Buying a Plot with Project and Licence in Spain

Common Mistakes When Buying a Plot with a Pre-Approved Building Licence

If you are planning to build a luxury villa in Spain, you have a few options available. You can go the traditional route of buying a plot with permission to build on and then contract an architect to make the designs and submit the basic project to the Town Hall to get the building licence.

Or, you can try to save time, by buying a plot which already has a project designed and the licences granted. This is becoming an increasingly popular and widely available option and can save you up to a year, which is good if you’re keen to move quickly. However, there are a number of complexities involved in this route, which many buyers don’t understand.

Having recently experienced some of the potential stumbling blocks with a client, and helping them through it, we wanted to share our experience in this article. We hope it will help you to be able to make a more informed decision when deciding which route is best for you.

We were recently contracted by Clients from abroad who had just completed on the purchase of a splendid plot and wanted to immediately crack on with the building of their villa. They had bought a “package deal” including the plot, basic design and concession of a building licence. So, they believed they had all they needed to progress in short order. Unfortunately, upon closer inspection, the realities were somewhat different! Read on to find out the potential pitfalls and the route to success.

Why a Basic Project Is Not Enough to Start Building Your Villa

When you buy a plot with a basic project, you should appreciate that you are only partly advanced on the requirements to start building.

Although the licence may have been issued based on the basic project, as it was in this case, that’s far from the end of the design and specification work. The licence is conditional on the presentation of the Execution Project, which is a highly detailed project plan and design. It is also subject to contracts with the “directors of the works”, the health and safety study and a “certificate of concordance” issued by the architect to guarantee that the execution project aligned completely with the basic project.

In this case, none of this was done, although the buyers were not aware of that fact. This is a large body of work and delayed the start date by several months and required extra fees to be paid, that they had not budgeted for.

What the Existing Project and Licence ties you into

The fact that the licence specified that the client deliver an execution project, direction of works contracts and “certificate of concordance” meant that the Client had to continue with the services of the same architect who designed the basic project. Changing architect would have resulted in a penalty for early contract rescission that the architect had negotiated with the original seller and who was unprepared to pay.

This is fine if you like the architect and their style, but not if you don’t!

Before you commit to choosing this option, request a meeting to ensure you like the current architect, ask for examples of his previous work and check that their design style matches your own. If you don’t, you will be faced with additional delays and costs.

How the Execution Project and the Bidding Process are linked

The Execution Project is a key document because it determines the detailed design aspects, the specifications, materials, finishes and Bills of Quantities. These aspects are needed to achieve a firm and detailed price from a range of constructors during the bidding process.

The Client believed he could achieve a “fixed price” from the scant details of a Basic project. However, this essentially seeks to demonstrate to the Town Hall that all the basic parameters are being respected and mainly deals in elevations, distributions and outlines, without going into specifics. To obtain a quote on the contents of a Basic project data is not advised, as it is leaving you open to receiving a quote on a high square metre construction costing, which can be wildly out when the details are determined. Not only that, but due to the lack of information, it will most likely bring you into legal conflict with the Constructor when the qualities he delivers on the basis of his assurances to you will differ from your own. When the specifications, materials or qualities are not defined, and it is left to the Constructor, it’s common for them to determine what exclusions to make, or charge you extra if they are included.

It is better not to proceed down this route if you value having control over the price paid and quality to be received! However, it was a delay that the client was not expecting.

How to Ensure Builder Quotes Are Comparable During the Tender Process

Once you have determined and agreed with the architect the specifications in the Execution Project, you can then choose a range of suitable (and available) constructors to compete for the business. In order for this bidding process to be effective, the bids must be directly comparable. To do so, you need to provide not only a detailed Execution Project, but also define clear terms and conditions that you’re expecting from the constructors and then ask them to bid for the work, with their most competitive price. This avoids confusion and ensures that you follow the right process. For example, if you intend to pay the monthly certifications on receipt of approved invoice, then don’t entertain paying a deposit “upfront”. If your intent is to have the house completed in 14 months, don’t accept a price for a delivery in 18 months!

Essential Clauses Every Spanish Construction Contract Must Include

Once you’ve chosen your constructor, don’t just sign whatever they give you. Ensure you have a watertight construction contract as part of the negotiation process for taking on the company. This will provide written agreement of certain processes, costs, deadlines and ways of working and be crystal clear in the event of disputes.

We advise including penalties for non-compliance, which incentivize the team to finish the project on time and as per the agreement. It’s also important to ensure that they aren’t able to continue charging you in event of an overrun, or request upfront payment for elements of the project such as metalwork, carpentry or tiling. Including details like these in the contract protects you from nasty surprises.

Ensure there’s Someone Technical Representing your Interest during the Project

Even if you purchase the plot with the project and the licence in place, a construction project is a lengthy process and there are thousands of elements involved, which require oversight and understanding. As an owner, it’s very hard to know the right questions to ask, the things to look for and how to respond to the many decisions that need to be taken on a daily basis.

That’s where having a skilled, knowledgeable and local technical representative on your team is invaluable. They can be your professional “eyes and ears”, visit the site as works progress, checking the resources on site and ensuring that the project is on track to hit interim deliverable milestones. This representative should also attend the necessary weekly site meetings between the architect, technical architect, key suppliers and constructor, adding to the Minutes of the Meetings, catching any problems raised and feeding back to the client. Not only that, but they are there to ensure the Monthly Certifications charged by the constructor are not only correct, but that adequate progress has been made for them to be paid in full. They are there to both assess the work, check it against the contract and the agreed terms and conditions, and in the case of inadequate progress being made, imposing temporary deductions to the agreed payment schedule. Many people think all of this will be undertaken by the “directors of the works”, but they rarely involve themselves in the terms and conditions of your contract, so will probably ignore these conditions and approve monthly charges with scant review.

MDCI Project Managers Ensure Quality, Transparency, and Control

We know that clients simply want the delivery of their new home to be as smooth and stress free as possible and have the peace of mind that everything is going as it should. They also want to have their home handed over to them 100% complete, having been thoroughly snagged, with all machinery fully functioning and guaranteed, and that the final account agrees with the balance of what you agreed and have paid to date. A Project Manager is your professional support to ensure this is the case and is vital to a successful construction process.

Don’t be part of the majority who miss out on this! Ensure you always have an “Orchestra Conductor” vouching for your interest throughout the process and keeping you in control and updated, so you receive the dream home you’ve worked so hard for.

MDCI Project Managers are here to take the stress out of building in Spain and can help you from the outset to ensure that you choose the right plot, the right package, the right team and are protected by the right contract! Contact us to discuss how we can support you.