Reply To: Probe into Costa Almeria Building Licences

#58512
Anonymous
Participant

When buying in Spain it is very common for developers and agents to try and get you to sign a reservation contract (documento de reserva), accompanied by a payment of 3,000 to 6,000 Euros. Unfortunately most overseas buyers fall for this, as you appear to have done. For the record you should always avoid signing one of these documents and making this payment, as this contract does you – as the buyer – no favours whatsoever. This contract is typically short and vague, and leaves you in a weak position should you want to back out if, for example, you find that the developer doesn’t have planning permission.

The reason why developers and agents want you to sign this contract is because they want to turn the momentum and enthusiasm of your visit into a commitment as quickly as possible. If you go home having signed a reservation contract and paid a non-refundable deposit of 3,000 Euros you are more likely to proceed with the purchase than if you go home having seen a property that you plan to buy, but without having made any commitment. The deposit makes a change of mind more costly, so on average fewer people change their mind if they have paid one.

You are much better off not signing anything at this stage, and proceeding instead to a full purchase contract having done an appropriate due diligence. The property may of course be snapped up by someone else in the time it takes you to get the due diligence done, but it is unlikely, especially now that the market has cooled. The point to take on board is that you should not sign reservation contracts or make any payments before you have had an independent lawyer carry out an appropriate due diligence.

Turning to what you should do given that you have signed a reservation contract and subsequently found that the developer doesn’t have planning permission.

The cardinal rule when buying new build in Spain is never, ever buy off-plan (or finished property for that matter) if planning permission has not been granted. If it is true that planning permission has not been granted – and you need to have an independent lawyer (not related in any way to the developer or agents you have dealt with) confirm this – then, in my opinion, it would be very reckless of you to proceed. I would demand the deposit back on the grounds that planning permission has not been granted (if true). You may loose your deposit, but you have to balance the loss of 3,000 Euros against the problems you may have if you proceed. Without planning permission you will never be able to take possession of the property or sell it, so bear that in mind before you pay any more money to the developer.

Mark