Off-Plan on the Costa del Sol: How Your Deposit Is Protected (2026)

Most buyers who ask me about off-plan are not really asking about the building. They are asking something simpler: if I pay now for a home that does not exist yet, what happens to my money if something goes wrong?

That is the only question this article answers. If you want the full purchase process from search to keys, I explain it in my guide to buying new developments in Spain, and the advantages of buying new are in why you should buy a newly built property on the Costa del Sol. Here I stay with payments and protection, from Sotogrande to Estepona and Manilva, because that is where off-plan purchases are won or lost.

Last reviewed: October 2026. Rules, tax rates and case law change, so ask your lawyer to confirm the points that apply to your purchase.

How off-plan payments usually work

The structure changes from one developer to another, but the pattern is familiar. You pay a reservation to take the unit off the market. You then sign a private purchase contract and pay a first deposit. During construction you pay further instalments on a schedule written into the contract. The balance is paid at the notary, when the public deed is signed and the home is delivered.

It is common for a significant part of the price, often in the range of 30% to 40%, to be paid before completion. That is a general pattern, not a rule, so ask for the exact schedule in writing and make sure it matches the contract.

Remember that new homes carry VAT (10%) and, in Andalusia, stamp duty (AJD, 1.2%) instead of the transfer tax that applies to resale. I explain how this adds up in what taxes apply when buying property in Spain and AJD in Andalusia.

The three layers of protection in Spanish law

The rules for money paid in advance on a home under construction are in the first additional provision of the Building Regulation Act (Ley 38/1999), amended by Ley 20/2015. In practice they work as three layers.

1. The building licence comes first

The developer’s obligation to guarantee your money starts once the building licence has been granted. My advice is simple: before the licence exists, limit any payment to a small reservation, and have your lawyer confirm in writing how and when it is refunded.

2. A guarantee for the money you advance

The developer must guarantee the return of the amounts you pay, plus legal interest, if the works do not start or are not completed in the agreed time. The guarantee takes one of two forms: a joint bank guarantee (aval solidario) issued by a credit institution, or a surety insurance policy (seguro de caución) from an authorised insurer. Both are valid. What matters is that the entity is authorised in Spain and that the guarantee is documented correctly.

3. A special account

Your payments must be received through a bank and deposited in a special account for the project, separate from the developer’s other money. This is the layer buyers forget, and it is the one that makes the other two work.

What the guarantee covers, and when it ends

The guarantee must cover the amounts you advance, including the taxes you pay, plus legal interest from the date of each payment until the agreed delivery date. The interest rate is set every year, so ask your lawyer for the current figure rather than relying on an old one.

If the works do not start or the home is not delivered, the law gives you a choice: terminate the contract and recover what you paid, or grant the developer an extension. The guarantee is cancelled once the home has its habitability documentation (the first occupancy licence process) and the delivery to the buyer is proven. In other words, it protects the construction phase. It is not a lifetime warranty.

How to check that your money is really protected

I would not pay an instalment until each of these points is confirmed, ideally by your own lawyer:

• A guarantee document in your name. The developer must give you a document that proves the guarantee and refers specifically to the amounts you will advance.
• The contract names the guarantor. It should say which bank or insurer issues the guarantee.
• The guarantor is authorised in Spain. Your lawyer can check the official registers.
• Payments go to the special account. Pay only into the project account at the bank named in the contract, never into another company or another account.
• Every payment is covered. The guaranteed amount should grow with what you pay. Ask in writing whether extras and upgrades are included.
• Timing is clear. Check the delivery date, the delay clause and the point from which you can terminate.

Red flags

I treat any of these as a reason to stop and ask questions: “the guarantee will be issued later”, a request to pay into a different account, a payment demanded before the licence beyond a small reservation, a contract that does not name the bank or insurer, and pressure to pay quickly to “secure the price”.

What the May 2026 Supreme Court ruling means for investors

This is the update that most articles on the subject have not caught up with. A Supreme Court ruling of May 2026, reported by idealista, stresses that the protection of advance payments is not automatic just because you bought a home under construction. The court looked at whether the purchase was genuinely for residential use.

According to that report, the factors weighed included whether the buyer already owned other properties, whether the contract allowed the home to be assigned to third parties, purchases made jointly by people who do not share a household, and whether the buyer could explain what the home was for. Where there are signs of an investment purpose, the buyer may have to prove more.

I am not a lawyer and I have not read the full judgment, so ask yours how it applies to you. My practical conclusions are these. If you buy as an investor, or through a company or a shared structure, do not assume the guarantee will behave exactly as it would for a family buying a home. Ask your lawyer to review assignment clauses and how your purpose is documented. And choose the developer with extra care, because the best protection is a project that never needs to be claimed. I cover that in how to check a developer’s reputation, and investor-specific questions are in my 10 essential questions for off-plan investment properties.

If there is a delay, or the developer fails

1. Read the contract. Find the delivery date, any permitted delay and your rights to terminate.
2. Act through your lawyer. Send formal written notice instead of relying on messages from the sales team.
3. Choose between extension and termination. Do not accept a new date without understanding what you give up.
4. Claim against the guarantor. If the developer does not return your money, the guarantee can be enforced against the bank or insurer.

If there was no guarantee or no special account, all is not lost. Case law, including a Supreme Court judgment of June 2016, has held banks responsible when they accepted buyers’ payments into a developer’s account without requiring the special account and the guarantee. Law firms put the general period for these claims at five years, but your lawyer should confirm which period applies. Do not wait.

Questions I hear most

Is surety insurance as safe as a bank guarantee?

The law accepts both. What matters is that the issuer is authorised and that the document is individual and correct.

Does the guarantee cover the VAT I pay?

The guarantee should cover the amounts you advance including taxes, plus legal interest. Confirm it with your lawyer in your contract.

Is a finished new build safer?

There is no construction risk and no staged payments to guarantee, but you lose the choice of unit and the payment schedule. I compare both options in New Build vs Resale on the Costa del Sol, and you can see where I would look first in the best new build areas on the Costa del Sol.

A final thought

Off-plan is not risky because the home does not exist yet. It is risky when the money moves before the protection is in place. The buyers who sleep well during construction are the ones who asked for the paperwork before the first transfer, and had someone who works only for them read it. It takes a few days at the start and removes most of the worry later.