What are the risks of buying a flat off-plan and how do I protect myself?

What can go wrong

• That the building work does not start or is not finished, for example because the developer runs out of financing or goes into insolvency proceedings. That is what the bank guarantee or insurance required of it by law is for.
• That the handover is delayed. If the agreed date passes, you will be able to cancel the purchase and recover what you paid or give the developer more time. If you want to cancel it, do not wait until you are called to sign the public deed.
• That the developer sells before obtaining the building permit. In Catalonia, the law on the right to housing does not allow it to sell off-plan or take payments on account without the permit and without the compulsory guarantees and insurance.
• That you are handed something different from what was promised, in terms of quality, floor area, communal areas or parking space. If you are buying as a private individual, the developer is bound by what is announced in its advertising and in the specification (“memoria de calidades”), the document describing the materials and installations, even if it is not in the contract.
• That the flat comes with charges, such as the mortgage the developer used to finance the building work. In Catalonia, that mortgage must be divided among the flats, so that each one is only liable for its own share.
• That you are charged costs that are the developer's responsibility, such as those of the declaration of new building (“escritura de obra nueva”) and division into units (“división horizontal”) or those of the mortgage it used to finance the building work. If you are buying as a private individual, the law does not allow them to be passed on to you.

Before signing and paying

• Ask for the building permit and check with the town council that it exists and relates to that building.
• Ask for a land registry extract (“nota simple”) for the plot, the summary issued by the Land Registry showing who owns a property and what charges it has. That way you will know whether the land belongs to the developer and whether it is subject to mortgages or attachments.
• Ask for the plans of the home, showing its usable and built floor area, the specification and the details of the guarantees. In Catalonia, the law requires the developer to provide that documentation when selling.
• Do not pay anything, not even a reservation, without first having the bank guarantee certificate or the insurance policy in your name.

What the contract must say

• A specific handover date, not an approximate one. Better still if it says that, if the date is not met, you can cancel the purchase without having to give the developer more time.
• The specification and the plans, signed as an annex. It should only be possible to replace materials with others of equal or higher quality.
• The payment schedule, the special account into which payments must be made and the bank guarantee or insurance covering them, with the bank or insurer providing it. The law requires the contract to state this.
• What will happen to the developer's mortgage, whether you will be able to take over the portion relating to your flat or whether the developer will discharge it before the public deed. If you are buying as a private individual, a clause that obliges you to take it over or penalises you if you do not may be unfair.
• Who pays each cost.

Only accept any later change, to the project or the handover date, in writing. What to do if you find defects when you receive the keys is a separate matter.