Buying A Home In Spain – All Your Questions Answered

When it comes to buying property, every country does it differently. Spain is, of course, no exception and to those unfamiliar with the buying process, it may seem confusing and/or strange. To help you understand the process more clearly, we’ve put together a list of questions about buying a home in Spain with their answers.

If you can’t find the answer to your question here, get in touch with us. We’re only too happy to provide the answer!

Questions about buying off-plan property in Spain

Most property purchases in Spain are for resale homes, but you may be looking at buying an off-plan property. The actual purchase process is similar, but there are extra things you need to be aware of before you sign a contract (detailed below) plus information about possible defects in the finished property.

How do I know that the developer is solvent?

This isn’t easy to find out.

The Business Registry (Registro Mercantil) publishes information about the development company such the administrators, its business capital and if it’s up to date with its accounting obligations. This information is publicly available. However, the Registry does not tell you about a company’s solvency at any given moment.

To address this lack of information, Spanish law has a system of compulsory guarantees (such as bank guarantees or insurance) to ensure the protection of payments made for off-plan property in Spain.

The developer wants me to sign a contract if I’m really interested in buying the property. What does this mean?

Signing a contract for the purchase of an off-plan property in Spain gives you, the buyer, a guarantee that will help avoid the seller backing out or the property being sold to someone else. Once you hand over a sum of money, you have the right to buy the property.

Buying off-plan in Spain? Discover why you should choose Costaluz Lawyers to help you do it.

Must the developer give me a list of specifications for the property?

Yes, absolutely and the list of specifications (memoria de calidades in Spanish) is binding for the developer so that if the property does not finally include everything listed then you can claim.

What else should I get from the developer?

Under Spanish law, the developer must give the buyer the following information (and cannot charge you for it):

• Name, address and, if applicable, Business Registry number of the seller.
• Plans of the property – general situation, specific floor plans, description and plans for utility services and their guarantees as well as fire safety measures in the building.
• Description of the property with useable square meterage and of the building, communal areas and additional services.
• Information about the materials used in construction including thermal and acoustic insulation of both the property itself and the building (if an apartment block).
• Instructions for the use and maintenance of installations needing it and evacuation measures in case of emergency.
• Identification number for the property in the Property Registry if applicable.
• Total price for the property and how to make the payments.
• Copies of the permits legally required to build the property together with a certificate stating the plot’s status in planning regulations.
• Statutes and rules for the running of the community if applicable as well as information about contracts for services and utility supplies to the community. If the community is already up and running, the developer must provide a statement of its accounts and the property’s obligations to the community.
• Information about payments of all taxes applicable to the property or its use.
• Information about how the contract will be formulated with its general and specific conditions. It must clearly state the following: “the buyer will not be liable for those costs derived from property title that must legally be met by the seller”. It should also state that the buyer has the right to choose which Notary to sign at.
• If the property, building or any communal areas are not yet completed, the date of completion and the current phase of construction should be clearly stated.
• When it’s a property that has never been sold before, information about the architect (name and address) and developer (name and address) must be provided.

What about the price and paying for the off-plan property?

The developer must also provide a document detailing the following information about the off-plan property, how you will pay for it and the guarantees backing your payment.

• Total price of the property including agency fees (if applicable) and VAT.
• Payment form. If you are buying off plan in Spain in instalments, information should be provided about how much should be paid and on which dates.
• If you are taking on a mortgage already loaned on the property, the developer must provide information on the loan (Notary where the mortgage deeds were signed, the date and inscription number in the Property Registry). You must also receive information on how much the loan is and how it is paid back.
• The developer must also inform you in writing which entity is backing the construction guarantee if construction does not go ahead as set out in the contract. The name of the entity (bank or otherwise) must be provided.

The developer has given me a contract stating that the payments I make are guaranteed through a bank guarantee or insurance policy. Is this information sufficient?

No. The contract must state the name of the entity or insurance company. Note also that payments must be made into a specific bank account and we recommend that you pay them via direct bank transfer.

Buying property in Spain? Take professional legal advice to ensure you buy with complete peace of mind. Find out more on conveyancing.

I saw an advert for a property development, but when I went to see the office selling the development the project was not the same. What rights do I have?

You only have the right to claim against the developer if you have already signed a contract. In this case, you would be protected for changes unless the contracts allows for them. If you haven’t signed a contract, you have no rights to claim against changes in a project.

Should the off-plan property contract detail the payments I have to make before taking possession of the property?

Yes, under Spanish law it should. It must state the final price of the property, the dates and amounts of payment of instalments as well as how they will be verified. In addition, if interest is charged on overdue payment, the interest rate must be clearly stated.

