Claim Against the Developer. Off-Plan Purchase in Spain. Breach of Contract. Legal Guarantees. Expert Legal Advice.

When you buy off-plan, you’re purchasing a property that hasn’t been finished yet. Payments are typically staggered, and by law, the developer must guarantee these payments in two ways (bank guarantee or insurance bond). These critical aspects, essential for any buyer, must be mentioned in the contract between buyers and developers. So that if the developers fail to meet their obligations, you may initiate a court claim against the developer.

Legal Guarantees in Off-Plan Purchases. Law 38/1999 (LOE), Royal Decree 515/1989 on consumer protection, etc.

In Spain, off-plan purchases are governed by Law 38/1999, on Building Regulation (LOE), which establishes fundamental guarantees for buyers: 1 year for finishing defects, 3 years for habitability issues, and 10 years for structural defects. Moreover, the developer must secure a special bank account to receive payments from buyers. Also, since the issuance of the building permit by the Town Hall, all payments must be backed by the bank guarantee or the insurance bond.

Royal Decree 515/1989 complements the LOE by regulating mandatory pre-purchase information that developers must disclose, promoting transparency and consumer protection in these transactions.

Contractual Breach by the Developer. Failure to deliver the property.

According to these regulations, in case of breach of contract, the buyer can demand contract resolution. By law, the developer must refund received payments plus legal interest (though additional compensation can be contractually agreed upon the parties).

To initiate a court claim against a developer, it’s crucial to verify two things:

Firstly, whether the guarantees established by the LOE are in place or not. Since you may claim also against the insurer who issued the bond or the bank that issued the bank guarantee.

Secondly, whether the bank account where payments were made is indeed a special bank account or not. According to LOE’s Additional Provision One, Paragraph b), before receiving payments, the bank must ensure that the developer’s guarantees (insurance or guarantee) are properly constituted. If not, you could also claim against the bank.

Claim Against the Developer. Construction defects.

While this scenario will be elaborated further in another section, buyers can also claim against a developer for construction defects in the property. Although developers are primarily responsible, other parties in the construction process can also be held accountable: architect, surveyor, builder, etc.

The administrative license of first occupation in off-plan purchases.

Another potentially contentious point in off-plan purchases is the first occupancy license. In the Valencian Region, this license has been replaced by a statement of responsibility (responsible declaration) of first occupancy. The developer submits all documentation to the municipality, declaring compliance with the building permit, applicable regulations, etc. From that moment, the occupancy license is presumed valid. However, municipalities can review the statement and declare it ineffective, which unfortunately occurs more often than expected. If the developer’s responsible declaration is deemed ineffective, you may also initiate a claim against the developer.

At White-Baos Lawyers, we have extensive experience in lawsuits against developers for breach of the purchase contract. If you need to initiate a judicial claim against the property developer for contractual breach, feel free to contact us.