What should I check before buying a new development in Spain?
Before buying a new development in Spain, verify the developer's licence to build, the reservation contract terms, bank guarantee arrangements for stage payments, the specification in writing, community fee estimates, and the developer's completion track record.
- 1Verify the building licence is in place before signing a reservation contract
- 2Confirm bank guarantees will protect every stage payment before transferring money
- 3Instruct an independent solicitor, not one recommended by the developer
- 4Request the full specification in writing and confirm what is and is not included in the price
- 5Check community fee estimates in writing, as high community fees significantly affect net investment returns
Key Takeaways
- Verify the building licence is in place before committing
- Instruct an independent solicitor who does not work for the developer
- Get the full specification in writing and signed before the private purchase contract
- Community fee estimates can change; cross-check against comparable completed developments
Buying a new development in Spain without proper due diligence exposes you to risks that are largely preventable. The essential checks before committing are: verify the developer holds a valid building licence (Licencia de Obras), confirm that stage payments will be protected by bank guarantees (avales bancarios), review the full specification document to understand exactly what is included, check the development's community fee estimates, instruct an independent Spanish solicitor before signing any contract, and verify the developer's previous project completion history. These checks take time but are far less expensive than discovering problems after you have committed your capital.
Legal checks before signing
Before signing any reservation contract or handing over any money, your independent solicitor should verify: the developer's identity and registration, that a valid Licencia de Obras (building licence) has been granted for the specific development, that the land is registered in the developer's name free of encumbrances, and that the bank guarantee mechanism is properly established. Some of these checks can be done at the nota simple stage, which your solicitor can obtain from the Land Registry.
Bank guarantee verification
Each stage payment in an off-plan purchase in Spain must be protected by a bank guarantee (aval bancario) issued by a licensed Spanish bank or insurance company. Your solicitor should receive and verify the guarantee before each payment is transferred. The guarantee must cover the principal amount paid plus legal interest. If a developer cannot provide individual guarantees for each stage payment, this is a serious warning sign and the purchase should not proceed.
Specification and inclusions review
Many disputes between buyers and developers arise from misunderstandings about what is included in the purchase price. Request a signed specification document (Memoria de Calidades) before signing the private purchase contract. This document should list: kitchen and bathroom fittings, floor and wall materials, appliance specifications, air conditioning and heating systems, parking and storage allocation, and any other items shown in the show home or marketing materials.
Community fee and development management
Community fees on new developments are set at the developer's estimate initially and can change significantly once the community is established and operational. Ask the developer for their estimated annual community fee per square metre and compare it to actual fees in similar completed developments nearby. Unexpectedly high community fees reduce net rental yields and can make a property more expensive to own than the purchase price suggests.
Common Mistakes to Avoid
A buyer is shown a beautiful show apartment and asked to sign a reservation contract and pay 6,000 euros that same day. They contact their solicitor first. The solicitor discovers the building licence has not yet been granted and the bank guarantee mechanism is not in place. The buyer declines to proceed and avoids committing to a development that later experienced significant delays. A second buyer at the same development signs the same day without legal advice and spends the next 18 months in uncertainty about their stage payment protection.
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.
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