Property disputes in Mallorca typically arise when a sale does not complete, when a deposit is withheld, or when the buyer discovers after completion that the property is not what was promised. For international owners, the difficulty is compounded by distance, language and unfamiliarity with Spanish procedure. Raso Investments represents buyers, sellers and owners in disputes concerning real estate on the island, aiming first for a negotiated solution and, where that is not possible, pursuing the claim before the courts or in arbitration.
Every dispute starts with a careful reading of the documents: the reservation agreement, the private contract, the deed, the correspondence and any technical reports. Their wording often decides the outcome.
Typical property disputes in Mallorca
- Deposits and failed sales. Disputes over who is entitled to the deposit when a sale does not go ahead are among the most frequent.
- Hidden defects. Defects that were not apparent at the time of the purchase and that make the property unfit for its use or significantly reduce its value.
- Misrepresentation. Differences between what was advertised or stated and the reality, for example as to built area, licences, pools, annexes or tourist rental registration.
- Construction defects. Claims against builders, architects and developers for defects in new or renovated properties.
- Boundaries, easements and access. Conflicts with neighbours over boundaries, rights of way, shared roads or water.
- Communities of owners. Disputes about service charges, works, use of common elements and resolutions of the community.
Deposits: penitential and other arras
Spanish private purchase contracts often include a deposit called arras. The legal effect depends on the type of arras agreed. Under penitential arras, regulated in article 1454 of the Civil Code, either party may withdraw: the buyer by losing the deposit, the seller by returning it doubled. Confirmatory arras, by contrast, are simply an advance on the price; if a party fails to perform, the other may demand performance or termination with damages. Where the contract is ambiguous, the courts interpret it, and the outcome can turn on the precise wording and on the parties’ conduct. Conditions linked to finance, due diligence or licences also affect whether a deposit must be returned.
Hidden defects and misrepresentation
The Civil Code obliges the seller to answer for hidden defects in the property sold. The buyer can choose between terminating the contract or obtaining a reduction in the price, and may claim damages if the seller knew of the defects. The legal period for these actions is short, six months from delivery, so prompt action is essential. Where the property delivered is substantially different from the one agreed, other contractual remedies with longer periods may be available. For newly built or renovated properties, the Building Act provides separate liability periods for those involved in the construction, explained on our page on building or renovating a villa in Mallorca.
How we work
We begin by analysing the documents and the facts and, where needed, obtaining an independent technical report. We then set out the client’s options in writing, including the strength of each claim and the likely timetable. Since April 2025, Spanish law generally requires the parties to attempt an appropriate out-of-court dispute resolution method before filing most civil claims, such as negotiation, mediation or a formal settlement offer. We use that stage to seek a solution, and when it fails we prepare and file the claim. Our wider litigation and arbitration work is described on our page on procedural law and arbitration.
Common mistakes
- Letting the six-month period for hidden defects expire while negotiating informally.
- Withdrawing from a sale without checking whether the contract provides penitential arras.
- Carrying out repairs before documenting the defects, which makes the claim harder to prove.
- Communicating only verbally or through the agent, without written notice to the other party.
- Not checking whether the seller or builder has assets or insurance to meet the claim.
Many of these disputes can be prevented. Our page on buying property in Mallorca explains the checks that reduce the risk, and our page on luxury villa due diligence covers the specific issues of high-value properties.
Tax aspects of a dispute
The resolution of a property dispute can have tax consequences. A price reduction may affect the acquisition value for future capital gains purposes; a deposit kept by the seller may be taxable income for the seller; the termination of a sale may allow the recovery of taxes paid, subject to specific conditions. Each case is reviewed individually under the regulations in force.
Litigation costs are also relevant. In Spanish civil proceedings, the losing party is generally ordered to pay the other side’s legal costs, subject to certain limits and exceptions, and court fees may apply in some cases. Before starting proceedings, we assess with the client the likelihood of success, the possibility of recovering the amount awarded and the timetable, so that the decision to litigate is taken with a realistic view of risks and benefits. Where the contract contains an arbitration clause, the dispute may have to be resolved by arbitration rather than in the courts.
Frequently asked questions
The seller has pulled out. Can I claim double the deposit?
If the contract provides penitential arras, the seller who withdraws must generally return the deposit doubled. If the arras are of a different type, other remedies may apply. The wording of the contract is decisive.
How long do I have to claim for hidden defects?
The action for hidden defects under the Civil Code must be brought within six months of delivery. Other actions may have longer periods depending on the facts.
Can I bring a claim while living abroad?
Yes. With a power of attorney for litigation, we can represent you throughout the proceedings. Your attendance may be required only in specific circumstances.
Is a settlement possible before going to court?
Often, yes. The pre-litigation stage required by law is an opportunity to reach an agreement, and many disputes are resolved there.
Next steps
If you are involved in a property dispute in Mallorca, write to info@raso.law describing the transaction and the property, what has happened, the relevant dates and the documents you hold. We will review your case individually and reply in writing.