except its articles 3.2 and 10, which apply everywhere in Spain. Choosing a lawyer explains who carries out these checks.

1. 1

   Identify the developer

   Balearic law requires the seller to give its name or company name and registered office, and details that allow direct contact with the developer, the builder and the project architect. An extract from the Registro Mercantil (companies register) shows the company’s capital, its directors and attorneys, and which annual accounts it has filed.

2. 2

   Check the plot at the Land Registry

   A nota simple (registry extract) shows the registered owner and charges, such as a mortgage taken out by the developer to finance construction. The registrars’ online service charges €9.02 per property plus taxes, and an English translation can be ordered for €30 plus taxes (October 2026). The developer must also say whether the deeds declaring the new building and dividing it into separate units have been signed yet (Law 7/2014, article 28).

3. 3

   Check the building licence

   The developer must supply a copy of the licencia de obras and of the other authorisations needed for occupation, and must say expressly if any of them is missing (Law 7/2014, article 28). Your lawyer can confirm with the town hall’s planning department that the licence is valid and covers the project you are buying.

4. 4

   Note the licence deadlines

   Under the Balearic planning law (Law 12/2017, article 154) every building licence sets a time to start and to finish the works. If the local plan is silent, the defaults are six months to start and three years to finish. A justified request made in time extends each period by half, and a second, final extension of the finishing period is possible once the works are well advanced. If the works are not started or finished in time, the licence lapses: the town hall declares this after hearing the licence holder, and the works cannot continue without a new licence.

5. 5

   Look at the site

   The site must show a sign with the licence details and the developer’s identity for as long as the works last (Law 12/2017, article 157).

6. 6

   Check the guarantee provider

   The developer must name the insurer or bank giving the guarantee and the bank holding the special account (Law 7/2014, article 28, and the LOE). Ask for confirmation that the guarantee will be individual to your home and cover every payment.

If the developer has already recorded a declaración de obra nueva en construcción (declaration of a building under construction) at the Land Registry, the notary will have required the licence and a certificate from a qualified technician (técnico competente) that the description matches the licensed project (national Land Law, Real Decreto Legislativo 7/2015, article 28). Surveys and checks covers the registry and cadastre checks in more detail.

The purchase contract

With an off-plan purchase you sign a private purchase contract long before the deed, sometimes after a reservation document. The buying process explains reservation agreements and arras (deposit contracts). When advance payments are agreed, the LOE requires the contract to state three things expressly:

• That the developer will return what you paid, with taxes and legal interest, if building does not start or finish within the agreed periods, or if the cédula de habitabilidad, first-occupation licence or equivalent document is not obtained.
• The insurance policy or bank guarantee, naming the insurer or bank.
• The bank and the account into which you must make the advance payments.

Balearic consumer law adds that when you sign, the developer must hand you its contractual offer with all the information listed in article 28 of Law 7/2014, and that offer becomes part of the contract (article 21.3). Besides the developer, licence and guarantee details above, that information includes:

• The delivery date of the home and of the common areas.
• Plans of the building and the home, its main orientation, the usable floor area (superficie útil), the materials and installations, thermal and sound insulation, energy-saving measures and any furniture included.
• The total price including IVA and any estate agent’s fees, minus amounts already paid on account, and the form of payment.
• Any penalty clauses for late delivery by the developer or late payment by the buyer.
• A statement that you do not pay title costs that legally fall on the seller, your right to choose the notary and gestor (administrative agent) where you pay those costs, and your freedom to decide whether to take over any loan you did not arrange.
• The community of owners’ rules, if already drawn up, and any limits on how the home may be used.

Under article 89 of the national consumer law (Real Decreto Legislativo 1/2007), these clauses are always treated as unfair, and so are void, when a business sells a home to a consumer:

• Making you pay the developer’s costs of preparing the title: the new-building declaration (obra nueva), the division into separate units (propiedad horizontal), and the mortgages financing construction or their division and cancellation.
• Forcing you to take over the developer’s mortgage, or penalising you if you do not.
• Making you pay taxes for which the developer is the legal taxpayer.
• Making you pay to connect the home to the general utility supplies when it must be handed over ready to live in.
• Making you give up your right to choose the notary (article 89.8).

