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10 May 2024 2:23 PM:


The source of information were these two copyrighted articles by  Raymundo Larrain Nesbitt

Law 20/2015: Important new bank-guarantee legislation explained for offplan buyers – 21st September 2015

Licence of First Occupation – 8th September 2018

Plus Maria de Castro has written all manner of other educative articles associated with BG law,  tax laws etc on EOS.... and answered many questions over the years on the EOS website. 


It's probably important to recognise that Spanish Law is highly procedural and complex so these educative articles are very helpful to at least try to grasp the complexities and procedures and thereafter put them into context relative to specific circumstance.

Suffice to say they are time consuming to develop and deserve recognition, and I for one have been immensely grateful for their endeavours to educate and where relevant identify ongoing legal changes or challenges that can unwittingly leave consumers at risk.

Likewise it is important to recognise and question the background detail relating to decades of delays in the Spanish administrative and legal system in order to put into context how the financial institutions and their legal teams have overloaded the Spanish Justice System via proliferation of appeals relating to BG law, which in turn have delayed SC doctrine and on occasion appear to have challenged the rule of law ( timely justice).

It would be so useful if the Bar Associations could recognise and effectively support their legal fraternity ( which in due course assist consumers) with regard to enhancing accountability by those who have undermined the Spanish legal system in this way.

 But consumers also need to support those trusted legal professionals who go the extra mile to educate and through their endeavours enhance accountability and strive for a Justice system fit for purpose for all our sakes. 



This message was last edited by ads on 5/10/2024.
Thread: Buying an off-plan apartment

07 Apr 2024 1:47 PM:

Other important aspects to consider for those still wishing to buy offplan, despite the forewarnings....

In general, the advice is not to complete on off-plan property if your developer has not attained a Licence of First Occupation.



A Licence of First Occupation is a certificate issued by a town hall which confirms that a newly-built property (off-plan) fully complies with all planning and building regulations and is fit to be used as a dwelling. It assures compliance with Health, Access, Safety, Planning and Construction laws, and that the property has been fully completed, with no outstanding works.

An LFO allows off-plan purchasers to dwell in a property legally.

The Licence of First Occupation (LFO) is important for purchasing a property in Spain for two reasons:

  1. Its granting means the developer has built the dwelling complying fully with the original Town Hall’s Building Licence (BL) as well as complying with all Planning laws. The inspection to grant this Licence is carried out by Town Hall’s chartered technicians who certify that the dwelling complies fully with Health, Access, Security, Planning and Construction Laws and is deemed as apt for human habitation.
  2. It is also required by the property’s owner to have access to the official utilities (water, electricity, gas and telecommunications). Spanish law requires the granting of the LFO to hook up the dwelling to the supply grid. Although in some parts of Spain there have been cases of supply companies waiving this and connecting you without the said licence. In such cases the only requirement was showing the application of having requested the LFO from the Town Hall.

Banks normally require the LFO before they consider granting a mortgage loan against the property. The only exception would be the developer’s bank which has already underwritten the whole development and is able to offer a mortgage loan without it because they are eager to spread the developer’s default risk. Also, taking on the mortgage offered by the developer’s bank may have advantages as it reduces the legal set-up expenses borne by the prospective purchaser.

What are the Associated Problems of Completing on a Property without a LFO?

Although it is legal to complete in such a case, it has numerous legal and practical drawbacks which ought to be highlighted by your lawyer to aid you in making an informed decision. To name a few:

  • Primarily, you will not be able to take out a mortgage on the property or remortgage it – if needed be- by any bank other than the developer’s.
  • You will not be able to benefit from the official utility supplies; only from the developer’s supplies (water and electricity) with all the associated problems this has, namely that you may be cut off at any time as it is the developer who is paying for it and if they go into receivership you will be shut off. Besides, the site supply electricity doesn’t have the same strength and power surges are fairly common on simultaneously turning on various electrical appliances such as air conditioning.
  • Any future prospective purchaser, or their lawyer, will haggle with you and only pay a lower purchase price if you lack a LFO in a newly built resale. In a resale, the purchasers in turn will undergo the same problems to secure finance by means of a mortgage loan. A lack of a LFO implies that you are actually reducing the base of potential purchasers for your resale.
  • If there are planning issues, the Town Hall can set a charge against the property and you as the new owner of an off-plan –and not the developer- may be held liable to pay the fine for the planning illegality.
  • Needless to say, you cannot let a property legally without a LFO.


