Off-plan contracts in Spain have been one of the biggest causes of controversy in the recent history of the Spanish property market. Developers regularly included abusive clauses and imposed conditions on buyers that were impossible to fulfill. Thanks to pioneering work from legal firms like Costaluz Lawyers, the situation now is very different.
However, with the current boom in new construction and by extension, in off-plan contracts in Spain, it’s still imperative that buyers understand their contract and its conditions. In this article, we provide a little bit of background and include a link to a sample contract with all the clauses you can expect to find.
A Bit of History
You don’t have to go back very far in Spanish property history to find hundreds of stories of abusive contracts. The winners were always the developers and banks. And the losers, the buyers, particularly foreigners who had the addition obstacle of not understanding Spanish. This situation came about because the Law 57/68 controlled off-plan purchases by virtue of a non-negotiable law (also known as imperative law).
Real buyers with real problems
Watch and listen to a first-person account of how abusive clauses affected a foreign buyer of property in Spain and what he did about it to help future buyers.
Change in the Law
Fortunately for off-plan property buyers, the legislation for off-plan contracts in Spain has changed. Part of the modifications are due to work by Keith Rule and his fellow team at Costaluz Lawyers.
The new law places banks at the centre of the liability chain, making them directly responsible for the guarantee. And by extension, non-fulfilment by the developer of clauses in the contract.
Well over a decade after Keith Rule instigated the pioneering changes, hundreds of foreign property buyers are still awaiting court decisions on the liability of financial entities and insurance companies.
Read the Costaluz Lawyers story and how we have helped dozens of foreign buyers get their money back from developers’ banks.
Is It Safe to Buy Off Plan In Spain Now?
Law 20/2015 and related Case Law make buying off-plan in Spain very safe. However, as with all purchases of Spanish property, you should use the services of an expert, independent lawyer acting in your interests. Your lawyer will challenge the developer and not allow any abusive clauses or illegalities.
Are Developers’ Banks Including Abusive Clauses Again?
We have noticed some cases of abusive clauses. In contracts we’re currently reviewing, we’ve seen developers attempting to set the balance of contracts in their favour by including certain clauses. These include the terms for penalties for late completion, the differences between what is offered off plan and then actually built and guarantees.
An independent lawyer acting in your interests will ensure that your off-plan contract contains no clauses that tip the contract in the developer’s favour.
Read about what’s involved when you buy property in Spain.
What’s Wrong With Using The Lawyer Recommended By The Agent or The Developer?
Such a lawyer will not be acting in your interests alone. They cannot act independently and avoid conflict of interests because they receive business from the developer or agent. An expert independent lawyer, outside the developer’s area of influence is the best choice.
Should The Lawyer Be In The Same Region As The Development?
Not necessarily. In today’s world of remote working and carrying out procedures online, the entire process can be done at distance. In fact, we would say that being in different regions is an advantage because your lawyer is far from the agents, developers and banks making it easier to remain independent!
Is There a Template for Off-Plan Contracts In Spain?
Yes, in 2001, the Advisory Commission on abusive clauses in the housing sector agreed on a draft contract that fully complies with Consumers Protection Law.
We have translated the contract and you can download a copy (pdf) here.
Which entities formed part of the Advisory Committee?
The General Directorate of Registries and Notaries of the Ministry of Justice, the Council of Consumers and Users, the National Institute of Consumers and the Market Control Working Group of the Consumer Cooperation Commission and, as ad hoc members, the representatives appointed by the General Directorate of Housing, the Ministry of Development and, on behalf of the sector, by the Association of Building Developers of Spain.
What Should I Do Next If I Plan to Buy Off-Plan in Spain?
Contract the services of an independent lawyer before you do anything. This will save you time, money and stress as well as ensuring a legally protected purchase.
Get in touch to find out how the Costaluz Lawyers team can help you buy off plan in Spain with complete peace of mind.
Maria Luisa Castro