Changes during construction are also regulated. If the developer wants to change the works for reasons it could not reasonably foresee and that would change the agreed price, RD 515/1989 (article 10) requires it to tell buyers first, and buyers must agree to the exact price change.

Payment stages, IVA and stamp duty

The contract sets how much you pay and when. There is no legal standard for the stages or percentages. The guarantee document you receive at signing must refer individually to the amounts to be paid in advance (LOE additional provision 1, section Tres), so each payment in the schedule can be checked against it. In outline:

1. 1

   Reservation

   A payment to take the home off the market. Ask whether it is refundable and whether the guarantee covers it.

2. 2

   Private contract

   You sign and receive your individual guarantee document. The first main payment goes into the special account.

3. 3

   Stage payments

   Further payments on the dates or milestones in the contract, each into the special account and each with an IVA invoice from the developer.

4. 4

   Deed

   You pay the balance when you sign the escritura before a notary. A mortgage to finance the purchase is also signed as a deed before a notary; see mortgages for non-residents.

5. 5

   Stamp duty

   You file and pay AJD on form modelo 600 to the ATIB (Agència Tributària de les Illes Balears, the Balearic tax agency) within one month of signing the deed.

A new home bought from the developer pays IVA (Impuesto sobre el Valor Añadido, Spanish VAT), not the transfer tax (ITP) that applies to resale homes. Homes, together with up to two garage spaces and annexes in the same building sold with them, pay the reduced rate of 10% (VAT Law 37/1992, article 91). IVA falls due on each advance payment when it is received (article 75), so every stage payment carries IVA. At the deed you also pay AJD (Actos Jurídicos Documentados, stamp duty on notarial deeds) at the Balearic rate. The buyer is the taxpayer (national ITPAJD law, article 29), and the tax is charged on the value declared in the deed, which cannot be lower than the Catastro’s reference value (valor de referencia) where one exists (article 30.1).

The AJD on your mortgage deed is paid by the lender, under a national change made by Real Decreto-ley 17/2018 in November 2018. Notary, Land Registry, lawyer and other costs are covered in buying costs and taxes.

Delays, changes and cancelling the purchase

If building has not started or the home has not been delivered by the agreed date, the LOE gives you a choice. You can cancel the contract (rescisión) and get back what you paid, including taxes, plus legal interest. Or you can give the developer an extension (prórroga), which must be recorded in an addendum to the contract stating the new date for finishing and delivering the home.

1. 1

   Check the dates

   Compare the delivery date in the contract, and any extension you agreed in writing, with the state of the works and the licence.

2. 2

   Legal assessment

   A lawyer can say whether the conditions for cancelling are met and how the choice affects the guarantee.

3. 3

   Send a formal demand

   Demand repayment from the developer in a way that can be proved, such as a burofax (a Spanish postal service that can certify a letter’s content and delivery) or a demand made through a notary.

4. 4

   Claim on the guarantee

   If the developer has not repaid within 30 days, claim from the insurer or bank named in your guarantee. You can claim from them directly if it is not possible to claim from the developer first.

5. 5

   Payment by the insurer

   An insurer must pay within 30 days of your claim. Once it has paid, the developer cannot sell the home until it has repaid the insurer.

If a claim has to go to the Spanish civil courts, a lawsuit is generally not admitted unless the parties first tried an out-of-court route, such as direct negotiation between them or their lawyers, mediation, conciliation or a binding confidential offer. This requirement has applied since 3 April 2025 (Organic Law 1/2025, article 5).

Delays can also come from the licence side. Licence deadlines can be extended (Law 12/2017, article 154), but that does not change the delivery date in your contract. Changes to the licensed project need the town hall’s approval. If a change alters the number of homes, the land use, the height, the volume, the position of the building or the maximum site coverage, the works must stop while it is processed (article 156).

