Buying off-plan in Marbella: bank guarantees and stage payments

Buying off-plan means agreeing to buy a home before it is built, or while it is still under construction, and paying part of the price in advance. On the Costa del Sol this is a common way to buy a new home, and it can give you more choice of layout, orientation and finishes than buying something already finished. It also means trusting a developer with your money before you can walk through the front door.

Spanish law has specific protections for those advance payments. This guide explains, in general terms, how bank guarantees, surety insurance and stage payments usually fit together, and what to ask. It is general information, not legal advice. Every development and contract is different, so ask your independent lawyer about your own purchase.

What off-plan means in practice

An off-plan purchase is based on plans, specifications and a promised delivery period rather than a finished building. You choose a unit from the drawings, sign a contract with the developer and pay agreed amounts while construction continues. The remaining balance is normally paid when the finished home is handed over and the sale is signed before a notary.

Off-plan is one route into new-build property. If you are still weighing it against an older home, our comparison of new build and resale in Marbella sets out the broader trade-offs, and our overview of new developments on the Costa del Sol explains how buyers usually approach projects across the coast.

The typical stages of an off-plan purchase

Developers structure their sales differently, so treat the following as a general outline rather than a fixed sequence. Amounts and timings are set in each contract, and your lawyer should review them before you pay anything.

Reservation. Many developers ask for a reservation payment to take a unit off the market while the paperwork is prepared. Ask what the reservation document says about refunds, how long it lasts and what happens if the private contract is never signed.

Private contract. The buyer and developer then sign a private purchase contract. It should describe the home, the specification, the price, the payment schedule, the delivery period and the developer's obligations, including the obligation to return advance payments in the circumstances set out by law.

Stage payments during construction. Further payments are often due as construction progresses or on agreed dates. Before each one, it is sensible to have your lawyer confirm that it is going into the correct special account and that it is covered by the guarantee.

Completion on delivery. When the building is finished and the occupancy documentation has been issued, the balance is paid and the sale is formalised in a public deed before a notary. Our guide to the costs of buying property in Spain explains the taxes and fees that usually come with completion.

How advance payments are protected by law

The main protection comes from the Spanish building law, Ley 38/1999 de Ordenación de la Edificación, in its first additional provision as amended by Ley 20/2015. In general terms, it requires developers who take advance payments for homes to guarantee their return from the time the building licence is obtained.

That guarantee can take one of two forms: a surety insurance policy (seguro de caución) with an insurer, or a joint bank guarantee (aval solidario) from a credit institution. In both cases, the purpose is the same. If construction does not start, or is not completed within the agreed delivery period, the buyer can recover the amounts paid.

The guarantee covers the amounts paid, including applicable taxes, plus legal interest. It is generally cancelled once the occupancy document, such as the licencia de primera ocupación or its equivalent, has been issued and the home delivered. From that point, other rules and guarantees deal with the finished building.

The special account for your payments

The law also says that advance payments must be paid into a special account at a credit institution, separate from the developer's other funds. Money in that account may only be used for the construction of the homes. This is designed to stop deposits being used for unrelated purposes.

In practice, ask the developer for the details of the special account before you pay, and check that the payment instructions in the contract match. Ask your independent lawyer to confirm that the account is the right one and that the payments you make into it are covered.

Documents to ask for before you pay

The buyer should receive the document evidencing the guarantee for the amounts they will pay. What to ask for is an individual certificate naming you and relating to your unit and payments, rather than a general reference to a policy held by the developer.

The contract itself should state the developer's obligation to return the amounts paid and refer to the insurer or guarantor. Your lawyer will usually want to see the building licence, the guarantee or insurance documentation, the special account details and the draft contract together, so that they can check that they line up.

Later, before completion, your lawyer can check the first-occupation licence or equivalent document and the final description of the home. These are not checks Find Marbella can do; they belong with your own lawyer.

If something goes wrong

If construction does not start or is not completed within the agreed period, the buyer can ask the developer to return the guaranteed amounts. If the developer does not refund them after a formal demand, the buyer can claim from the insurer or guarantor after the period set in the law.

There are also time limits after which a guarantee can lapse if no claim has been made. The details matter, so act promptly if you are concerned about a delay and ask your lawyer about the deadlines that apply to your contract and guarantee.

Questions to ask the developer

Before you commit, it helps to ask a short list of direct questions and to get the answers in writing:

• Has the building licence been granted, and can my lawyer see it?
• Which insurer or bank provides the guarantee, and will I receive an individual certificate in my name?
• Which special account will my payments go into?
• What is the agreed delivery period, and what does the contract say about delays?
• How are changes to the specification handled, and how will I be told about them?
• What happens to the reservation payment if the private contract is not signed?

Ask your independent lawyer which answers they want to see supported by documents.

Risks to discuss with your lawyer

Off-plan buying can work well, but it carries risks that a finished home does not. Construction can be delayed. The delivered specification can differ from what you expected from brochures or show homes. Your own circumstances can change before completion, including whether finance you planned to use at the end is still available on terms you are comfortable with.

None of these risks is a reason to avoid off-plan altogether, and none can be judged from a general guide. Ask your lawyer how the contract deals with each of them, and ask a mortgage adviser about finance at completion if you plan to borrow. Our guide on how to buy property in Spain as a foreigner covers the wider process.

How Find Marbella can help

Find Marbella is a free buyer-side property search service, not an estate agency or a buyer's agent. You send one brief describing the areas, property type, budget and timing you have in mind. We ask the developers and estate agencies we work with about current projects relevant to that brief and aim to reply within 24 hours.

If you would like to look at new projects, our pages on new developments in Marbella and new developments in Estepona are good places to start, and our New Golden Mile area guide covers a stretch of coast where buyers often compare new homes.

We introduce you to a developer or agent only when you say yes. If a purchase completes, the agency holding the property pays us a referral fee from its commission, and nothing is added to the price. We do not assess developers, guarantees or contracts, and we give no legal, tax or mortgage advice. Please appoint your own independent Spanish lawyer.

Official information

These official Spanish sources explain the rules in more detail. They are in Spanish; your lawyer can explain how they apply to you.

• BOE: Ley 38/1999 de Ordenación de la Edificación (consolidated text)
• Banco de España, Portal del Cliente Bancario: guarantee for the return of amounts paid
• Spanish consumer affairs ministry: what guarantee do I have when buying a home off-plan?

Frequently asked questions

If you are considering a new home, send your property brief and we will ask the developers and agencies we work with about relevant projects. You decide whether to take any introduction further.