Off-Plan Deposits Are Protected by Law: Bank Guarantees in Spain

When you buy off-plan in Spain, the law requires the developer to protect your payments with a bank guarantee or insurance policy. If the home isn't finished, or doesn't get its licence, you get your money back plus interest. Since 1 January 2016 that protection sits in Ley 20/2015 and the Ley de Ordenación de la Edificación.

Buying off-plan is one of the most rewarding ways to own a home in the sun. You choose your plot or apartment early, often pick your finishes, and watch your future home take shape on a golf resort in the Region of Murcia. The question I get asked most in those early conversations is a sensible one: what happens to my deposit?

The answer is reassuring, and it's written into Spanish law.

What is an off-plan bank guarantee?

A bank guarantee (aval bancario) is a written commitment from a bank, or an insurer through an insurance policy, that the money you pay towards an off-plan home will be returned if the developer doesn't deliver it as agreed.

It covers the payments you make before completion: the deposit when you sign the private purchase contract and each stage payment during construction. If the home isn't built, isn't completed within the agreed time, or doesn't obtain its first-occupation licence, you're entitled to a refund of those payments plus legal interest. Your claim is against the bank or insurer, so it doesn't depend on the developer.

In practice it's a certificate issued in your name, identifying the property and the amount guaranteed.

Which law protects my off-plan deposit today?

Ley 20/2015 added a section called disposición adicional primera (Additional Provision One) to the Ley de Ordenación de la Edificación, Spain's building law (Ley 38/1999). It applies from 1 January 2016, and it's the framework for every new off-plan purchase today.

It replaced the older Ley 57/1968, which had required guarantees since the late 1960s and was repealed from 1 January 2016. The protection didn't go anywhere. It was updated and moved into the main building law. You'll still see Ley 57/1968 mentioned in connection with contracts signed before 2016, but for a home you buy in Murcia now, the LOE is the one that matters.

Spanish courts, up to the Supreme Court, have also confirmed that banks receiving buyers' payments into a developer's account have responsibilities under these rules, which adds a further layer of protection.

What does the developer have to do?

These are legal obligations on the developer, so an established developer has this paperwork ready as a matter of routine.

How do the stages and payments usually work?

1. Reservation. A modest reservation fee takes your chosen home off the market while the contract is prepared. 2. Private purchase contract. You sign the contract and pay a deposit, often around 20-30% of the price. From this point your payments are covered by the guarantee. 3. Stage payments. Some developments ask for further instalments at agreed milestones during construction. Each one is guaranteed in the same way. 4. Completion. The developer obtains the licencia de primera ocupación, you pay the balance, sign the deed before a notary and collect your keys.

Your lawyer also confirms the building licence is in place before you sign the purchase contract, so everything lines up from the start.

When budgeting, allow roughly 12-13% on top of the price for purchase costs on a new-build (10% VAT, 1.5% stamp duty (AJD) in Murcia, plus notary, registry and legal fees).

What does my lawyer check before I pay?

Your own independent Spanish lawyer runs through a short list for you:

• The guarantee certificate, issued for your purchase and showing the amount covered
• That it covers every payment you make, not only the first
• The name of the guarantor bank or insurer, matching your contract
• The special account details your payments go into
• The building licence, the delivery date and the payment milestones in the contract

Keep every receipt and bank transfer confirmation together; your lawyer will ask for them for the file. At MedSol we guide you through each step from reservation to completion and handover, and we can introduce you to independent, English-speaking lawyers (you're always free to choose your own).

What happens at completion?

Once the home is finished and licensed, you pay the balance and sign the escritura before a notary. The guarantee has done its job and is released, because you now own a completed home. Then comes the fun part: snagging, collecting your keys and settling in. We cover the handover in our room-by-room snagging checklist.

Why do so many buyers choose off-plan in Murcia?

Buying early usually means a wider choice of plots, orientations and views, and time to plan your move while the home is built. Combined with a legally required guarantee on your payments and Spain's 1, 3 and 10-year new-build warranties after completion, it's a well-protected way to buy. At MedSol we work with new-build developments on resorts across the Region of Murcia, including Omala Residences, Alhama Nature at Condado de Alhama, Corvera Hills and Santa Rosalia, and we can give you an itemised cost breakdown for any home before you reserve.

FAQ

Is my off-plan deposit protected in Spain?

Yes. Under Ley 20/2015 and the Ley de Ordenación de la Edificación, the developer must guarantee payments made before completion with a bank guarantee or insurance policy, refundable with interest if the home isn't delivered.

Is Ley 57/1968 still the law?

It was repealed from 1 January 2016. New off-plan purchases are covered by disposición adicional primera of the LOE, added by Ley 20/2015; Ley 57/1968 is relevant only to older contracts.

Is my money protected if the developer can't finish the build?

Yes, that's exactly what the guarantee is for. You claim your payments plus interest from the guarantor bank or insurer.

Does the guarantee cover the reservation fee?

The guarantee covers the payments made on account of the price before completion. Your lawyer will confirm exactly how your reservation fee is treated in your contract.

Do bank guarantees apply to resale homes?

No. They protect payments made before completion on off-plan and under-construction homes. A completed resale home is paid for on the day you sign the deed.

If you'd like to see the resorts for yourself, I'd love to show you round. Message me on WhatsApp on +44 7424 864 684 or send an enquiry and I'll get straight back to you.

This article is general information, not legal or financial advice. Confirm your own position with a qualified Spanish lawyer or tax adviser before you act.

About the author — Lee Doherty is the founder of MedSol Real Estate. He spent two years researching the region before buying here himself, and now helps UK and international buyers find golf-resort homes across the Region of Murcia.