Off-plan deposit guarantees: sell off-plan with the guarantee the law requires
Developers who take payments on account before a home is finished must guarantee their refund to buyers. With surety insurance they can do so without using up the bank lines they need to finance construction.
A legal obligation for developers and protection for buyers
The Spanish Building Act requires anyone developing homes, including cooperatives and owners' associations, to guarantee the refund of payments made by buyers on account before handover, plus statutory interest.
The guarantee responds if construction does not start, is not completed within the agreed period or does not obtain the authorisations needed for handover. It can be provided by a bank guarantee or by surety insurance, and the money must be paid into a special account, separate from any other developer funds.
It is also known in Spain as afianzamiento de capitales or insurance of payments on account.
In a nutshell
Each buyer receives a certificate guaranteeing they will recover what they have paid if the home is not delivered. The developer can keep selling off-plan without tying up their financing.
From building permit to handing over the keys
- Development policy. The insurer assesses the project and issues a group policy for the development, with a limit covering the expected payments.
- Certificate per buyer. For each sale contract, an individual certificate is issued in the buyer's name and handed over with the contract.
- Special account. Payments on account are made into the development's special account.
- Release. The guarantee ends when the home obtains the authorisations needed for handover and is delivered to the buyer.
The advantages for developers
Financing intact
Bank lines remain available for the development loan and day-to-day operations on site.
Sales momentum
Certificates for each buyer are issued quickly as sales are signed.
More capacity
Allows several developments at once by adding insurers' capacity to that of the banks.
Buyer confidence
A guarantee from a solvent insurer is a selling point when marketing off-plan.
We prepare the file so the development can go ahead
We present the development to surety insurers with the documentation they need to decide quickly, and negotiate limit, premium and counter-guarantees.
- The project. Permit, location, number of homes, budget and construction schedule.
- Viability. Financial study, construction financing and level of pre-sales.
- The developer. Solvency, annual accounts and track record in previous developments.
- The structure. Special purpose vehicle, shareholders and, where applicable, additional guarantees.
Deposit guarantees, ten-year cover and all risks, coordinated
A development needs several policies throughout its life: guarantees for buyers' payments, contractors' all risks during construction and ten-year building insurance after handover. We coordinate them from the outset so there are no gaps or overlaps, with the legal backing of Grupo Trebia.
Daniel Santana
Client Manager · Trade Credit and Surety · Creditizia, Grupo Trebia
He supports you from the initial analysis of your company to the issue of each guarantee, liaising directly with the surety insurers.
What clients usually ask us about off-plan deposit guarantees
Is it compulsory?
Yes. Anyone developing homes who receives payments on account from buyers before handover must guarantee their refund, including cooperatives and owners' associations.
What exactly does it cover?
The refund of payments made on account, plus statutory interest, if construction does not start, is not completed within the agreed period or does not obtain the authorisations needed for handover.
Surety insurance or bank guarantee?
Both are valid. Surety insurance has the advantage of not using up the bank lines the developer needs to finance construction.
When does the guarantee end?
When the home obtains the authorisations needed for handover and is actually delivered to the buyer.
I'm a buyer. How do I know my money is guaranteed?
The developer must give you an individual certificate in your name issued by the insurer or bank, and tell you the special account into which to make payments. Ask for it before paying anything.
How much does it cost?
It depends on the amount guaranteed, the construction period, the developer's solvency and the viability of the development. We present comparative proposals free of charge.
We will prepare a free review of your development
Tell us who you are and what development you are planning. Our specialist will contact you to prepare the file and present it to surety insurers.
- Comparison across more than 40 insurers
- A review of your current policy, if you have one
- A single point of contact who also supports you with claims
Request your review
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