'Off plan v On plan'

This article is one of series written following our own recent experiences when purchasing a property in Casares Del Sol Spain. The path to property purchase abroad has many routes and along our path we have picked up some knowledge.

Hopefully you will find this and the other articles interesting, please do give feedback If enough find it of benefit a book may follow. If we sell enough it might even pay for the mortgage!

Specifically this article briefly explains the two types of property purchase. My sound advice is to engage an English speaking lawyer to lead you through the purchase maze. In Spain a property lawyer is called a Notary. The law in Spain is different to elsewhere and at first will seem daunting and complex but you will soon pick up the process. It does make life much easier if you can speak to your Notary.

Very basically there are two types of property purchases abroad. 'On plan' where you buy a resale or newly completed property and full payment is quickly due as in a normal house purchase, and 'Off plan' where you buy a property still to be built or which is partially built. Payments are in stages.

In Spain ‘On plan’ deposits are normally known as arras, deposito, fianza, and reserve. Whilst the deposit amount is negotiable expect to pay around 10 per cent of the purchase price, the balance is paid upon completion. Check as to whether your purchase contract, contracto states plainly whether the initial deposit is to be returned in the event of non-completion. Expect there to be conditional clauses attached to a purchase contract, and are called clausulas abrogatorias.

‘Off plan' is often the preferred option both for the vendor and vendee. From the point of view of both parties the deposit can very low, in some cases 3-4,000 Euros. There is usually a 30 day cooling off period after which time normally 20-30% of the purchase price has to be paid, minus the initial deposit. The vendor loves 'off plan' since it is easy to sell the dream.

Friends of ours have been privy to this poetic licence occurring when buying their own specific properties ‘off plan’. Example 1: The internal floor space looked less when they obtained the keys than on the original specification, no less than 7 sq metres less in fact. Example 2: The apartment block was further down a hill than on the original plan, and consequently nearer to noise and the associated dust from road traffic.

Lastly before you decide which type of purchase is for you do lot’s of research!