Insurance for payments on account at the time of the purchase of a property in Spain

purchase of property in SpainDear purchaser of a property in Spain.

Before over planning or proceeding with the purchase of a Spanish property under construction, it is important to acquire legal advice from a settled law firm in Spain and not to make any payments on account, as part of the purchase price, before ensuring that payments made to the vendor are assured by insurance or bank guaranty.

The Spanish “Law 57/1968 of 27 July, regarding the receipt of sums of money in advance for the construction and sale of homes”, later strengthened by the “Law 38/1999 of 5 November on Building Ordinances”, ruled that it is the obligation of developers to ensure repayment of the amounts received in advance as part of the purchase price (adding legal interest) from purchasers prior to the start of construction or during the same when the developer does not fulfil the obligation of delivering the dwelling in the agreed time. This guarantee to refund the sum of money received in advance is specified in an “individual insurance policy” or “individual bank guarantee” for each acquirer.


Needless to say, it is difficult to put these Spanish laws into practice. The buyer does not receive the “individual insurance policy” simultaneously with the signing of the Spanish private purchase contract and the payment of the deposit. It will be later (days, weeks, or never). Once the developer has deposited the amounts received in a special account opened for that purpose and settled the appropriate risk premium, the insurance company will issue the “individual policy” for each purchaser. At the time of signing the Spanish private purchase contract, purchasers may only be provided a copy of the “general policy”, which, in any case, supposes an obligation between the insurance company and the purchaser.

Therefore, due to the fact that the signing of the private contract with an advanced payment of the amounts as well as the delivery of the “individual policy” do not occur in the same act, we may ask what happens if the purchaser never receives the “individual policy”.

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Do not hesitate to contact our office, where we will give the necessary advice to resolve this issue and any others related to the acquisition of a property in Spain.


Felix Ruiz, English-speaking lawyer in Spain

  • Wim Lamers
  • Emigration to Spain, Lawyer in Spain, Legal Advice Costa del Sol, Property lawyer, Property Lawyer in Marbella,

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