In our practice, we saw a number of new construction projects being delayed due to delayed material deliveries. This article provides you with more information on your options in case of late delivery when buying on plan in Spain.
A clear delivery deadline
For a sale on plan, the promoter must specify a clear and determinable delivery period. Within this period, the property must then be completely finished and have the conformity certificate. If the promoter expects or foresees any delay during the course of the works, he has a notification obligation.
Find more information here on delays due to non-granting of planning permission.
Late completion of a sale on plan in Spain due to force majeure
Most purchase agreements in the case of a sale on plan provide for a force majeure clause. Specifically, force majeure means when there are (i) circumstances beyond the promoter's control that (ii) are not attributable to him and (iii) make performance of the contract temporarily impossible. A current example is a general problem in the supply of construction materials by a Chinese port in lockdown. Other examples include a disaster or strikes. In cases of force majeure, there is not much you can do but wait.
A limited delay
In case the promoter delivers late, but the delay is within limits (e.g. not more than 6 months), you are theoretically entitled to compensation. However, most purchase agreements provide for the promoter to delay delivery for a certain period of time.
The damage - and, as a result, its compensation - for a buyer of a second residence is limited anyway because you do not have extensive costs because of the delay.
The situation is different if you cannot emigrate because of the delay. For example, you have to temporarily move into rental accommodation. In that case, it is advisable that you indicate the completion period as an essential condition. Then explicitly state that you wish to move within a certain period after completion.
In most situations, however, the right to compensation will be limited. And the suds are not worth the coals to start proceedings for this. However, if you are having a property built yourself, in-house, it is common to negotiate a delay penalty.
Here are 8 steps on self-building in Spain.
A significant delay
A delay is significant if we are talking about around 9 months. If there is no prospect of a completion date by then, you can dissolve the purchase agreement. Upon dissolution, you can recover all sums you have already paid to the promoter, plus statutory interest. In practice, you will then appeal to the bank to recover your funds. After all, the promoter will have already used the funds to finance the works. The importance of a bank guarantee should therefore not be underestimated.
Making the termination of the purchase agreement legally hard is not obvious. You need to argue such an action thoroughly. It is therefore advisable to have your case thoroughly assessed first.
Read more about the bank guarantee of a buy on plan in Spain.
Decision
In the event of a late completion when buying on plan in Spain, you need to be realistic. Unless the delay is significant, in practice there is little you can do against the promoter. A smart promoter will also adequately contractually hedge against limited delays and force majeure.
Here is an overview of the legal aspects of buying a new building in Spain.
