30 Jun Basic guide to buying an off plan property
Plots with excavators and cranes transferring material. This is what we see in many lots of our cities, in Spain and it is indicative that the sale an off plan property has reactivated strongly.
This kind of purchase has, without doubt, certain advantages, for example, that the house will be part of a new building, or that the promoter allows the variation and personalization of the finishes of work.
The major drawbacks of buying off plan are essentially three: (i) that at the time of signing the purchase commitment, the object of the purchase does not exist (and, therefore, there is no certainty of what it will be, even if (ii) that in these purchase commitments the purchaser is required to disburse a series of payments to account whose repayment in case of breach of the promoter can be difficult, and (iii) between signing the commitment and the delivery of housing usually takes a considerable time, in which circumstances may occur, whether or not foreseeable, impact on the outcome of the business.
The last real estate crisis has left us a good rush of buying cases off plan with bitter end: buyers who never received their homes because the buildings were paralyzed by the insolvency situation of the developers and are living a judicial ordeal to try to recover the quantities delivered. To analyze this matter and possible ways of claiming, we will dedicate another post from our section. This post pretends to be a preventive resource when it comes to buying off plane to minimize, as far as possible, the disadvantages pointed out:
1. Require the developer or marketer to make all mandatory documentation, both the one that must be available at the time of commercialization (before signing the reservation and the sales contracts), and the one that must be made available to the buyer at the time of the delivery of housing. There are different regulations in each Autonomous Community, but in general terms it includes:
a) Identification of the promoter, builder, facultative management and other professionals related to the construction. Thus the buyer will know against whom it has to address in the case of non-compliances or constructive defects.
b) Description of the house with plans and expression of the useful surface.
c) Quality report: indication of materials used in the work.
d) Copy of the works permit granted for the work project.
e) Registration data of the farm on which the houses will be built.
f) Statutes of the Community of Owners.
g) Precise indication of the date of commencement of the construction and delivery of the dwelling, which must be included in the purchase contract as an essential condition.
h) Price and exact form of payment, including any taxes that may accrue. This must also be recorded in the contract of sale
i) Delivery of the obligatory guarantees to ensure the return of the amounts delivered on account plus the legal interest (insurance or individualized guarantees) and require that the amounts are entered into a special account. All this must be reflected in the contract of sale.
j) The Energy Efficiency Certificate and the energy label. The license of first occupation of the building, and the certificate of habitability of the dwelling in those communities in which it is obligatory. The list of supply companies and newsletters. The guarantees of housing (ten-year insurance). All this documentation is part of the Building Book.
2. To keep a copy of all the documentation, included in the offer, promotion and publicity distributed during the commercialization, since its content is binding for the promoter.
3. Sign a sales contract that includes the essential aspects referred to in point.
4. Have professionals to review technical issues. As we can not all “read” the plans or understand the memory of qualities, it is advisable to have the help of a professional (architect) to “translate” this information and indicate the characteristics of the building, the orientation of the house and the rooms, the suitability of its size, and, above all, warn us of some feature that we have not been able to decipher in the plans (for example, ceilings overly sloping, rooms not functional for their size), and ensure that reality will meet our expectations.
Likewise, in order to review legal documentation, demand fulfillment of the information obligations of the promoter, identify abusive clauses in sales contracts, and review the adequacy of the guarantees provided, it is necessary to have the assistance of a lawyer expert.
Real Estate Department