After years of customers being afraid that a creditors’ meeting would ruin a real estate project, off-plan sales have resurfaced from its ashes.
Now, seven years after the financial crisis, tow trucks are not only re-populating the homeland but the change in the economic situation – major financing from the banks – has caused a major change to the financial landscape. Such is the case that in just a few months, promoters and banks are managing to sell entire promotions even before the foundations have been laid.
Buying a house is, possibly, the biggest investment that we can make in our lives, so if our choice is to buy an off plan property, it is necessary to make a series of inquiries to avoid unpleasant surprises.
1- Investigate who your seller is. Check, for example, that the developer owns the land on which the house will be built. For this, you can request a simple note to the Land Registry. You can go in person or you can make it through the Internet after paying a little less than 10 euros. If this is not possible, there is always the possibility of going to Town Hall to make sure that the building can be constructed on these lands, that its construction has been authorized and that it has all the necessary licenses, as the license of works that is what allows to begin the construction.
You must make sure that the house is in perfect condition. Check the finishes, the paint and check that everything is in line with what was planned.
“It is essential that we know who we are going to buy the off plan property from and have references, for example, in what promotions they have previously worked,” say people from Neinor Homes staff. “It is also very important that we inform ourselves about the economic situation of the company and its solvency,” they add.
2 – Look closely at any private agreement. The Organization of Consumers and Users (OCU) advises ensuring that such contracts do not contain abusive clauses that allow, for example, the developer to change the design of the property without the consent of the buyer or those that involve the resignation of the latter if the notary allows it.
There are others clauses that require customers to take out a mortgage with the loan company with which the developer works. From the OCU, they point out that although these types of clauses may be signed by the future buyer, they are void, which would force a judicial process to declare it abusive and be deemed not established by a judge. Therefore, it is better to prevent this preemptively.
3 – Do not forget that you are a consumer, and, as such, you have the right to demand certain information. When buying a house, you can ask for the full identification of the developer and their NIF (tax identification number in Spain) to verify, for example, that the developer is actually registered in the commercial register. You may also ask for the plans of your future home, as well as its exact location within the promotion, the usable area, the building specifications (which should detail the materials used), the price and form of payment and the delivery date.
Make sure that the promoter has insurance that guarantees the return of the amounts paid if your house is not built
“The client must demand to know the building specifications, must read and understand them and, if necessary, count on asking a technical professional to explain them,” Neinor Homes points out.
4 – If you pay any amount before the house is built, demand a receipt not only to show the amount paid but to know that the money has been deposited in a special bank account that can only be used for the construction of the project.
Make sure that the promoter has an insurance or bank guarantee that guarantees the refund of the amounts paid – plus interests – if your house does not get built or its construction is delayed.
5- Make sure of the final price of the house. From January 1, 2013, when you buy a new house, the first transmission, you have to pay 10% of VAT. You must check whether the price of the home includes this tax or it must be added. For example, for a house of 200,000 euros, we would be talking about 20,000.
6 – Choose the method of payment and delivery of the house that best suits you. If you opt to pay in installments before the delivery of the keys, you must accurately record the amount of each one of them and its expiration date. Usually, during the construction stage, 20% or 30% of the total price is advanced and the rest is paid when the home is delivered and the public deed of sale is signed. However, during the real estate crisis, many transactions were conducted without financing, that is, in cash.
It is also necessary to know what happens with the reservation if you decide not to buy the house, or what happens if the delivery is delayed: if you are entitled to some type of compensation or what rights you have if the house is not finally built.
7 – Design your future home to suit your needs. It is increasingly common for promoters to offer future homeowners the possibility of adding some modifications to the home, like joining several rooms of the house, two bedrooms or the kitchen and the living room, or removing the bidet or bathtub from a bathroom. Sometimes, some promoters even allow using higher-quality floors or tiles.
Each time, it is more common for promoters to offer future homeowners the possibility of adding some modifications
Find out about all the possibilities. “For this, it is necessary to carefully read the contract of sale. We must know what the house includes; that is, what we are buying, exactly,” advises the promoter of Lone Star.
8 – Check and assess the position of the house. This information should be indicated on the plan. Knowing the position of the house, we can know at what time of day more light will enter, or if the floor is too light. It is important to inquire about the energy efficiency of the home and ask the developer for an estimate on the savings.
9 – Once the property is finished, do not sign the deeds immediately. You must make sure that the house is in perfect condition. Check the finishes, the painting and check that everything is in line with what was planned in the building specification list, even in the common areas. The buyer has the right to have, during the 72 hours prior to signing, a draft of the deed, to review it and request clarification from the notary.
10 – Make sure that the house has a first occupancy license. It is a document that the City Council has to grant. Without it, you cannot enter the house. Also, check the existence of insurance that covers all the damage that the property may have in the future.