How to get money back on an Illegal Off-plan Property in Spain

  • Are you one of the many foreigners who bought off-plan and have since discovered that the property is illegal?
  • Are you trapped in a cycle of regular mortgages payments on a home you cannot sell because it was built illegally?
  • Have you in the past made mortgage payments on an off-plan property that was illegal?

If these scenarios sound familiar, read on to find out how you can get money back on your illegal property in Spain.

What’s the background to illegal property in Spain?

During the last property market boom in Spain, tens of thousands of off-plan homes were bought by foreigners, many of whom used a mortgage to finance the purchase. As has been well documented, a sizeable proportion of these properties turned out to be illegal. 

Some developers didn’t have the correct planning permission or have a licence to build at all. Others carried out construction on land where building wasn’t permitted or exceeded the legal limit. In short, problems with illegal off-plan properties are Spain are myriad and affect thousands of people. 
The issues are compounded still further when mortgages are involved. Homeowners find themselves bound to a mortgage and its monthly payments for a property that is illegal and therefore cannot be sold to pay off the mortgage debt.

However, a Supreme Court ruling in 2016 has opened up the possibility for owners of illegal off-plan properties to claim money back. You have the opportunity to claim for all amounts paid before completion and mortgage payments made since. 

Read more about solving problems of mortgage debt in Spain

What does the Supreme Court sentence say?

In 2016, the Spanish Supreme Court ruled that the scope of law 57/68 could include cases in which the developer hid the illegal status of the development to the buyer.

This means that if you bought an off-plan property in good faith but then discovered that the paperwork is worthless because it was built illegally, you can now claim money back.

To find out how much you’re entitled to get back on your illegal property bought off-plan, get in touch with us now.

What money back on an illegal off-plan property in Spain can I claim?

According to the Court ruling, you have several options:

Payments made before completion – off-plan purchases typically include stage payments throughout construction, which can total up to 60% of the total price or a one-off deposit. Owners of illegal off-plan properties are entitled to claim back all the money they paid to the developer before completion. 

Payments made after completion – your grounds for money back will depend on the particular circumstances of your purchase. For example, if you took on the developer’s mortgage when you bought, you’re entitled to money back on mortgage payments made since the purchase. Or if your decision-making process was affected by third-party actions then you could be able to get a refund.

If I completed on the illegal off-plan property, am I still entitled to a refund on all the payments I made before completion?

Yes, you are. Contact us for a free consultation on how much refund you could get.

What about my mortgage payments since I completed? Can I get a refund for those too?

Yes, you may be able to claim these back if your circumstances meet the requirements described as follows. If you took on the developer’s mortgage when you completed (a process known as subrogation in Spain and meaning you bought the property and mortgage in the same package), you may be entitled to a refund on mortgage payments.

If you took out a mortgage from an alternative source and a third party such as a bank, lawyer or notary, for example, was involved in the decision-making process, you may also be able to claim a refund on amounts paid.

What about interest on mortgage payments?

Under Spanish law, your claims also include the interest due on them at the legally established rate. Interest must be paid since the date you made the payments to the developer and bank.

Do I need to go to court to claim this?

Claims for money back on an illegal property in Spain are relatively new so there isn’t much precedent. To date, Costaluz Lawyers is unaware of any claims settled out of court, which means that you will probably have to start legal proceedings to get your money back.

However, don’t let this put you off because we are experts in defending our clients’ interests when it comes to property malpractice. Since 2011, we have helped dozens of clients get money back from Spanish banks.

Do I have to start legal action with a specific time frame?

No, claiming for down payments made for completion on illegal properties and mortgage payments made afterwards have no time limit. You can start legal proceedings at any point regardless of how long ago you purchased.

What do I do next?

Contact us for a free appraisal of your case and information about our conditions.

Contact Us

    Scroll to Top