The sale of properties under construction in Spain

« The best way to predict the future is to create it» (Abraham Lincoln)

The sale of a property under construction consists in the sale of a property that has not yet been constructed. It is basically the sale of a property that does not exist at the moment of the conclusion of the contract. Hence, it entails the obligation of the seller to construct a building within a deadline agreed upon in the contract. This kind of sale is under expansion in Spain.

The possibility of selling a future good

It is in this sense that our civil law systems, including Spanish law that is the object of this article, foresee the possibility of selling a future good. In fact, a contract of sale can relate to a future good, in other words, a good that does not physically exist at the moment of the formation of the contract, but whose existence the parties have already foreseen. Very frequently, such contracts are concluded in the current real estate market where it is very common to buy planned construction properties and properties under construction.

Such sales of future goods can be concluded through the use of different contracts, each of them having pros and cons for the parties, namely on one hand the selling promoter, on the other the investor-buyer. Clearly there are common elements to these contracts, but also certain peculiarities. Hence, the parties have a wide range of opportunities in order to choose the contract which best fits their mutual expectations.

The aim of this article is to explain:

• The characteristics of a sales contract of a future good (and thus subsequently, the ones of a sales contract of a building under construction)
• The contractual conditions will allow the conclusion of such a sales contract of property under construction, and finally,
• The liability regimes and guarantees given at the the conclusion of the contract.

This should be kept in mind for the purposes of the article.

The characteristics of a sales contract of a future good in Spain

The object of the contract: the « future good »

Article 1271 of the Spanish Civil Code foresees the sale of a future good by providing that « All goods which are not beyond the bounds of commerce between men may be the subject of a contract, even future goods»[1].

The wording of the article leaves no doubt that the Civil Code sets a clear limit: surely future goods can be the subject of a contract but notably on the condition that they are not beyond the bounds of commerce. Furthermore, in order for the contract to be valid, it is necessary to determine its object (Article 1445 of the Spanish Civil Code[2]), which means that no misunderstanding is admissible and that it may not be confused with another. Moreover, according to Article 1272 of the Spanish Civil Code[3], the good which is the object of the contract cannot be impossible.

Actually, there are two types of future goods: on one hand « emptio res speratae », in other words goods that do not exist at the moment of the conclusion of the contract, but which will only come into existence later on– the hypothesis above mentioned– ; and on the other hand, goods that actually exist but that are not yet in the possession of the seller at the time of the conclusion of the contract.

Effects of the sales contract of a future good

As a result of the sale, the ownership of a future good is transferred to the buyer. In principle, this transfer of ownership occurs immediately by the mere exchange of consents between the parties: this is called a transfer of ownership solo consensus (by the mere exchange of consents).

Generally, this transfer also implies the transfer of risk, in other words the buyer will bear the risks arising from the conclusion of the contract.

Nevertheless, it is becoming increasingly frequent for the transfer of property to be deferred to the moment of the conclusion of the sales contract. This may be due to a number of reasons. In the present case, it depends on the nature of the good, namely a future good, thus a good to be produced. As a consequence, once the future good comes into existence, its delivery and transfer of ownership to the buyer will provide the contract with actual effect.

Cécile Proust & Clément-Henri Girardot

[1] Art. 1271 of the Spanish Civil Code: « All goods which are not beyond the bounds of commerce between men may be the subject of a contract, even future goods ».
[2] Art. 1445 of the Spanish Civil Code: « Pursuant to the contract of sale and purchase, one of the contracting parties undertakes to deliver a specific good and the other to pay a certain price for it, in money or in something which represents it».
[3] Art. 1272 of the Spanish Civil Code: « impossible goods or services may not be the subject matter of a contract».

For further information regarding the sale of properties under construction in Spain,