Off-plan buying: The hidden risks buyers face
Buying a property off-plan is often promoted as a great investment opportunity, but it comes with a major drawback: buyers are required to pay the full purchase price before thoroughly inspecting the property. This process raises significant concerns, especially when compared to other high-value purchases like cars, where performance checks are standard. So why are property buyers expected to pay upfront without full transparency?
What is MAD? Missing items, Agreed extras, and Defects
MAD, or the process of “Missing items, Agreed extras, and Defects” (commonly known as snagging), involves inspecting a new building for:
- Items missing from the original specification
- Extras that were agreed upon but not delivered
- Any visible defects within the property
Unfortunately, developers often make it difficult for buyers to conduct a proper MAD inspection prior to finalising the purchase.
Limited inspection time before purchase
- Courtesy Visits: Developers generally allow buyers only a short, supervised visit—often just 30 minutes—before completing the purchase at the Notary. This limited timeframe is rarely sufficient for professional home inspectors, such as those from Survey Spain, to carry out a detailed assessment. Additionally, developers’ agents may discourage defect reporting to avoid delays in finalising the sale.
- No Utilities for Testing: Water and electricity supplies cannot be tested beforehand, as utility contracts can only be signed after the buyer takes ownership. This restriction makes it impossible to check essential systems before payment is made.
Post-purchase defect reporting: A race against time
Once the purchase is complete, buyers typically have 10-15 days to report any defects to the developer. To meet this deadline:
- Your lawyer or agent must ensure utility contracts are signed and activated immediately after the Notary visit.
- Moving furniture into the property during this period can complicate claims, as developers may argue the defects were caused by the buyer.
Developers’ responsibilities for defects
Under Spanish law, developers have post-purchase responsibilities:
- 1 Year: Liability for significant defects
- 2 Years: Liability for major structural issues
However, proving these defects can be a challenge. Developers may deny responsibility, claiming the issues resulted from the buyer’s actions or suggesting that buyers claim through their insurance.
The role of Urbanisation Administrators
In some cases, developers may insist that defects will be addressed by the Urbanisation Administrator. Buyers should be cautious, as the first administrator is often appointed by the developer. If the developer holds a voting majority, there may be little incentive to prioritize fixing defects promptly.
Protect yourself as a buyer
To safeguard your investment:
- Insist on a thorough snagging inspection by a professional home inspector.
- Work closely with your lawyer to ensure utility activation immediately after purchase.
- Document all defects and missing items within the post-purchase reporting window.
- Be aware of developers’ legal obligations and don’t hesitate to escalate unresolved issues.
By understanding the MAD scandal of off-plan buying, buyers can take steps to protect themselves and their investment from unnecessary risks.
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