Off-plan payment schedules on the Costa del Sol begin with a reservation deposit, followed by an initial down payment of approximately 10% upon signing the Private Purchase Agreement. Subsequent payments, typically 10% to 20%, are staggered throughout the construction period, aligning with specific build milestones like structural completion or roofing. All these interim payments are legally required to be protected by bank guarantees or insurance policies, safeguarding the buyer's investment. The final balance, usually 60% to 70% of the purchase price, is paid upon the property's completion, issuance of the habitation license, and signing of the public deed of sale before a Notary. Buyers must ensure all payments are backed by individual bank guarantees.
Off-plan property developers on the Costa del Sol usually structure payment schedules in phases, aligning with construction milestones to mitigate risk for both parties. Typically, the process begins with a reservation deposit, often ranging from 3,000 to 10,000 Euros, which secures the property for a short period while legal checks are conducted. Following this, approximately 10% of the purchase price, minus the reservation deposit, is paid upon signing the Private Purchase Agreement (PPA). This initial down payment is legally protected by bank guarantees or insurance policies, as mandated by Spanish law (Law 57/1968, superseded by Act 20/2015), ensuring the return of funds if the property is not delivered. Subsequent payments are then staggered throughout the construction period, commonly at 10% to 20% intervals, coinciding with specific build stages such as the completion of the structure, roofing, or internal installations. These staged payments are also covered by bank guarantees, offering continuous protection for the buyer's investment. The final and largest payment, usually 60% to 70% of the total price, is due upon completion of the property, issuance of the habitation license (Licencia de Primera Ocupación), and signing of the public deed of sale before a Notary. Buyers should always confirm that all interim payments are backed by individual bank guarantees or insurance certificates, which are crucial for safeguarding their investment against potentialinsolvency or non-completion by the developer. It is also important to factor in the 10% VAT (IVA) on new builds, stamp duty (AJD) at 1.2% to 1.5% in Andalusia, and legal fees, which are paid at relevant stages. An independent lawyer is essential to verify the legality and protection of all payment terms and guarantees.
