How to check a developer in Spain before you reserve

Spanish law requires every payment you make before completion to be guaranteed, as explained in how bank guarantees work. But a developer in difficulty can mean years of delay, a claim against an insurer, and a home you never receive. The best protection is to buy from a developer able to finish the project.

Spanish companies must file their details and annual accounts with the Registro Mercantil (Companies Register), and anyone can request them. Accounts are approved within six months of the year-end and filed within a month of approval, so for a calendar year they are normally available after the summer of the following year.

• Identity: the exact company name and tax number on the contract should match the register. Many projects are built by a company set up for that one project; check who stands behind it.
• Accounts: equity, debt, revenue and results over several years. Missing or late accounts are a warning in themselves.
• Directors and shareholders: who runs it, and whether their other companies have a record.
• Insolvency: check the Registro Público Concursal, the public register of insolvency proceedings.

• The plot: a Nota simple from the Land Registry shows who owns the land and what is registered against it. A developer's construction loan secured on the plot is normal; it must be divided or cancelled before your deed.
• The licence: the building licence should be granted and cover the project as sold. Ask for the licence and check it with the town hall.
• The guarantee: from the grant of the licence, every payment must be guaranteed. Ask which bank or insurer issues the guarantee and for a sample certificate before you reserve. Check the issuer is an authorised bank or insurer.
• The account: payments go to the special account named in the contract.
• The specifications: the building specifications should be attached to the contract, and the plans should match what you are shown.

Ask which projects the developer has delivered, and when, compared with the dates promised. Visit one if you can, and talk to owners about finishes, after-sales service and how warranty claims under the LOE were handled.

• Payments asked into an account other than the one in the contract, or to an agent.
• No individual guarantee certificate, or a vague promise that one will follow.
• Payments beyond a reservation before the building licence is granted.
• Pressure to reserve the same day or to skip legal checks.
• No filed accounts, or a company with no assets beyond the plot and no named group behind it.
• A contract with no firm delivery date, an open-ended extension, or no right to cancel for delay.

An independent lawyer, working for you and not for the developer, should do these checks before you sign the reservation contract. For the wider picture, see off-plan pros, cons and risks.