In Spain some building companies prefer payments in cash to avoid paying taxes. "Black money" is not then declared to the Spanish Inland Revenue (Hacienda). The company uses the black money to pay, its own undeclared expenses (undeclared wages to illegal workers, purchase of materials...) which, in turn, reduces the overall company costs. If you pay by cheque, the building company has to pay the cheque into its bank account, which means the money becomes visible, which means it has to declare it to the Spanish Tax Office.

If you decide to go ahead with your purchase, it is very very important that before handing over any cash at all you sign a formal, and legal, private purchase/sale contract (checked by an expert) which clearly specifies the following basic elements of the purchase and the sale agreement:

• Identification of the seller as the legal owner of the property you are going to buy
• Exact description of the property which is going to be built - squared meters, closed price (total amount), materials to be used in the construction
• Form of payment. This is particularly important, because if you agree to hand over certain sums of money at certain stages of the building process, the builders will only be legally bound to keep to the dates of completion if the dates and amounts are reflected in the contract.

It is also highly recommended to ask for a receipt each time you make a payment and, if possible, a bank guarantee to cover these payments.