Lawyers César Paunero and Jerónimo Díaz warned off-plan home buyers that they must obtain written bank guarantees before handing over money to property developers.
Paunero and Díaz, specialists in debt cancellation at the firm Paunero & Jerónimo Abogados, shared the warning through their educational social media account @juristadebolsillo on Instagram. They explained that purchasing an unbuilt home carries significant risks that can endanger a buyer's life savings.
When buying a property that has not yet been built, buyers hand over large sums of money to the developer over several months or years. The primary danger arises if the developer goes bankrupt during construction. The lawyers noted that developer insolvencies occur more often than they should, leaving buyers without a home and without their advanced funds.
Legal protection for buyers
Spanish law establishes a key protection mechanism for buyers by requiring developers to guarantee every euro handed over to them. This backing is typically provided through a bank guarantee or a surety insurance policy, securing the return of all funds contributed by the client.
If construction is not completed or the developer ceases activity, buyers have the legal right to claim the return of all paid money plus interest directly from the bank or insurance company. Paunero emphasized that the claim is not directed at the developer, who may be insolvent, but at the financial institution that issued the guarantee.
Because of this risk, the lawyers advised that buyers must demand the guarantee in writing before signing a contract or making an initial payment. They stressed that no money should be handed over without a guarantee, noting that this simple precaution can save thousands of euros and avoid severe financial hardship.
