Where buyers get caught out
Some buyers transfer deposits straight to the developer without an individual guarantee in their name. If the project stops, or is delayed because the licence is challenged, getting that money back becomes much harder. Guarantees must be issued for each payment, which must go into a special account.
Before you sign
| Check | Why it matters |
|---|---|
| Developer | Company, track record and financial position |
| Plot and licence | Ownership of the land and a valid building licence under the island plan |
| Guarantees | Bank guarantee or insurance for every payment |
| Contract | Specifications, delivery date, penalties, termination |
| Division and community | Your unit, parking, storage and community rules |
| Future use | Whether holiday rental will be legally possible |
Protecting your payments
Developers of residential property must guarantee amounts paid on account until delivery through a bank guarantee or insurance and a special account. We check that each guarantee covers your payments plus legal interest and is issued before you pay.
Negotiating the contract
Developer contracts tend to allow flexible dates and limited penalties. We negotiate a firm delivery date, your right to terminate and recover your money if it is missed, the specifications and the conditions for any changes. For a new villa on rustic land, we also check that the licence covers everything being built, because licences on protected land are closely scrutinised.
Delivery and completion
Before completion we check the first-occupation licence, habitability certificate, ten-year structural insurance and the registration of the building, and coordinate a snagging inspection so defects are recorded before you sign. We then handle the notary, VAT and stamp duty and registration. See purchase costs and taxes.
Delays and defects
If the developer misses the delivery date you may be able to terminate and recover your payments under the guarantee. After delivery, builders and developers are liable for defects for different periods depending on their type. See property disputes in Menorca. Menorca.law is part of Castell.law.
An illustrative example
Based on situations we commonly see; not a specific client. A couple reserved an apartment in a small new development in Ciutadella and the developer asked for 20% in stage payments. Before the first transfer we found that no individual guarantee had been issued. We made the guarantee and the special account a condition of the contract. When delivery was delayed by a year, the couple could choose between waiting and recovering their money with interest.
Before you sign or pay, ask a lawyer
Send us the document, the listing or a short summary of the problem. A lawyer will tell you what matters, what it could cost you and what to do next.
Questions about buying a new build in Menorca
Is my deposit safe when buying off-plan in Menorca?
It should be if each payment is covered by a bank guarantee or insurance in your name and paid into the special account.
Can I negotiate the developer's contract?
Yes, on dates, penalties, specifications and termination rights.
What taxes apply to a new build?
VAT on the price and stamp duty on the deed, instead of transfer tax.
What if delivery is late?
Depending on the contract and the delay, you may be able to terminate and recover your payments with interest.