Buying off-plan in the south of Tenerife: the bank guarantee the law gives you, what to demand before paying, and what happens when the developer is late

A couple from Leeds sit in our Costa Adeje office with a glossy brochure for a development above Playa del Duque: a reservation of €6,000 already paid, a private contract on the table asking for 20 % of the price over the next fourteen months, and delivery «estimated» for the summer of 2028. Their question is the one every off-plan buyer in the south of Tenerife should ask before the first transfer: what protects that money if the building never rises, or rises two years late? The answer is a Spanish law with a long history and a new address, a document the developer must hand you the day you sign, and a clock that runs against you as much as against the developer. This piece reads the texts — the first additional provision of the Building Act as rewritten in 2015, the consumer-information decree of 1989, the land-registry rules and the Supreme Court's own compilation of its case law — and then works the couple's numbers. Quotations are in Spanish with the reading in English.

The law that protects your deposits, and where it lives now

For almost fifty years the rule was Ley 57/1968, the law on advance payments for the construction and sale of homes. It was repealed with effect from 1 January 2016 by Ley 20/2015, whose third final provision rewrote its content as the first additional provision of Ley 38/1999, the Building Act, and added the repeal of the 1968 law and its 1968 decree and order. So when a developer's contract in Adeje or Granadilla still cites Ley 57/1968, the reference is obsolete; the obligations are the same in substance and now stand in the Building Act. The provision applies to toda clase de viviendas, incluidas las que se realicen en régimen de comunidad de propietarios o sociedad cooperativa — every kind of home, including those built by owners' communities or cooperatives — whenever the promoter wants money from buyers before the home exists.

Three obligations the developer owes you from the day the licence exists

The first paragraph of the provision sets two conditions on any developer who takes money in advance, and a third on the bank. The developer must Garantizar, desde la obtención de la licencia de edificación, la devolución de las cantidades entregadas más los intereses legales, mediante contrato de seguro de caución suscrito con entidades aseguradoras debidamente autorizadas para operar en España, o mediante aval solidario emitido por entidades de crédito debidamente autorizadas, para el caso de que la construcción no se inicie o no llegue a buen fin en el plazo convenido para la entrega de la vivienda — guarantee, from the moment the building licence is obtained, the return of the sums paid plus legal interest, through a surety insurance contract with an authorised insurer or a joint and several bank guarantee, for the case that construction does not start or is not completed within the agreed delivery period.

The developer must also receive the advances through a bank cuenta especial, con separación de cualquier otra clase de fondos pertenecientes al promotor — a special account, separate from any other funds of the developer — usable only for the construction. And the bank is not a bystander: to open that account la entidad de crédito, bajo su responsabilidad, exigirá la garantía a que se refiere la condición anterior — the credit institution, on its own responsibility, shall demand the guarantee. The cover is not the bare price: La garantía se extenderá a las cantidades aportadas por los adquirentes, incluidos los impuestos aplicables, más el interés legal del dinero — the guarantee extends to the sums paid by the buyers, taxes included, plus the legal interest of money.

Two consequences follow for a buyer in the south. Money paid before the licence exists is money the law does not yet oblige the developer to guarantee, which is why a reservation on a plot without a licence is the riskiest euro of the whole purchase. And the account you pay into is not a detail: a transfer to the developer's ordinary account, or to an agent, sits outside the system the law built.

Insurance or bank guarantee: what each document must say

The provision's second paragraph writes the rules for each instrument. A surety insurance must be individual: Se suscribirá una póliza de seguro individual por cada adquirente — a policy per buyer, identifying the home. The insured sum must be the whole of the advances in the contract, taxes included, increased by the legal interest from each payment to the promised delivery date; the developer takes out the policy and pays the premium; the buyer is the insured; and the insurer cannot hide behind the developer: El asegurador no podrá oponer al asegurado las excepciones que puedan corresponderle contra el tomador del seguro. La falta de pago de la prima por el promotor no será, en ningún caso, excepción oponible — the insurer may not raise against the insured the defences it may have against the policyholder, and the developer's failure to pay the premium is never a defence. The policy must last at least as long as the delivery commitment, and any extension of the delivery date must be matched by an extension of the policy, with notice to the buyer.

