A Manchester legal firm has warned that Britons who bought holiday homes in Spain off-plan and now want to pull out are being pursued in the Spanish courts by developers, even though there was a clause in their contracts which should have allowed them to back out of the deal. The DWF firm is acting for a number of British buyers who've been threatened with legal action, and Antonio Guillen, a Spanish lawyer working for the firm, says that it is waiting to see whether courts in Spain will uphold the position of the developers.
The predicament faced by buyers in this case is the opposite of that faced by many who've bought off-plan and have been left stranded by developers who've gone bust, or have abandoned the promised development half-completed. What both situations demonstrate is the importance of paying close attention to the legal contract when you do buy a property off-plan – before it has been constructed.
John Howell, senior partner at property lawyers the International Law Partnership, says that before signing up to any developer's contract you should always check whether a completion date is specified, and whether you will be entitled to compensation if the developer is late with the scheme. The contract should state when building will begin and end, he says, not just the length of time it will take.
Off-plan property became hugely popular in the last 10 years or more for a number of reasons: you would normally expect to buy at a lower price than when the property was completed; if demand was high, it could be the only way to secure a property; and you might also have the opportunity to specify some of the finishes in your property.
The case for buying off-plan is currently looking tenuous and the safe option is to buy something that is already completed in an established environment. Nevertheless, in some cases it will still make sense; before doing so you should make sure you really are getting a good discount; that you have a watertight contract; and that the pedigree of the developer is beyond reproach, so that the development will be delivered on time and as promised.
Alexander Garrett is a freelance property writer who contributes regularly to The Observer and British Airways' Business Life.