What Should I Check Before Reserving an Off-Plan Property?
Before reserving, check the developer track record, building licence status, payment schedule, bank guarantee structure, specification documents and the reservation contract terms.
- 1Instruct a lawyer BEFORE paying the reservation not after
- 2Verify the developer has a building licence
- 3Review the payment schedule and confirm bank guarantee obligations
- 4Check the specification document is complete and legally binding
- 5Understand the reservation contract refund conditions
Key Takeaways
- Lawyer first, reservation second - always
- Building licence confirms the development is legally approved
- Bank guarantee structure protects all stage payments
- Specification document defines exactly what you are buying
Before paying any reservation fee for an off-plan property you should verify the developer completed projects and financial standing, the development building licence status, the total payment schedule and triggers, how bank guarantees will be structured, the full written specification, and the terms of the reservation contract. Ideally instruct an independent lawyer before paying the reservation, not after.
Verify the developer track record
Review the developer completed developments. Visit a finished project if possible. Check reviews from previous buyers. Confirm the developer is registered with Companies House in Spain and that their financial position is sound. For large institutional developers public reporting makes this easier. For boutique developers request financial references through your lawyer.
Confirm the building licence
Every legitimate development must have a building licence granted by the local Town Hall before construction begins. Some developers sell at the pre-licence stage which is higher risk. Your lawyer can verify licence status via the Ayuntamiento.
Review the payment schedule
Ask for the complete payment schedule before paying anything. Understand exactly when each payment is due, what construction milestone triggers it and what the total payment breakdown is. Confirm that bank guarantees will be issued for each stage payment.
Read the reservation contract carefully
The reservation contract defines what you are reserving, the price, the reservation fee amount, whether it is refundable, the deadline for signing the PPC and what happens if either party does not proceed. Have your lawyer review it regardless of its length.
Request the full specification document
The specification document lists all materials, appliances, finishes and features included in the property. Review it carefully. What you see in the show apartment may not all be included in the standard specification. Get written confirmation of any upgrades or customisations you are promised.
Why This Matters in Costa del Sol
With multiple new developments launching every quarter in Costa del Sol, buyers often feel pressure to reserve quickly before a property is taken. This is a real dynamic in popular developments but it should never come at the cost of basic due diligence. A 24 to 48-hour window is almost always available to conduct initial checks.
Common Mistakes to Avoid
A buyer from Ireland attended a property exhibition and fell in love with a development in Estepona. Instead of paying the reservation immediately they contacted a recommended independent Spanish lawyer that evening. The lawyer ran due diligence the following morning, confirmed the building licence was in place, reviewed the reservation contract and advised the buyer to request a clarification on one refund clause. The developer agreed to amend it and the reservation was paid with confidence two days later.
This answer is for general information only and does not constitute legal advice. Always consult a qualified Spanish property lawyer before making any purchase decisions.
A reservation agreement is a contract signed when a buyer pays an initial holding deposit to secure an off-plan or new build property. It removes the property from sale for a defined period, typically 14 to 30 days, while due diligence is conducted and the main Private Purchase Contract is prepared. The reservation fee is typically 1% to 3% of the purchase price or a fixed amount such as 5,000 to 15,000 euros.
The Private Purchase Contract (Contrato Privado de Compraventa or PPC) is the main legal agreement between a buyer and developer in an off-plan property transaction. It sets out all the terms of the sale including the purchase price, full payment schedule, completion date, property specification, bank guarantee obligations, penalties for delay, and dispute resolution. It is signed after the reservation stage and typically involves payment of 10% to 30% of the purchase price.
A bank guarantee (aval bancario) is a legal commitment from a Spanish bank to refund a buyer's stage payments if the developer fails to complete the property within the agreed timeframe or becomes insolvent. It is a mandatory legal requirement for all off-plan property purchases in Spain under Ley 57/1968 (updated 2015). Bank guarantees should be obtained for each stage payment individually.
A nota simple is an official summary document from the Spanish Land Registry (Registro de la Propiedad) that shows the current ownership details of a property, any mortgages or charges secured against it, any restrictions on the title, and the cadastral reference. It is the most important due diligence document for any property purchase in Spain.
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