Where clients get caught out
Some developers ask for stage payments without issuing an individual bank guarantee for each buyer. If the project stops, recovering the money without that guarantee can take years.
Checking the developer and the project
We verify that the developer owns the land, that the building licence is valid, how the project is financed and whether there are charges on the plot. We also review the specifications and plans attached to the contract.
Protecting your payments
Amounts paid before completion must be held in a special account and guaranteed by a bank guarantee or insurance issued individually to each buyer. We check each guarantee before every payment. See off-plan property and bank guarantees.
Taxes on a new build
| Tax | Rate |
|---|---|
| VAT on a home | 10% (21% on plots and commercial units) |
| Stamp duty (AJD) | Balearic rate on the deed value |
Handover and defects
At handover we check the first occupation licence and prepare a snagging list. Spanish building law gives the buyer guarantees against defects: one year for finishings, three years for habitability and ten years for structural defects. If defects appear, see property disputes.
Example: buying a new build or off-plan in Mallorca
Based on situations we commonly see; not a specific client. A Belgian couple reserved an off-plan apartment in Palma with payments of 30% before completion. The developer had a general guarantee policy but no individual certificate for them. We obtained the individual guarantee before any payment was made.
Our collaborators for buying a new build or off-plan in Mallorca
For every service we work with trusted collaborators when a matter needs them: notaries, architects and surveyors, tax advisers at Castell.tax, sworn translators, banks and mortgage brokers, property managers and specialist lawyers in other parts of Spain. You keep one lawyer as your single point of contact, and we coordinate everyone else.
Castell.law is the English and German-speaking practice of Castell Abogados, a law firm in Palma de Mallorca. This page is general information, not advice on a specific case: laws and procedures change, so check your situation with us before acting.
Not sure where you stand? Ask before you sign
Tell us about your matter or send us the documents you have. A lawyer will explain the risks, the options and the cost before you commit to anything.
Questions about buying a new build or off-plan in Mallorca
Are my off-plan payments protected?
Yes, if the developer issues an individual bank guarantee or insurance for each payment.
What taxes does a new build pay?
10% VAT for homes plus Balearic stamp duty.
What if the project is delayed?
The contract and the guarantee decide whether you can terminate and recover your money.
How long are new builds guaranteed?
Up to ten years for structural defects.