¿Is it safe to buy a flat under construction?

The purchase of flats under construction is quite safe in Spain if proper precautions are taken and the Promoter is requested to comply with the Law. Before buying a flat under construction, it is essential to ensure that the municipal Building Permit has been granted to the building project. Before making any payment or reservation for a property under construction, we must demand to be shown the municipal Building Permit and we must examine as well the architect’s original plans. There should not be any difference at all between the architect’s original plans and the plans appearing in the selling brochure, because only then you can be sure that what they are selling to you is really what the municipality has given permission to build. Regretfully there were recent cases where it was not so, and the consequences were rather dramatic. Further it is important, like for any other property, to examine the Land Registry and check the legal situation of the plot, the ownership, surface, possible encumbrances on the same, etc. When buying a property under construction it is usual for the promoter to demand payments on account from 20% up to 40% of the total price, during the construction process. According to a law passed as far back as 1968, all the amounts paid on account of the price for a flat under construction must be secured by the promoter by means of a bank guarantee or an insurance policy, which guarantees the repayment of his money to the buyer if the building is not completed, with all the necessary documents, within the agreed period of time. Further, all amounts paid by the buyer must be paid into a special bank account, from which payments can only be made upon presentation of the certificates that the architect issues as the construction progresses to certify the completion of the different phases. In that way, it is possible to control that the monies paid by the buyers are indeed employed in the building and not used for any other different purpose. Quite frequently promoters do not offer those guarantees but it is essential to demand them. In fact, that is an inalienable right of the buyer, even though it is not expressly stipulated in the contract. Finally and according to the “Ley de Ordenación de la Edificación”, which came into effect in 1999, the building agents must provide the following guarantees by means of an insurance policy: a) Insurance covering during one year the material damages due to faults or deficiencies in workmanship that affect the appearance, the final aspect or finish of the building works. b) Insurance covering during three years, the damages caused by faults or defects of the building parts or installations that bring about non-fulfilment of the habitability requirements (hygiene, isolation, etc.) c) Insurance covering during ten years the material damages caused in the building by faults or defects that either have their origin in or affect the structure and stability of the building. The purchase of a property under construction usually starts with a reservation contract and the payment of a small amount on account of the price. It is a very simple contract, but before we actually make the reservation, we should request to examine the conditions of the purchase contract to be signed later and make sure that all the above mentioned guarantees will be included in the same. Moreover we should demand that all the information on the flat we are buying (plans, description of the building and decoration materials, etc) is attached as an annex to the contracts. By Daniel García Chagrin & Carolina García Chagrin, Cárdenas Real Estate, Gran Canaria, Spain