From a legal perspective, purchasing a newly built property differs substantially from buying a second-hand home. The risks, guarantees, and obligations of the parties involved vary significantly depending on the type of transaction. At Boltas Boyé Abogados, we analyse the key differences to ensure that your investment benefits from the highest level of legal protection.
Información detallada
Key Legal Differences Between Buying an Off-Plan Property and a Second-Hand Home
1. Purchasing a New-Build or Off-Plan Property
This type of transaction is characterised by the fact that the buyer pays part of the purchase price before the building has been completed. Due to the risks involved, Spanish law provides a particularly strict consumer protection regime.
Advance Payment Guarantees:
The developer is legally required to guarantee the refund of all amounts paid in advance, together with the applicable legal interest. Pursuant to the First Additional Provision of the Spanish Building Regulation Act, these payments must be secured by means of a surety insurance policy or a joint and several bank guarantee.
The developer must deposit these funds into a special account separate from its general assets and may only use them to finance the construction works.
This guarantee becomes enforceable if the construction does not commence or is not completed within the agreed timeframe.
The Importance of the First Occupancy Licence or Equivalent Authorisation:
It is not enough for the developer to complete the physical construction of the property. Delivery must also be legally valid. The absence of a First Occupancy Licence may justify termination of the contract where it prevents the normal use of the property or constitutes a material breach of the developer’s obligations.
The property must be delivered in a condition that is legally habitable and suitable for lawful occupation. The lack of the relevant licence may hinder or prevent the ordinary connection of certain essential utility services.
Building Logbook:
Upon completion of the works, the seller must provide the Building Logbook, which contains the technical documentation of the building together with maintenance and operating instructions.
Ten-Year Structural Insurance:
The ten-year structural insurance policy covers material damage arising from structural defects affecting the foundations, beams, floors, load-bearing walls, or other essential structural elements that compromise the building’s stability.
The developer is legally required to arrange this insurance before delivering the property. It is mandatory for buildings primarily intended for residential use, subject to certain statutory exceptions, including some cases of self-development for personal use.
2. Specific Considerations When Purchasing a Second-Hand Property
In the purchase of a pre-owned property, the legal focus shifts from construction risks to the property’s legal status, encumbrances, and potential defects.
Latent Defects and Seller’s Liability:
Unlike new-build properties, which are governed by the specific warranty periods established by the LOE, second-hand properties are subject to the general provisions of the Spanish Civil Code concerning liability for hidden defects.
The buyer must prove that the defect existed prior to the purchase and that it was not apparent upon reasonable inspection.
For properties located in Catalonia, the Catalan Civil Code applies the concept of “lack of conformity”. The property must correspond to its description, be fit for its ordinary purpose, and meet the buyer’s reasonable expectations.
The seller is liable for any lack of conformity that becomes apparent within three years of delivery. The buyer may seek repair, a reduction in the purchase price, termination of the contract (where the breach is substantial), or compensation for damages.
Any claim must be brought within the time limits established by the Catalan Civil Code, making it advisable to act promptly once a problem is detected.
Land Registry and Urban Planning Status:
It is essential to verify that the property is free from attachments, mortgages, or planning infringements.
In the case of a new-build development, the developer must prove ownership of the land and hold the necessary building permits before receiving advance payments from purchasers.
3. Liability Regime Under the Building Regulation Act (LOE)
For newly constructed residential properties, the Building Regulation Act establishes the following warranty periods for material defects, which remain in force following the amendments introduced by Act 20/2015:
1 year: Defects affecting finishing or completion works.
3 years: Defects affecting habitability (such as dampness, thermal insulation, or acoustic insulation issues).
10 years (Structural Insurance): Structural defects affecting the building’s stability and safety.
4. Are You an Investor or an End Consumer?
An important legal issue that we regularly analyse at Boltas Boyé Abogados is the intended purpose of the purchase.
The protection afforded to advance payments under the First Additional Provision of the Building Regulation Act is primarily designed for properties intended to serve as a residence, whether permanent or seasonal.
Case law has interpreted this protection restrictively where the purchaser acts primarily for investment or speculative purposes, on the basis that such purchasers do not fall within the consumer profile that this protective regime is intended to safeguard.
Conclusion
In summary, purchasing an off-plan property and purchasing a second-hand home involve different legal risks and require specific due diligence in each case. Proper legal advice can help identify potential liabilities, negotiate better contractual terms, and avoid future disputes.
At Boltas Boyé Abogados, we provide a comprehensive legal review of the entire property transaction, including:
- Reservation agreements.
- Deposit agreements (arras contracts).
- Private purchase agreements.
- Advance payment guarantees and insurance policies.
- Land Registry searches (Nota Simple).
- Urban planning status of the property.
- Planning and urban development certificates.
- Community of Owners’ bylaws and related documentation.
Gemma Pérez Boyé
Boltas Boyé Abogados
This article is provided for informational purposes only and does not constitute legal advice.