Why buyers get caught out
Off-plan buyers sometimes pay deposits directly to the developer without an individual guarantee in their name. If the project stops or is delayed, recovering that money becomes much harder. The guarantee must be issued for each payment, and payments must go to a special account.
What we check before you sign
| Check | Why it matters |
|---|---|
| Developer | Company, registry, track record and financial position |
| Land and licence | Ownership of the plot and a valid building licence |
| Guarantees | Bank guarantee or insurance for every payment, in your name |
| Contract | Specifications, deadlines, penalties and termination rights |
| Horizontal division | Your unit, parking and storage, and the community rules |
| Rental use | Whether holiday rentals will be possible in the building |
Protecting your payments
Spanish law requires developers of residential property to guarantee amounts paid on account until delivery, with a bank guarantee or insurance and a special account. We check that each guarantee covers your payments, plus legal interest, and that it is issued before you pay. See off-plan guarantees in the Balearics.
Negotiating the contract
Developer contracts tend to favour the developer: flexible delivery dates, limited penalties and broad rights to change the specifications. We negotiate a firm delivery date, your right to terminate and recover your payments if it is missed, the specifications and finishes, and the conditions for any changes. See buying new-build property in Mallorca.
Delivery, snagging and completion
Before completion we check the licence of first occupation, the habitability certificate, the ten-year structural insurance and the registration of the building. We coordinate the snagging inspection with an architect, and we make sure defects are recorded before you sign the deed. Then we handle the notary, VAT and stamp duty and the registration of your title.
Delays and defects
If the developer misses the delivery date, you may be entitled to terminate and recover your payments under the guarantee. After delivery, the developer and the builders are liable for defects for different periods depending on their type. See recovering off-plan deposits and our property dispute service.
This service is provided by the property team of Castell.law in Palma, for new developments in Mallorca, Ibiza and Menorca.
Before you pay a deposit, ask a lawyer
Send us the listing or the document you have been asked to sign. An English-speaking property lawyer will tell you what needs checking and what it could cost you not to.
Questions about buying off-plan in Mallorca
Is my deposit safe when buying off-plan in Spain?
It should be, if every payment is covered by a bank guarantee or insurance in your name and paid into the special account. Check before paying.
Can I negotiate the developer's contract?
Yes. Developers often accept changes on deadlines, penalties, specifications and termination rights, especially before the project is sold out.
What taxes do I pay on a new build in the Balearics?
VAT on the price and stamp duty on the deed, instead of the transfer tax that applies to resale property.
What if the developer delivers late?
Depending on the contract and the delay, you may be able to terminate and recover your payments with interest under the guarantee.