A bank guarantee follows the same lines on amount and on the claim, with one clause of its own. Both instruments are called the same way: siempre que haya requerido de manera fehaciente al promotor para la devolución de las cantidades aportadas a cuenta, incluidos los impuestos aplicables y sus intereses y este en el plazo de treinta días no haya procedido a su devolución — once the buyer has formally demanded the refund from the developer and thirty days have passed without it, the buyer claims from the insurer or the bank, which must pay within thirty days; and where a demand to the developer is not possible, the buyer may go to the guarantor directly. The clause that belongs to the bank guarantee alone is a trap: Transcurrido un plazo de dos años, a contar desde el incumplimiento por el promotor de la obligación garantizada sin que haya sido requerido por el adquirente para la rescisión del contrato y la devolución de las cantidades anticipadas, se producirá la caducidad del aval — two years after the developer's breach without the buyer demanding rescission and refund, the guarantee lapses. A buyer who lets a late delivery drift while the developer promises «next spring» is spending that clock.

Whichever instrument the developer chose, the law puts a paper in your hands on signing day: the developer hará entrega al adquirente del documento que acredite la garantía, referida e individualizada a las cantidades que han de ser anticipadas a cuenta del precio — shall deliver to the buyer the document evidencing the guarantee, referred and individualised to the sums to be advanced. A brochure line saying «all payments are guaranteed» is not that document; a certificate naming you, the home and the amounts is. The advertising itself is regulated: any promotion that takes money before or during construction must state that the developer complies with the law, haciendo mención expresa de la entidad aseguradora o avalista garante, así como de la entidad de crédito en la que figura abierta la cuenta especial — expressly naming the insurer or guarantor and the bank where the special account is open.

What the contract must state, and what the developer must show you

The third paragraph of the provision lists what the private contract must expressly say: that the developer undertakes to refund the advances, taxes included, plus legal interest if construction does not start or finish within the agreed periods, o no se obtenga la cédula de habitabilidad, licencia de primera ocupación o el documento equivalente que faculten para la ocupación de la vivienda — or if the habitability certificate, first-occupation licence or equivalent document is not obtained; the reference to the insurance or guarantee with the name of the insurer or bank; and the bank and account through which you must pay.

Beside it stands Real Decreto 515/1989 on consumer information in the sale of homes, which is still in force and is written for exactly this moment. Anyone selling homes must keep available, and give you a copy of at the seller's cost — article 9: the buyer tiene derecho a recibir a costa del vendedor copia de los documentos — the seller's identity and registry data, plans of the site and of the home, its useful surface, the materials, the registry details of the property or a statement that it is not registered, the total price and the way of payment (article 4); and for a promotion, copies of the building licence and the planning certificate, the statutes of the future community, the tax position, the way the contract will be documented, and, where the home is not yet built, se hará constar con toda claridad la fecha de entrega y la fase en que en cada momento se encuentra la edificación — the delivery date and the phase the building is at must be stated with complete clarity, together with the architect's and the builder's names (article 5). Article 7 adds that for an unfinished home the seller must keep available a copy of the documents formalising the guarantees for advance payments, and article 6 requires a price note that lists the instalments, the interest on deferred amounts and Garantías que deberá constituir el comprador — any guarantees the buyer must give. A developer who cannot produce these before you sign is telling you something.

The registry, the licence and the insurance behind the building

Three public checks cost little and settle much. The first is the land registry: a nota simple of the plot from the Registro de la Propiedad of Adeje, Arona or Granadilla de Abona shows who owns the land, whether a construction loan is already registered against it and whether the building has been declared. The declaration of a new building under construction cannot be notarised without the licence: notaries demand el acto de conformidad, aprobación o autorización administrativa que requiera la obra — the administrative act of conformity, approval or authorisation the work requires — and a technician's certificate that the description matches the licensed project (article 28.1 of the consolidated Land Act), and the finished building cannot be registered without the completion certificate and the occupancy authorisations. In the Canaries the first occupation of a finished building is not a licence but a prior communication to the town hall — Ley 4/2017 lists Primera ocupación de las edificaciones y las instalaciones, concluida su construcción — first occupation of buildings and installations, once construction is complete — among the acts subject to comunicación previa (article 332.1.c) — which is the «documento equivalente» the guarantee provision refers to.

The second check is the ten-year insurance. The Building Act requires, for every new building, an insurance or financial guarantee covering for ten years the damage from structural defects (article 19.1.c), and article 20.1 makes it a condition of the deed: no deed of a new building is authorised or registered sin que se acredite y testimonie la constitución de las garantías a que se refiere el artículo 19 — without proof of those guarantees. The third is the developer's own mortgage. Most developments in the south are financed by a construction loan distributed across the future homes; at completion you either take over your share of it or demand its cancellation at the developer's cost, and the 1989 decree obliges the developer to tell you in advance the notary, the date, the registry data and the mortgage liability of each home if any subrogation is planned.

