Most new homes on the Costa del Sol and Costa Blanca are sold before they are finished. Spanish law requires the developer to protect every euro you pay before completion with a bank guarantee or insurance policy in your name. This guide covers how the process runs, what the protection covers and what to check before each payment.
1. How an off-plan purchase runs
Reservation: a deposit, typically €6,000 to €20,000 on this coast and more on a large villa, takes the home off the market for two to four weeks while your lawyer does the checks. It is normally lost if you withdraw.
Private purchase contract: signed within about 14 to 30 days. It fixes the price, payment schedule, completion date, extension and penalties, and must name the guarantor and the special account your payments go to.
Stage payments: on the dates or construction milestones in the contract, each with IVA at 10%.
Completion: once the architect has certified the works and the town hall has issued the first occupation licence, you pay the balance and sign the title deed (escritura) before a notary.
2. What you pay and when
There is no statutory schedule; each developer sets its own. The usual pattern is 30% to 40% of the price before completion, with the reservation counted towards it, and 60% to 70% at the notary. Some take it all at contract; others split it between contract and construction milestones.
Worked example: a €350,000 apartment with 30% before completion.
Reservation: €6,000
At private contract: €99,000, plus IVA at 10% on the €105,000 paid so far, €10,500
At the notary: €245,000 plus IVA of €24,500, plus AJD on the full price (1.2% in Andalucía, €4,200; 1.4% in the Valencian region, €4,900), plus fees
The sum at risk during construction is €115,500: the €105,000 paid plus its IVA. That is what the guarantee must cover. Our cost guide has the rest.
3. The legal protection: Ley 38/1999, as amended in 2015
The rules sit in the first additional provision of the Building Act (Ley 38/1999, LOE), rewritten by Ley 20/2015 with effect from 1 January 2016. From the moment it holds the building licence, the developer must:
Pay every advance into a separate account at a credit institution, used only for building costs, never its general account.
Guarantee repayment of those advances, including the IVA on them, plus legal interest, through an insurance policy (seguro de caución) or a joint and several bank guarantee (aval), in case the works do not start or the home is not delivered on time.
Issue the cover individually, per buyer, identifying your home, with you as beneficiary. The developer pays for it.
Legal interest is set each year in the state budget and is 3.25% for 2026. A developer that fails to provide the guarantee can be fined up to 25% of the sums it should have secured.
4. How the guarantee works in practice
Before each payment you should receive a certificate or guarantee document in your name for that amount. Only sums you can prove you paid are recoverable.
To claim, your lawyer sends a formal written demand to the developer. If 30 days pass without repayment, you claim directly from the bank or insurer, which then has 30 days to pay.
The guarantee ends when the first occupation licence is issued and the home is handed over. It also lapses two years after the developer's breach if you have not cancelled and claimed.
5. What the Supreme Court has said about banks
Two 2015 rulings, both cited by the Bank of Spain, set the doctrine. Judgment 322/2015 held that where the developer had a collective policy, the absence of individual certificates did not release the guarantor. Judgment 733/2015 of 21 December 2015 held that a bank receiving buyers' advances must make sure they go into a properly guaranteed account, and is liable to the buyers if it does not.
Judgment 634/2025 of 28 April 2025 reaffirmed the line, ordering CaixaBank to repay buyers in a failed housing cooperative with interest because it knew the sums were housing advances. The limit is knowledge: banks have escaped where payments were routed through lawyers' or agents' accounts, so pay from your own account, directly to the special account, with a reference identifying your home.
6. Licences, insurance and snagging
Building licence (licencia de obra): your lawyer should see it, granted rather than applied for. Payments made before it exists are not covered by the guarantee.
First occupation licence (licencia de primera ocupación, or the regional equivalent): confirms the home is legally fit to live in. Do not sign the deed or pay the balance until it has been issued.
Ten-year structural insurance (seguro decenal): compulsory for housing under the LOE, covering structural defects for ten years from reception of the works, with three years on installations and habitability and one year on finishes.
Snagging: inspect against the signed specification before completion, with an independent surveyor if you can, and get the defects list and repair timetable in writing.
7. Common pitfalls
Paying into the developer's general account, or to an agent or third party, rather than the special account in the contract.
A guarantee not in your name, not matching the sums you have paid, or arriving weeks after the payment.
A generic or collective guarantee for the whole development with no individual certificate for you.
Contract wording that makes the guarantee available only on request, or allows long extensions without penalty.
Paying a reservation to a developer that does not yet hold the building licence.
A construction mortgage not released from your unit before you sign.
8. If the developer is late or fails
When the completion date plus any agreed extension passes without delivery, you can grant a further extension in writing or cancel and demand everything back with legal interest from the date of each payment. If the developer does not repay within 30 days, the claim goes to the guarantor or insurer, not the insolvency administrator. Act within the two-year window, through your lawyer.
Checklist before you pay a stage
The developer owns the land: a current nota simple from the Land Registry.
You have seen the granted building licence.
The contract names the guarantor or insurer and the special account.
You are paying into that account, from your own account, with a reference identifying your home.
You hold an individual certificate in your name for every euro paid so far, including the reservation and IVA.
Every certificate, transfer and receipt is in one file.
What to do next
Browse our new-build homes on the Costa del Sol and Costa Blanca, and use the cost and yield calculator to see what each stage would cost in your currency. Appoint an independent Spanish lawyer before you reserve. This guide reflects the law on 13 October 2026 and is not legal advice.