What can I do if the developer is late in handing over the home?

The rule for off-plan purchases

The “Ley de Ordenación de la Edificación”, the Building Act, which applies in the same way throughout Spain, gives a buyer who has made payments on account two options if the building work has not started or the home has not been handed over within the agreed period:

• Cancel the contract and recover what was paid on account, with the taxes paid with each instalment, plus interest. This is covered by the bank guarantee or insurance the developer was required to give you.
• Give it an extension. The law requires this to be set out in a clause added to the contract, with the new date for completion of the works and handover. Check that the bank guarantee or insurance still covers you until that date.

The Supreme Court has held that, in these purchases, the buyer can cancel the contract even if the delay is not especially long. Unlike with other contracts, a serious breach is not required. But there are two limits:

• You must do so before the developer, with the home finished and with its certificate of habitability, formally calls on you to sign the public deed. After that, you can only cancel the purchase if the delay is serious. If you then refuse to accept the home, the bank guarantee or insurance is cancelled anyway.
• You cannot act in bad faith, for example if the delay is minimal and what you are really after is getting out of the purchase because prices have fallen.

What the Catalan Civil Code adds

For purchases signed since 2018, the Catalan code also gives the buyer these remedies:

• Demanding that the home be handed over.
• Cancelling the contract, which the law calls terminating it, if the delay is serious, that is, if it substantially deprives the buyer of what they were entitled to under the contract.
• If the delay is not serious, giving the developer a reasonable additional period in writing and terminating the contract if it does not deliver within that period. If the developer does not object straight away, the period is deemed reasonable. In the same letter the buyer can warn the developer that, if it does not perform, the contract will be terminated without further notice. There is no need to give that period if the contract made it clear that the handover date allowed no delay.
• Claiming compensation for the losses they can prove, for example the rent they have had to keep paying. If the contract provides for a late-delivery penalty, the buyer can demand it, but it replaces that compensation unless otherwise agreed.

If you are buying as a private individual, a clause that makes the handover date merely a guide or allows the developer unlimited delay may be unfair. In the rest of Spain, apart from the rule for off-plan purchases, the Spanish Civil Code (“Código civil”) allows the contract to be cancelled if the breach is serious.

How to go about it

• Decide what you want and notify the developer in writing, by a method that leaves a record, such as a “burofax”, a certified letter with proof of content. Do not stop paying or refuse to sign without having given notice first.
• If the developer does not refund what you paid within thirty days, claim it from the bank or insurer that provided the guarantee. If it is a bank guarantee, do not let two years pass from the breach without having demanded that the developer cancel the contract and refund what you paid, because claims under the guarantee would become time-barred.
• Before suing, the law requires you to attempt negotiation.