A worked example from Adeje

Take the couple's apartment: price €320,000, reservation €6,000 on signing the reservation, 20 % — €64,000 — in monthly instalments over fourteen months from the private contract, the remaining €250,000 at the deed, delivery promised for 30 June 2028. The guarantee the law demands must cover the €70,000 of advances, the IGIC charged on them — 7 % on a home that is not the buyers' habitual residence, €4,900 — and the legal interest of money from each payment to 30 June 2028, which at the 3.25 % in force as we write adds roughly €3,000 across the schedule. The certificate the couple should hold on signing day therefore names them, identifies the apartment, and covers about €78,000, not a round «20 %».

If the building is never started, or on 1 July 2028 the apartment is not delivered, the couple write a formal demand to the developer for the refund of the €74,900 plus interest; on the thirty-first day without payment they claim from the insurer or the bank, which has thirty days to pay. Alternatively they may grant an extension, but only by a written additional clause with a new delivery date, and only if the guarantee is extended to match it. What they should not do is nothing: with a bank guarantee, two years after 30 June 2028 without a demand, the guarantee is gone.

When the developer is late: rescission or extension, and the clock

The provision's fourth paragraph is short and favours the buyer: Si la construcción no hubiera llegado a iniciarse o la vivienda no hubiera sido entregada, el adquirente podrá optar entre la rescisión del contrato con devolución de las cantidades entregadas a cuenta, incluidos los impuestos aplicables, incrementadas en los intereses legales, o conceder al promotor prórroga — if construction has not started or the home has not been delivered, the buyer may choose between rescinding the contract with the refund of the advances, taxes included, plus legal interest, or granting the developer an extension, recorded in an additional clause with the new completion and delivery date.

How much delay is enough was settled by the Supreme Court under the old law, and its own compilation of doctrine states the rule: in sales subject to the advance-payments regime, a delay in delivery beyond the agreed date, even one that is not especially serious, is a breach that entitles the buyer to rescind, provided that el derecho a resolver se ejercite por el comprador antes de ser requerido por el vendedor para el otorgamiento de escritura pública por estar la vivienda ya terminada y en disposición de ser entregada — the buyer exercises the right before being summoned by the seller to sign the deed because the home is finished and ready to be delivered (plenary judgment of 20 January 2015, appeal 196/2013). That is the sharper edge of the general rule of article 1124 of the Civil Code, under which a court weighs the seriousness of the breach; here the date itself is the term. The same compilation records that the guarantee is autonomous: the buyer may claim from the developer or from the guarantor, jointly and severally, without first obtaining a judicial rescission (judgments of 3 July 2013, 7 May 2014 and 22 April 2015), and that the insurer answers for every advance actually paid even where the policy printed a lower cap. One exception is written in the Civil Code itself: if buyer and developer dissolve the contract by mutual agreement before the delivery date, the guarantor is free, because La obligación del fiador se extingue al mismo tiempo que la del deudor — the surety's obligation is extinguished with the debtor's (article 1847; plenary judgment of 23 March 2015).

Two clocks matter. The guarantee's own two-year lapse for bank guarantees, above; and the general five-year limitation of personal actions, which since the 2015 reform of article 1964.2 run desde que pueda exigirse el cumplimiento de la obligación — from the day performance can be demanded. A buyer who waits for a developer's promises past those dates has, in practice, converted a guaranteed claim into a bare one.

When the guarantee is missing: who answers

The worst case is the contract with no guarantee at all, or with a «line» that never produced an individual certificate. The Court's doctrine, built under the 1968 law and carried into the 2016 text by the courts since, treats the absence of the guarantee as an essential breach in itself: while the home is not finished and ready for delivery, the buyer may rescind for that reason alone (a line of judgments from 25 October 2011 to 15 September 2015, several of them plenary). The bank that received the advances without a special account and without demanding the guarantee answers too: the plenary judgment of 21 December 2015 reads the bank's role as one that supone la imposición legal de un especial deber de vigilancia sobre el promotor — imposes by law a special duty of vigilance over the developer — so that a developer could not defeat the system by collecting buyers' money in an ordinary account. The 2016 text says the same in its own words, «bajo su responsabilidad». And the directors of a developer that took unguaranteed advances have been held personally liable for the buyers' loss as a breach of their own duty of care (judgments of 23 May 2014, 25 November 2014 and 3 March 2016). None of that replaces the certificate in your hand; it is the map of who to sue when the certificate was never issued, and the reason to refuse to pay until it is.

