Sometimes, justice can be slow. But that’s no reason to give up on the pursuit of it. Over the past decade I’ve been part of an effort to support around 500 clients to reclaim deposits that they paid on Spanish off-plan properties that were never built. Having been in that situation myself, it’s a cause I feel deeply committed to. As such, I wanted to share the lessons learned from those clients’ experiences – and my own – in order to help anyone buying property in Spain today do so safely and with peace of mind.
Let me start with a quick example. John and Noleen Parkes from Norfolk placed a substantial deposit (€77,000) on a property in La Marine, Alicante in February 2008. They planned to live in the property, but their dream was never to be. Between a failing developer and an ineffective lawyer, the property was never finished, and the couple were told they had no effective form of redress.
Then they read about CostaLuz Lawyers’ pioneering Finca Parcs victory in 2012, which resulted in a pay-out of nearly €1.5 million for a group of claimants who had lost their own deposits. Feeling fresh hope, John and Noleen asked us if we would help them.
Their case took six years to work its way through the Spanish justice system, but our perseverance paid off. John and Noleen have now received 75% of their deposit back, while a parallel court case is still being pursued, which we are confident will be brought to a successful conclusion.
Sadly, John and Noleen are far from an isolated case. We’ve won cases for 71 clients in the same situation in 2020 alone and that’s despite the courts being closed for three months and now operating at a lower capacity. Others in their situation only have until 28 December 2020 to start legal action if they wish to reclaim their own lost deposits.
So, is there anything that future buyers of off-plan Spanish property can do to protect themselves from ending up in this position? There are several things, but six of the most important are:
- Always engage the services of an independent conveyancing lawyer.
- Never send any money to the developer’s bank account until your conveyancing lawyer has checked that the building licence has been issued according to LEY 20/2015 and has a copy of it.
- Always ensure that any money paid to the developer is paid to the developer’s Special Account (Cuenta Especial), which is stated in the Purchase Contract.
- Ensure your conveyancing Lawyer obtains your Individual Guarantee as required by LEY 20/2015 for any money paid to the developer while the property is under construction.
- Always keep a copy of your Purchase Contract and proof of all payments made to the developer.
- Bear in mind that once the Certificate of Habitability or the First Occupation Licence is issued, the protection provided by the Individual Guarantee is cancelled.
Buying an off-plan home in Spain is a dream for many people looking for a sun-kissed holiday home or a retirement nest egg that comes with plenty of lifestyle benefits. Sadly, it’s not always a dream that comes true. However, by following the six steps above, buyers are doing all they can to ensure that their purchase goes ahead smoothly.
By Keith Rule
Keith Rule is Director of UK Office and Client Services Manager at CostaLuz Lawyers. Keith’s vision and persistence have helped CostaLuz Lawyers become a pioneering force in the Spanish legal system, supporting clients from Spain, the UK and elsewhere in the world.