What is a bank guarantee?
When you buy a new-build property in Spain, you usually pay a deposit before the property is completed. That money is used to finance the construction project.
But what happens if construction stalls or the developer cannot meet its obligations? That is what the bank guarantee (aval bancario) is for.
A bank guarantee is a legal protection whereby the deposits paid can, under certain conditions, be recovered if the project is not completed correctly.
In short: your prepaid money is not simply gone if things go wrong — the guarantee keeps it recoverable under the applicable conditions.
Why is a bank guarantee important?
You often buy a property one to three years before it is ready. A lot can happen during that time. A bank guarantee significantly reduces the financial risk.
Completion slips by months or years.
The developer cannot secure the financing.
The construction company goes under.
A permit is missing or refused.
The project is halted completely.
When are you protected?
Protected are usually the deposits you pay before completion. Important to know: the exact protection depends on the legal conditions and on your specific situation.
Before every payment, have it checked whether your specific property and your deposits are effectively covered. A guarantee on paper is only reassuring once it also covers your situation.
What if the developer goes bankrupt?
A bankruptcy does not automatically mean you lose your money. That is one of the biggest misconceptions with new build.
When the legal protection has been correctly applied, the deposits paid can be recovered under the applicable conditions. That is precisely why it is so important to have the guarantee thoroughly checked before your purchase.
Confirmed by Spanish case law
The protection of buyers with new build is not theory. Spanish case law has reaffirmed its importance in recent years.
For you as a buyer, the message is simple and reassuring: those who have their deposits properly guaranteed are in a strong position. It is precisely that certainty that makes a well-guided new-build purchase so safe.
What to check yourself
Seven points to check (or have checked) before you buy.
Has the licencia de obra been granted and is it in the name of this project?
Who is building, and what is the developer’s reputation and track record?
Are the price, payment schedule and completion date clearly and fully set out?
Are your deposits guaranteed — and does the guarantee cover your property?
Do your payments go to the special, designated account?
What date is stated, and what happens in case of delay?
Have everything checked by a lawyer who serves your interests alone.
Peter and Anne buy an apartment in Finestrat
Peter and Anne find their dream apartment in a new-build project in Finestrat, overlooking the Puig Campana. Completion is not planned for another year and a half — precisely the moment they wonder whether their deposit is really safe.
Together with their Tu Travesía adviser and an independent lawyer they go through the checklist point by point: the building licence, the developer, the contract and — crucially — the bank guarantee. They have it confirmed that their deposits are covered and that their payments go to the correct account.
Only when everything checks out do they sign. A year and a half later they receive the keys to a home they bought with complete peace of mind — without ever losing sleep over the risk.
Frequently asked questions about the bank guarantee
What is a bank guarantee?
A bank guarantee (in Spanish aval bancario) is a legal protection whereby a bank or insurer stands surety for the deposits you pay before the completion of a new-build property. If the project is not correctly completed under the applicable conditions, those amounts can be reclaimed.
Is a bank guarantee compulsory?
In practice a developer should guarantee the amounts prepaid by buyers. Always ask explicitly for the guarantee for your specific property and have it checked before you pay — your concrete situation determines your protection.
Does this also apply to foreign buyers?
Yes. The protection is independent of your nationality: it applies to the buyer of the property, whether you are British, Irish, Dutch, Belgian, French or Spanish. Tu Travesía guides international buyers through the entire process.
What happens if the builder goes bankrupt?
A bankruptcy does not automatically mean you lose your money. When the legal protection has been correctly applied, the deposits paid can be recovered under the applicable conditions.
Can I buy without a bank guarantee?
It is strongly discouraged to pay deposits without watertight cover. See the bank guarantee as a basic condition, not an extra — and always have it checked by an independent lawyer.
How do I check my bank guarantee?
Request the guarantee document and have it checked by your independent lawyer: is the amount correct, is your property named and does it cover the deposits paid? Only pay once that is confirmed.
Is insurance the same as a bank guarantee?
Not necessarily the same, but both can serve as cover: the guarantee can run through a bank (aval) or through an insurance policy. What matters is that your prepaid amounts are effectively covered.
When do I pay the deposits?
Usually you pay a reservation and deposit amount on signing, followed by interim payments according to the construction phases. It is precisely those amounts paid before completion that should be covered by the guarantee.
This information is general in nature and does not replace legal advice. Always have your purchase guided by an independent lawyer in Spain.