Completion: licences, handover and snagging

Before handing over the home, the developer has to finish the building and obtain the documents that allow people to live in it. Under the Balearic planning law (Law 12/2017, article 158) a building can only be occupied with a valid cédula de habitabilidad or licence of first occupation, and utility companies cannot sign permanent water, electricity, gas or telecoms contracts without one. The Balearic Housing Law (Law 5/2018, article 16) requires a copy to be included in any sale or, if there is none, the contract or deed must say so expressly.

1. 1

   Completion certificate

   The director of works and the director of execution of the works sign the certificado final de obra (end-of-works certificate). It is attached to the record in which the developer formally accepts the finished works from the builder (LOE, article 6).

2. 2

   First-occupation licence

   The town hall checks the works against the licence and issues the licencia de ocupación o primera utilización. It must notify its decision within one month of a complete application (Law 12/2017, article 158).

3. 3

   Occupancy licence, not a first cédula

   Since 29 May 2024 a new home in the Balearic Islands no longer receives a first-occupation cédula: the town hall’s occupancy licence also confirms that it is fit to live in, and a renewal cédula from the Consell de Mallorca is needed ten years after the licence (Law 7/2024, article 53). See surveys and checks.

4. 4

   Registering the finished building

   The developer records the completed building (obra nueva terminada) at the Land Registry. That needs the completion certificate, proof of the occupation authorisations and energy-efficiency requirements (Land Law, article 28) and proof of the ten-year building insurance (LOE, article 20).

5. 5

   Snagging visit

   An inspection of the home before signing, by the buyer or a building surveyor (arquitecto técnico) the buyer hires, with any defects listed in writing for the developer to put right.

6. 6

   Deed and keys

   You sign the escritura, pay the balance and receive the keys. Balearic consumer law requires the seller of a new home to hand over signed plans of the home and its installations, a list of materials, the first-occupation licence, the installers’ certificates for electricity, gas and water, a use and maintenance manual and the guarantees for built-in appliances (Law 7/2014, article 21). The Libro del Edificio (building file, with the final project and approved changes, the record of acceptance of the works, the people involved and use and maintenance instructions) must also be handed over (LOE, article 7).

7. 7

   After signing

   The AJD is due within one month, the deed is registered at the Land Registry, and utilities and community fees are moved into the buyer’s name. The buying process covers these steps.

Building warranties after you move in

Article 17 of the LOE makes everyone who took part in the building liable to owners, including later buyers, for material damage caused by defects within set periods. The periods run from the recepción de la obra (the formal acceptance of the finished works by the developer from the builder), without reservations or from when any reservations were resolved. That date can be earlier than your own handover, so part of each period may already have passed when you get the keys.

In every case the developer is jointly liable with the other agents to buyers for damage caused by construction defects, so you can claim against the developer as well (article 17.3). A claim must be brought within two years of the damage occurring (article 18). These rules apply alongside your contractual rights against the developer as seller.

For buildings used mainly as homes, the developer must take out ten-year insurance or an equivalent guarantee (seguro decenal) against structural damage, for at least 100% of the cost of the works (articles 19 and 20 and additional provision 2). For homes, only this ten-year cover is compulsory: the one-year and three-year guarantees in article 19 become compulsory only if a royal decree requires them. The one-year and three-year liability periods in the table still apply; what is not compulsory is insurance behind them. The Land Registry will not register the new building without proof of the ten-year cover.

Questions to ask before you sign

• Who exactly is the developer, and what does the company extract show?
• Has the building licence been granted, and what are its start and finish deadlines?
• Which insurer or bank provides the guarantee, and will I receive an individual document covering every payment, including the reservation?
• Which special account do I pay into, and is it named in the contract?
• What is the delivery date, and what happens if it is missed?
• Are the plans, floor area and specification of materials attached to the contract?
• Is IVA shown separately, and which costs at the deed fall on me?
• Is there a developer’s mortgage on the plot, and how will it be cancelled or divided at completion?
• Can the home be used the way I intend, for example for letting?
• If I buy through a company or buy several units, do the same protections apply to me?

Questions buyers ask