What to ask your lawyer before you sign — part of a six-part series on the new-build purchase contract in Spain.
Why this question matters more than the price
A developer's insolvency is rarely sudden. It is the result of a chain of small delays and funding gaps. If you only start looking at your security once things go wrong, you are already in the weaker position.
What you actually hold in your hand
- Your title: if you are already the owner of the plot with the building under construction after the Escritura, the insolvency administrator has no access to your land.
- Your bank guarantee or Seguro de Caución: if the statutory protection under Ley 20/2015 applies, you can reclaim the payments made, including VAT and interest.
- Your payment schedule: what you have not paid, you cannot lose. A schedule that lags behind the construction progress is itself insolvency protection.
Where the weak spots typically sit
Very often the security is correctly agreed on paper but not practically accessible: guarantee documents made out to the developer, not the buyer. Dedicated accounts that are not cleanly ringfenced. Rectification work with no reserve behind it.
The questions that belong on the table
- Who becomes owner from the Escritura, and when is the declaration of new construction recorded in the land registry?
- Is the bank guarantee or Seguro de Caución in your name, and does it cover every payment up to the final instalment?
- How is the payment schedule tied to actual construction progress, and who confirms that progress?
- What happens to your position if the developer is sold or restructured during the build?
What this protection cannot do
Even the best security cannot replace time. An insolvent developer almost always means delay. That is why a penalty clause and a right of withdrawal have to be part of the package — see Nº 03.
Written by Valentin Quiroga, lawyer specialising in real estate law on Mallorca. This article does not replace individual legal advice.
Security is a mindset.
If you have a new-build contract in front of you right now, we walk through it with you in calm and detail. We connect you with Valentin Quiroga, our specialist in real estate law, and stay by your side if you want us to.