Can the contract state that the final price may vary because of the increase in building materials?

No. The contract can only include price changes that have to do with unforeseeable circumstances. It is easy for the developer to factor in price increases for building materials so this is not regarded as an unforeseeable circumstance.

What are the disadvantages of taking on the developer’s mortgage?

Being obliged to take on the developer’s mortgage is considered an “abusive clause” if you don’t have the option to look at loans with other banks within a reasonable time period. It is “abusive” because if later on you decide to move the mortgage to another bank you will have to pay charges on the new loan as well as cancellation charges on the old one. It is not fair that consumers have to pay costs for a transaction they did not take part in.  

Must the developer provide information on construction progress and if necessary, any possible delays?

Yes, particularly when they lead to changes in the agreed conditions. If the changes affect substantial parts of the contract (such as price, building schedule, changes in the project, etc) you must give your express consent. If not, you have the right to demand the contract conditions are met in their entirety or if this is not possible, for the contract to be dissolved with compensation.

Do I have to sign the title deeds if the property has defects or is missing elements that are included in the contract?

If you find yourself in this situation, you should request that the developer corrects the faults. However, if you do sign the title deeds, you can still claim against the defects afterwards.

I signed a contract for an off-plan purchase two years ago and there’s still another year before completion, but the developer now says he cannot keep the price originally agreed. What do I do?

This situation usually arises because the developer has found another buyer prepared to pay a higher price. The developer benefits because even though he is obliged to return any payments (with interest) already made to you, the higher price makes it worthwhile. To avoid this situation, it’s a good idea to register the contract with the Property Registry to make the developer keep to the terms agreed.

Can I claim for delays in completion of my off-plan property?

Yes, but only if the delay is clearly the seller’s fault or it cannot be justified. You need to provide proof of inconvenience and financial burden. This includes payments for a rental property or furniture storage.

However, the best thing to do is include a clause in the contract that obliges the developer to pay a certain amount for a period of delay, e.g. weekly or monthly.

How can I claim against defects in my new property?

There are different timescales for claiming against defects in new builds:

1 year for defects in finishes.

3 years for building elements or fittings that affect living in the property.

10 years for structural defects.

You should inform the developer or builder as soon as possible of any defects before the legal time limit runs out. If you do not receive a reply or get any response, you may have to take the case to court.

Questions about buying resale property in Spain

What are the essential checks that must be carried out?

Before you commit to buying a resale property in Spain, your lawyer carries out a series of checks on the property. They include:

• Checks on who owns the property.
• Possible embargos or charges on the property.

Other checks include a certificate proving that the property is up to date in payments for community fees (if applicable) and local taxes (IBI in Spanish).

H3 What other documents do I need?

The owner of the property you want to buy also needs to provide an Energy Efficiency Certificate and a Certificate of Occupation (Cédula de Habitabilidad or Licencia de Ocupación in Spanish) proving that the property is legally fit to live in.

What about a “rental contract with an option to buy”?

This is a popular type of purchase contract in Spain giving the buyer the right to live in the property as a tenant (and paying rent) before buying it. If you’re thinking about this type of contract, bear in mind the following:

Premium – this is the price you pay for the right to have the option to buy and is basically payment for the right to use this option for a certain period of time. Before you sign, find out if the premium will be deducted from the final price. If you are not sure whether you will buy the property in the end, beware of paying a high premium because you may not get it back unless the contract states otherwise. The premium is subject to VAT (IVA).

Formalising the contract – if you are sure that you will eventually buy the property, it’s worth formalising the contract with a Notary. This allows you to register the contract at the Property Registry and guarantee your right to buy against third parties.

How can I claim against defects in the property?

You have six months after purchase to claim against unseen defects that make the property unfit for living in or reduce it to the point that if you had known about them before hand you would not have bought the property. They must be defects that you cannot see, known as “hidden defects”. You may be eligible to claim for compensation for them.

Can I claim for delays in buying the property?

Yes, but only if the delay is clearly the seller’s fault or it cannot be justified. You need to provide proof of inconvenience and financial burden. This includes payments for a rental property or furniture storage.

Maria Luisa Castro

Director and Founder

María founded CostaLuz Lawyers in 2006 and is the Firm’s Director. María is registered Lawyer number 2745 of the Cadiz Bar Association and is licensed to practice in all areas of law throughout Spain. Working closely with her team, María has developed the firm into one of the most highly regarded and trusted Spanish Law Firms acting for English-speaking clients with legal problems in Spain. We’re here to help. Contact us today for a free, no-obligation, initial legal orientation.