Bank Guarantees on Off-Plan Purchases (Ley 57/68)

Buying off-plan on the Costa del Sol means paying for a home before it exists. You typically sign a reservation, then a private purchase contract, and release your money in instalments as the building rises, with the balance due at completion. The single most important legal protection for a foreign buyer in this situation is the bank guarantee on off-plan purchases, the mechanism that forces the developer to refund every euro you advanced if the property is never delivered. This guide explains how that protection works under Ley 57/68 and its modern successor, what the guarantee must cover, and how to claim.

What the bank guarantee protects

The rule is simple: any money you pay a developer before you receive the finished, legally habitable home is not the developer’s money to spend freely. Every advance payment must be secured so that, if construction does not start or does not reach a good end, you get your money back rather than joining the queue of an insolvent developer’s creditors. The protection covers off-plan homes bought directly from a promoter, which is precisely the situation for most new-build purchases in Marbella, Estepona, Fuengirola, Mijas and across the Costa del Sol.

From Ley 57/68 to the LOE

The original statute was Ley 57/1968, of 27 July, on the collection of advance payments in the construction and sale of dwellings. ¹ It was formally repealed with effect from 1 January 2016 by Ley 20/2015, which rewrote the regime and moved it into the First Additional Provision (Disposicion adicional primera) of Ley 38/1999, the Ley de Ordenacion de la Edificacion (LOE). ²³ In practice buyers and lawyers still refer to the protection as “Ley 57/68”, and the courts continue to apply the old law to contracts signed before 2016, so the name remains the shorthand for the whole system. Contracts signed today are governed by the LOE, but the substance is very similar.

The developer’s obligations

Under the First Additional Provision of the LOE, a developer who takes advance payments for homes under construction must do two things. First, the developer must guarantee the return of the sums delivered, plus legal interest, from the date the building licence is obtained, either through a suretyship insurance policy (seguro de caucion) issued by an authorised insurer or through a joint-and-several bank guarantee (aval solidario) from an authorised credit entity, covering the case where construction does not begin or does not reach a good end. ²⁴

Second, the money itself must be handled correctly. Advance payments must be received through a credit entity and deposited in a special account, kept separate from the developer’s other funds, which may be used only for costs arising from the construction of the homes. ²⁴ The receiving bank is expected to exercise particular care to ensure the funds land in that dedicated account, and the Supreme Court has held banks liable where they failed to do so.

What the guarantee must cover

The guarantee is not limited to the bare capital you paid. The Banco de Espana confirms that the aval must cover the totality of the advance payments, including applicable taxes, plus the legal interest of money (interes legal del dinero) from the date each payment is made until the scheduled handover date. ⁴ The inclusion of taxes matters for off-plan buyers, because new-build stage payments carry IVA, and that IVA forms part of the sum you are entitled to recover. The exact purchase taxes on a new build are covered in the separate guide on new-build IVA and AJD.

Legal interest: the figure that grows your claim

If a claim succeeds, you recover 100% of your deposits plus the legal interest of money running from each payment. Spain sets that rate annually in its Budget Law. It has stood at 3.25% since the 2023 Budget (Ley 31/2022) and, because no new Budget has replaced that reference, it remains 3.25% for 2026; the related interest for late tax payment (interes de demora) is 4.0625% for 2026. ⁵ Because the interest accrues from the day of each payment right through until you are actually reimbursed, a claim that takes years to resolve can be worth substantially more than the sum you originally handed over, and the Supreme Court has confirmed that this interest keeps running even where the developer is insolvent.

How to claim if the home is not delivered

If construction does not start or does not finish within the agreed period, the process is straightforward in outline. You first require the developer to return all the sums you paid. If the developer does not comply within 30 days, you may claim reimbursement directly from the guarantor (the bank or the insurer). ⁴ You do not have to prove the developer’s insolvency first; the guarantee stands on its own, and the guarantor cannot escape by arguing that it owes less than the developer.

Spanish case law has been strongly protective of buyers. The Supreme Court has ruled that the absence of an individual guarantee certificate does not defeat your right to restitution where a collective or blanket policy exists for the development, and that the guarantor bank must refund the full deposits plus legal interest even where you paid through an intermediary or into an account other than the guarantor’s own. If you never received an individual guarantee document (many buyers on older Costa del Sol developments did not), that alone does not sink your claim.

When the guarantee ends

The security is not open-ended. It is cancelled once the developer proves both that the certificate of habitability, first occupation licence or equivalent document has been issued, and that the home has actually been delivered to you. ⁴ From that point the off-plan risk the guarantee was designed for has passed, and your protection shifts to the completion, snagging and handover stage covered in the snagging and handover guide.

Time limits

Do not assume a stale claim is still alive. The limitation period for a personal action in Spain was cut from 15 years to 5 years by the 2015 reform of article 1964 of the Civil Code, applying to relationships arising from 7 October 2015 onwards; older relationships were subject to a transitional cut-off. The Supreme Court has confirmed that the ordinary article 1964 period governs claims to recover advance payments. ⁶ Because the arithmetic of the transitional rules is unforgiving and the counting of the period can be fact-sensitive, anyone with a historic off-plan deposit should take Spanish legal advice quickly rather than delay.

Practical checklist for buyers today

• Before releasing any money, ask in writing for the individual guarantee certificate (aval or seguro de caucion) naming you as beneficiary for the exact amounts.
• Check that the promotional material and contract name the guarantor and the credit entity holding the special account, as the LOE requires developers to state. ²
• Pay only into the developer’s designated special account, never into a personal or general account.
• Keep every transfer receipt: the legal interest is calculated from each individual payment date. ⁴
• Confirm the covered sum includes the IVA charged on the stage payments, not just the net price. ⁴

The bank guarantee is the backbone of off-plan buyer protection in Spain, but it works alongside the other elements of the purchase. Read it together with the guides on reserving off-plan, off-plan versus resale, mortgages and deposits for non-residents, and paying the deposit and completion from abroad, so that the legal, financial and tax pieces of your Costa del Sol purchase line up before you sign.