Ten things to demand before paying a euro

1. The building licence, as a copy, with its date, and the planning certificate of the plot.
2. A nota simple of the plot from the land registry, no older than a month, showing the owner, the charges and the declared building.
3. The name of the insurer or bank guarantor and the name of the bank and the number of the special account, written in the contract.
4. The individual guarantee document in your name, identifying the home and covering every instalment, the IGIC on it and legal interest to the delivery date.
5. A delivery date written as a date, not a season, and the phase the works are at on the day you sign.
6. The payment schedule with each instalment, its date and its IGIC, and the statement that nothing is paid outside the special account.
7. The developer's registry data, the architect's and the builder's names, and the plans and surface of the home.
8. The community's draft statutes and the position of the developer's mortgage on your future home.
9. The refund clause the law requires, verbatim, and the extension mechanism as an additional written clause, never a verbal reassurance.
10. The tax note: IGIC on each instalment and at the deed, stamp duty at the deed, and who pays the notary and registry.

Taxes on an off-plan purchase in the Canaries

A home bought from its developer is subject to IGIC, not to transfer tax, and the tax accrues on each advance as it is paid. The rate is the general 7 % unless the home will be your habitual residence, where the Canary consolidated text sets 5 % for a taxable amount up to €200,000 when you own no other home, and 3 % for buyers under forty, large families and other listed groups within income limits (Decreto Legislativo 1/2025, article 38). At the deed the stamp duty applies at 1 %: the Canary ceded-taxes text fixes the general rate at 0.75 % and adds that cuando se trate de documentos relativos a operaciones sujetas al Impuesto General Indirecto Canario o al Impuesto sobre el Valor Añadido, el tipo se fija en el 1 por 100 — for deeds documenting operations subject to IGIC or VAT the rate is 1 % (Decreto Legislativo 1/2009, article 36), reduced to 0.40 % for a habitual residence that meets the conditions of the reduced rates. The wider tax and legal map of a purchase — the reference value, non-resident buyers, the golden-visa repeal — is in our guide to buying property in the Canaries; the private contract and the deposit rules are in our piece on the arras contract; and a buyer from outside the European Union should read the Canary purchase limit for non-residents before reserving anything on a plot near the coast.

The guarantee is not the developer's promise, the bank's brochure or the agent's assurance. It is a piece of paper with your name on it, the home's identification and a sum that covers every euro you will pay before the keys, with its tax and its interest. If that paper is not on the table on signing day, the law says the developer is in breach before the first brick, and the courts have said the same for a decade.

Our property team at the Costa Adeje office reviews off-plan contracts, guarantee certificates and registry notes for buyers in the south of Tenerife before the first transfer, and manages the demand and the claim against the guarantor when a delivery date passes; the review is a paid consultation, quoted in advance. The service is described on our property law page, and the contact page has both offices' hours.

Common questions

Is my reservation deposit covered by the guarantee?

Only if it was paid after the building licence exists and into the special account, and only if the individual guarantee document lists it. The law's guarantee duty starts desde la obtención de la licencia de edificación; money paid before that date to reserve a unit on an unlicensed plot depends on the contract and on the developer's solvency. Ask for the licence before you reserve, and make the reservation refundable in writing if it does not exist yet.

The contract says the payments are guaranteed by a «bank line». Is that enough?

No. The law requires a guarantee referida e individualizada to your instalments, delivered to you on signing. A framework line between the developer and a bank is the source from which your certificate is issued; until you hold the certificate in your name, you hold nothing the guarantor must honour without argument. The Supreme Court has held insurers to collective policies even without the individual certificate, but that is litigation, not a document.

The developer offers a later delivery date and a small discount. Should I accept?

You may, but do it as the law describes: an additional written clause with the new completion and delivery date, and the guarantee extended to the new date with notice to you. Bear in mind that accepting an extension resets the point from which a later delay counts, and that with a bank guarantee the two-year lapse runs from the developer's breach; a series of informal extensions is how buyers lose the guarantee without noticing.

What exactly do I get back if I rescind?

Every sum paid on account, the IGIC paid on those sums and the legal interest of money from each payment, from the developer within thirty days of your formal demand or, failing that, from the insurer or bank within thirty days of your claim to it. Not the notary or agent costs you may have incurred, and not the increase in value of the home; those are claims against the developer under the general rules, if it is solvent.

Does this apply if I buy through a cooperative or a community of owners?

Yes. The provision expressly covers homes promoted en régimen de comunidad de propietarios o sociedad cooperativa, and the guarantee, the special account and the individual document are owed to each member in the same way. The difference is practical: in a cooperative you are also a member of the promoter, so read the statutes and the management contract as carefully as the guarantee.

This article is general information as of September 2026, not legal advice for any particular contract; the texts cited are the first additional provision of Ley 38/1999 in the wording of Ley 20/2015, Real Decreto 515/1989, the consolidated Land Act, Ley 4/2017 of the Canary Islands, the Canary tax texts and the Supreme Court's published compilation of its doctrine on advance payments. Contract terms, dates and tax figures are the ones in force on the day you sign; a consultation with our property team is a paid service.