Buying off-plan: advantages, risks and guarantees

Buying off-plan — acquiring a home that does not yet exist — is one of the most common ways to access new build on the Costa Blanca. It offers real advantages (price, customisation, best unit selection), but also involves risks worth understanding before handing over the first euro. This article breaks them down without patronising or unnecessary alarm — just facts.

How off-plan purchase works

Phase 1 — Reservation

You visit the developer's sales office, choose your unit (orientation, floor, views) and sign a reservation document with a deposit of €3 000-10 000. Generally non-refundable if you change your mind — but refundable if the developer fails to meet agreed conditions.

Phase 2 — Private contract

Within 2-4 weeks, you sign the private purchase contract. You pay an additional percentage (usually up to 10-30 % of the total). The contract establishes: final price, payment schedule, estimated delivery date, property description, included finishes and breach penalties.

This is the most important document — have a lawyer read it before signing. A property lawyer costs €500-1 500 and can save you tens of thousands.

Phase 3 — Construction payments

Per the agreed schedule (usually quarterly), you complete payment up to 20-30 % of the total before delivery. Each payment should be accompanied by a construction progress certificate.

Phase 4 — Completion and keys

When the home is finished and has the first-occupation licence (LPO), you attend the notary to sign the public deed. You pay the remaining 70-80 % (or your bank disburses if you have a mortgage). You receive the keys.

The real advantages

• Lower price than completed: developers offer slightly lower prices at launch to attract buyers. Buying earliest can mean 5-10 % savings versus the final price.
• Best unit selection: first come, first served. Orientation, floor, corner position — all affect value and comfort.
• Customisation: modify finishes, layout and extras before construction — cheaper and more efficient than renovating later.
• Staged payment plan: you do not need all the money on day one. Typical: 10 % at contract, 10-20 % during construction, 70-80 % at completion.

The real risks

Delivery delay

The most frequent and frustrating risk. Contracts usually include an estimated date with a 3-6 month margin. Real delays can exceed this. Common causes: slow municipal permits, material supply issues, weather, underperforming subcontractors.

What you can do: the contract should include delay penalties (usually a percentage per month). If it does not, negotiate before signing. If delay exceeds the maximum agreed term, you have the right to terminate and recover all amounts paid (with interest).

Differences between promise and delivery

What you see in the brochure may not match what you receive. Finishes may downgrade, communal areas may shrink, views may differ from renders.

What you can do: the contract should detail finishes exhaustively (brand, model, colour). Before signing the deed, conduct a snagging visit with an independent surveyor who verifies delivered matches contracted. Deficiencies must be corrected before completion.

Developer bankruptcy

The most serious risk — and the one the law most protects. If the developer goes bankrupt before delivery:

• Deposits must be bank-guaranteed or insured by surety bond (Law 38/1999, updated by Law 20/2015). If the developer fails, the bank or insurer refunds you in full, plus legal interest.
• Always verify the guarantee exists before paying. Request a copy and confirm authenticity with the issuing bank. If the developer cannot provide the guarantee, do not pay.

Environmental changes

The empty plot next door may become a building blocking your views. The planned road may be delayed years. The promised shopping centre may never be built.

What you can do: check the municipality's General Urban Planning Plan (PGOU) to see what is planned in the area. Public information available at the town hall or its website.

What the contract must include

• ☐ Closed total price (VAT included or specified separately)
• ☐ Detailed payment calendar
• ☐ Delivery date with maximum deadline
• ☐ Delay penalties
• ☐ Complete quality specification (brands, models, colours)
• ☐ Scaled floor plan
• ☐ Communal areas description
• ☐ Copy of bank guarantee or surety bond for deposits
• ☐ Developer's building permit
• ☐ Contract termination conditions (both parties)
• ☐ Developer's obligation to obtain first-occupation licence before completion

Frequently asked questions

Can I lose my money if the developer goes bankrupt?

No, if amounts are correctly guaranteed. Spanish law obliges the developer to guarantee all deposits via bank guarantee or surety bond. If complied with, your money is 100 % protected. If not complied with (no guarantee), you should not have paid — and if you did, you have legal action against the developer and potentially the financial institution that should have required the guarantee.

Can I withdraw after signing?

Yes, but with consequences. Withdrawal without justified cause generally means losing the reservation deposit and potentially a percentage of paid amounts (penal arras — usually 10 %). If the developer breaches (excessive delay, inferior finishes, missing permits), you can terminate and recover all amounts plus interest.

Is it better to buy at launch or when nearly complete?

At launch: better price, more customisation, best unit choice. More risk (longer wait, more uncertainty). Nearly complete: you see what you buy (fewer surprises), faster delivery. Slightly higher price, fewer options. Each profile has its optimal moment.

Do I need a lawyer?

Technically not mandatory. Practically, essential. A property lawyer reviews the contract, verifies the bank guarantee, checks the building permit, negotiates unfavourable clauses and represents you in disputes. The cost (€500-1 500) is insignificant compared to the risk of signing an unfavourable contract on a €150 000-300 000 purchase.

Can I apply for a mortgage before the home is finished?

You can start the process (pre-approval, risk analysis) before delivery, but the mortgage is signed and disbursed at completion. Some developers have agreements with banks offering preferential terms — ask before searching independently.

If you are considering buying off-plan on the Costa Blanca, explore our available properties or contact us for a personalised consultation.