How to Check a Developer Before Buying a New Flat

Buying a new flat directly from a developer is a major decision that combines financial investment with emotional expectations. In many European countries, especially where new residential construction is booming, buyers are increasingly interested in off-plan purchases. But how can you be sure that the developer is trustworthy?

This article outlines everything you need to know to assess a real estate developer before signing any agreement — from legal and financial checks to evaluating previous projects.

Why Due Diligence Matters

Even in regulated European housing markets, there are risks associated with buying from a developer:

• Construction delays
• Abandoned or frozen projects
• Poor build quality
• Legal disputes over land or permits
• Insolvency or bankruptcy

Many of these issues can be avoided through thorough due diligence. Investing time now can save you money and stress later.

Research the Developer’s Track Record

Start by learning about the developer’s history:

• How long has the company been in business?
• How many residential projects has it completed?
• Have previous projects been delivered on time and within specifications?
• Are there reviews or legal complaints from other buyers?

In countries like Germany, France, or Spain, there are online portals and consumer watchdogs where you can read about developers’ reputations. Visiting completed buildings is also highly recommended — speak with residents, inspect quality, and verify infrastructure.

Legal Status and Business Registration

Verify that the developer is a legally registered and authorized business:

• Check the company’s registration with the national commercial registry (e.g., Handelsregister in Germany, Infogreffe in France, or Companies House in the UK).
• Request a copy of the building permit and land title.
• Ensure the company is licensed to develop residential properties.

These documents are often accessible through national cadastral or land registries.

Financial Health of the Developer

A financially unstable developer poses one of the highest risks. Investigate:

• Annual reports or audited financial statements (if publicly available)
• Outstanding debts or legal claims
• Whether the project is backed by a bank guarantee or escrow system
• Credit ratings, if applicable

In many EU countries, such as France or Italy, developers are required by law to offer completion guarantees or insurance in case of insolvency.

Building Permits and Land Ownership

Before signing anything, make sure the developer has legal rights to the land and the necessary permits:

• Title deed or long-term lease agreement
• Valid building permit issued by local authorities
• Environmental and zoning approvals
• Architectural plans approved by city council

Some countries offer online platforms (e.g., Geoportal in Poland or the French cadastre) where buyers can verify planning details.

Escrow Accounts and Payment Plans

To protect your funds, many European countries now require the use of escrow accounts, where payments are released in stages as the project progresses.

Typical payment milestones might include:

• 10 % upon signing
• 30 % after foundation
• 30 % after structural completion
• 30 % upon final handover

Ensure the agreement clearly outlines the schedule, late penalties, and refund terms.

Contract Transparency and Guarantees

Carefully review the purchase agreement and ask for legal advice if necessary. Key contract elements include:

• Handover deadline and delay penalties
• Technical specifications of the apartment
• Five- or ten-year structural warranties (common across Europe)
• Return conditions and buyer withdrawal rights
• Responsibilities for post-handover issues

For example, in France, the Loi Pinel and VEFA contracts (Vente en l’État Futur d’Achèvement) include strong buyer protections. In Germany, the MaBV regulation ensures deposits are protected by law.

On-Site Inspections and Quality Control

If construction has already started:

• Visit the site personally, not just the showroom.
• Evaluate safety conditions and progress.
• Ask for updated progress reports with pictures.
• Request a sample unit or visit a completed apartment, if available.

Pay attention to finishes, insulation quality, materials, and ventilation systems.

Verify Developer Insurance Coverage

Trustworthy developers provide various insurances to protect buyers:

• Construction risk insurance
• Third-party liability insurance
• Completion guarantee insurance
• Ten-year decennial warranty (required in countries like France, Spain, Belgium)

Ask for copies or at least confirmation of policy numbers and issuing insurers.

Communication and Responsiveness

Reliable developers are transparent and communicative:

• They answer questions clearly
• Provide detailed documentation on request
• Offer regular project updates
• Are willing to sign in front of a notary

Beware of pressure tactics like “limited-time discounts” or vague promises that lack documentation.

Independent Professionals Can Help

If you’re uncertain, involve professionals:

• Real estate lawyer
• Technical inspector or architect
• Notary public (required in many EU countries for property sales)
• Certified buyer’s agent

In some jurisdictions, buying through a licensed agent adds another legal protection layer, as in Portugal or Spain.

Typical Costs and Guarantees Across Europe (in Euros)

Most new developments in Western Europe are legally required to include a 10-year structural guarantee and often operate under bank supervision.

Conclusion

Buying a flat from a developer can be rewarding if done with caution. By conducting proper due diligence — verifying permits, contracts, finances, and previous work — you significantly reduce the chances of running into trouble.

Don’t rely on marketing brochures or verbal promises. Insist on transparency, ask tough questions, and never sign without clarity.

With the right research and legal support, buying off-plan can lead to a beautiful, well-built home — and a safe long-term investment.