Also.... are you expected to pay additional instalments during the program of build?

Are these amounts fully protected in the event of developer insolvency/ administration? ( as rightly forewarned by Windtalker).

It would appear that there are still instances where Banks are contesting Bank Guarantees as they are challenging consumer law in instances where purchaser's "investor status" is being investigated. Suffice to say this also needs to be taken into consideration from the outset by good accredited INDEPENDENT conveyancing lawyers who should be able to further explain the many risks associated with offplan purchase. Education appears all in this scenario where all too many fail to comprehend the ongoing risks associated with offplan purchase. 

As an aside, it is important to recognise that sadly in the event of developer insolvency Spanish Banks continue to challenge Bank Guarantees at every opportunity, which ironically were intended to protect in the event of developer insolvency. During this last decade and beyond in that process they have sadly undermined not only the Spanish Justice system and trust in the Spanish Banking system's compliance, but also the rule of law. 


This message was last edited by ads on 4/7/2024.
Thread: Buying an off-plan apartment

06 Apr 2024 9:43 AM:

As advised back in 2019....

A new law Ley20/2015 replaced Ley 57/68 for offplan properties and this law came into force as from the first of January 2016. So all those purchasing off plan property after that date must remain aware of the following.

The change in the law is that bank guarantees are only valid as from the time a developer attains a Building Licence from the town hall. Only as from that moment onwards are bank guarantees valid.

Many developers try to allay purchasers fears claiming they have an application for a Building Licence; well, that isn’t enough. Unless a developer has attained a Building Licence, all the money you have paid towards your new property is unsecured.

Should the developer go bankrupt or the development become stalled (for whatever reason) you will lose ALL your money. Even if you have been issued with bank guarantees rubber stamped by a bank, they are totally useless unless a Building Licence has been issued.

A conveyancing lawyer must therefore advise his client not to pay any deposit before a Building Licence is issued to a developer. 

To repeat, any interim payment you make prior to its granting will therefore be unsecured and you will be left financially exposed with a risk of losing your deposits. It must be stressed that deposits are NOT covered by a bank guarantee or insurance policy prior to attaining a Building Licence under this new legislation.

Buyer beware!


Thread: Buying an off-plan apartment

04 Feb 2024 12:54 PM:

You can find Maria's contact details from Costaluz website


It would be good to gain answers to my questions on the thread however so that potential purchasers or existing owners can remain fully aware of the protections that are currently in place and if there are realistic legal routes to gain accountability under these circumstances. But always with a view to using existing law as a means of adequate redress. DOES EXISTING LAW COVER AND PROTECT YOUR CIRCUMSTANCE?

Would a small claims court suffice in this circumstance? Would your financial outgoings be recoverable?

Good luck. 

Thread: Bad Community - Conflict of Interest

04 Feb 2024 11:01 AM:


I wonder if Maria de Castro could answer the following concerns that this thread has identified in terms of the vulnerabilities that currently exist with regard to community of owners.

Could Maria please answer the questions that I posed in my last posting?

This reassurance would be much appreciated as it has the potential to address some of the issues that appear to be undermining community owners ability to resolve what appears as conflict of interests. Plus it also has the potential to educate those considering purchasing on a community and the aspects that they need to remain fully aware of in order to minimise such conflicts of interests.

Does the existing HPL adequately address these concerns? 

Many thanks.





Thread: Bad Community - Conflict of Interest


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