Good News to Start the Year: The Spanish Supreme Court Strengthens Buyer Protection in Off-Plan Housing

The Spanish Supreme Court strengthens buyer protection in off-plan housing

Banks remain liable even when homes are built under a surface right

The Spanish Supreme Court has once again addressed one of the most sensitive issues left by the real-estate crisis: advance payments made for homes that were never built.

In its Judgment no. 634/2025 of 28 April, the Court confirmed the liability of CaixaBank, ordering the refund of approximately €95,000 plus legal interest to several families who had paid deposits into a failed housing cooperative.

The ruling follows — and strengthens — a clear and increasingly protective line of case law, offering renewed legal certainty to buyers.

f you want to understand how these Supreme Court decisions fit into the wider off-plan buyer protection framework in Spain—and what practical steps buyers should take when deposits are at risk—read our Off-Plan Guide. We have been specialists in off-plan litigation since 2006, and our team was among the early firms helping shape the protective case-law that followed the real-estate crisis, particularly around bank guarantees and the recovery of advance payments.

Buying Off-Plan Property in Spain – Complete Guide 2026

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What was the case about?

Several families paid significant sums (ranging from €10,000 to €18,830) to access a home promoted by a housing cooperative.

The project had a specific legal structure:

• the buyers did not acquire full ownership,
• but rather the right to use the home for 75 years, based on a surface right over municipal land.

The development was never completed, the surface right expired and the land reverted to the local authority.
The families were left without a home and without their money.

Crucially, no bank guarantees or insurance policies had been issued to secure the advance payments.

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How did the lower courts rule?

• The Court of First Instance ruled in favour of the buyers and held the bank liable.
• The Madrid Provincial Court overturned that decision, reasoning that a 75-year right of use could not be equated to the purchase of a dwelling protected under Law 57/1968, as there was no transfer of full ownership.

The Supreme Court has now corrected that interpretation.

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The key contribution of the judgment

1. Residential purpose prevails over legal form

The Supreme Court makes a decisive point:
What matters is not whether ownership is transferred, but whether the operation has a clear residential purpose.

Law 57/1968 — and today its successor regime — applies to all types of residential developments, including:

• housing cooperatives,
• developments built under surface rights,
• and legal structures other than a traditional sale.

When families commit financially in order to live in a home for decades, they deserve the same legal protection.

2. When does the bank become responsible?

The Supreme Court defines the moment of “knowledge”

A key aspect of the Court’s approach is that it moves away from the overly formalistic interpretations sometimes seen in previous disputes under Law 57/1968—for example, arguments that liability would only arise if the buyer’s payment contained an exact “magic wording” or if the buyer personally made the transfer in a particular way, even when the bank was fully involved in the payment flow. The Supreme Court makes clear that consumer protection cannot be narrowed by formal requirements that the law itself does not impose: if the bank is the receiving entity and the payments are traceable and clearly linked to a residential development, the duty of control is triggered regardless of technicalities.

This judgment is particularly important because it consolidates existing case law, notably Supreme Court Judgment 498/2024, and clarifies when a bank knew or should have known that it was receiving advance payments for housing.

In this case:

• CaixaBank was responsible for the integrated management of the cooperative’s monthly payments.
• The payment receipts were issued by the bank itself, at the cooperative’s request.
• The payment confirmations issued to clients expressly stated “housing contribution”.
• Transfers and direct debits were clearly linked to the financing of a residential development.

According to the Supreme Court, this alone is sufficient proof that the bank knew — or could not reasonably ignore — that the funds were advance payments towards the price of a dwelling.

From that moment onwards, a strict duty of control arises:

• the obligation to require a special account, and
• the obligation to ensure the existence of a bank guarantee or insurance.

If the residential purpose is clear and the bank actively manages or receives the payments, liability follows.

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3. Owning other properties does not remove protection

The bank argued that some buyers already owned other properties.
The Supreme Court firmly dismissed this argument.

Owning:

• a second home,
• an inherited property,
• or a dwelling in another location,

does not remove consumer status nor legal protection.
Housing needs can legitimately be multiple.

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The outcome

• Full repayment of the advance payments, and
• Legal interest accrued from the date of each payment, raising the total amount above €100,000.

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The current legal framework

Although Law 57/1968 was repealed with effect from 1 January 2016, its protective regime remains fully alive under the First Additional Provision of the Spanish Building Act (LOE), as amended by Law 20/2015 of 14 July.

For this reason, Supreme Court doctrine continues to apply with full force today.

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A hopeful message — and a practical warning

This judgment sends a clear and hopeful message:
the Spanish Supreme Court is strengthening consumer protection and refusing to allow banks to evade responsibility through technicalities.

At the same time, it reinforces a crucial practical lesson anyhow:

In any real-estate due diligence, extreme care must be taken with both the issuance of bank guarantees and the clear traceability of payments.

Best practice now increasingly includes:

• guarantees issued from the first euro,
• payments made through clearly identified accounts held by the developer

A practical takeaway for buyers is that a bank-issued certificate confirming (i) the housing purpose of the payments, (ii) the account details receiving the funds, and (iii) the traceability of each instalment can function as an important interim safeguard—almost a “bridge protection”—while the formal executable guarantee (bank guarantee/insurance policy) is being issued. It is not a legal substitute for the statutory guarantee, but it can strengthen evidence and accountability at the very stage where risks typically arise: the first payments.

Buyers should not assume the market has suddenly become “safe”: we still see recurring tactics by developers and, at times, banks aimed at avoiding premiums and reducing liability—sidestepping special accounts, delaying guarantees, or disguising payment concepts. The Supreme Court’s trajectory is encouraging, but robust due diligence remains essential. Clear traceability is no longer a formality — it is a cornerstone of legal protection.

Call to Action (CTA)

If you are buying off-plan in Spain and want a first opinion or a second opinion on whether your deposits are truly protected, contact us for a free review.

We will quickly check the key risk points — the payment route, the bank guarantee/insurance, and the contract clauses — and tell you clearly what is safe, what is missing, and what should be corrected before you pay anything else.

A note from our practice: off-plan due diligence since 2008

At CostaLuz Lawyers, our track record goes beyond “due diligence.” For almost two decades, we have been actively pursuing claims for failed off-plan investments and recovering funds for buyers caught in developments that never materialised. That long, hands-on litigation experience is precisely what makes us exceptionally strong at preventing problems before they happen.

Because we have dealt with so many real-world failures, we know the market’s recurring “black holes” inside out: payments channelled through ordinary accounts, guarantees issued late (or not at all), ambiguous payment references, shifting developer structures, and contract clauses that look standard but quietly shift risk onto the buyer. As a result, we can often smell risk immediately—from the very first moment a client shows us the proposed payment schedule, the guarantee wording (or absence of it), or the draft contract provided by the developer.

This is not “being excessively strict.” It is a direct response to what we have repeatedly seen: serious disputes and substantial financial losses suffered by well-intentioned buyers who were told that “this is normal” or that “the guarantee will come later.” Our approach is simple: activate protection from the first euro, insist on verifiable guarantees and clear traceability, and remove ambiguity before it becomes an expensive problem. This is exactly why the Supreme Court’s current direction is so encouraging: it reflects the practical reality buyers face—and reinforces the safeguards that responsible professionals have been demanding for years.

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About CostaLuz Lawyers and María de Castro

You can read testimonials from hundreds of satisfied clients, going back to 2006, on our website, on Google Reviews and on EyeonSpain.

Reviewed by María de Castro, Abogado no. 2745, Ilustre Colegio de Abogados de Cádiz. CostaLuz Lawyers has supported international buyers since 2006 on EyeonSpain  with guidance and advice on the legal aspects of life in Spain. Included in the lawyers lists of the UK and Ireland embassies. Updated 22 Nov 2025.

María Luisa de Castro’s work, founder of CostaLuz Lawyers, is backed by a strong presence in specialist media and professional directories. Her track record as a Property Law and Consumer Real Estate Law (Derecho de Consumo Inmobiliario) specialist can be seen in her guides for international audiences on Expatra, in her long-running blogs on Spanish off-plan protection and Ley 57/1968 on EyeOnSpain , in her legal analysis for Confilegal and Legal Today, and in her contributions for the Spanish Bar Council (Consejo General de la Abogacía Española) and the Centre for Consumer Studies at the University of Castilla-La Mancha.

Her work is also profiled on international retirement and expat platforms such as Retirement Abroad, and has been highlighted by expat media including The Olive Press News Spain and The Local Spain among other specialist expat and legal forums.

Her legal work has also been featured or referenced in respected international and Spanish media, including The Telegraph, The Times, the BBC, El País and El País English, The Local Spain, The Olive Press and other reputable outlets, particularly in connection with landmark court rulings on Ley 57/1968 and Spanish consumer protection.

CostaLuz Lawyers is also included in the official lists of English-speaking legal professionals for British and Irish nationals in Spain, as compiled by the UK government’s “Spain: list of lawyers” and by the Embassy of Ireland in Spain and its honorary consular network.

For a complete overview of property law and conveyancing in Spain, see our Buying Property in Spain Complete Legal Guide 2026.