The builder will not pay you: the direct claim against the owner

The case, in five lines

What is brought

Direct claim under article 1597 of the Civil Code against the owner of the works, joined to the money claim against the builder that subcontracted you. In chains of subcontracts, also against each intermediate contractor that owes something to the next one down.

Before which court

The civil section of the Tribunal de Instancia (the first-instance court) for the defendant's domicile; if you sue both the owner and the builder and they are domiciled in different places, you may choose either (article 53.2 of the Civil Procedure Act). Verbal procedure up to fifteen thousand euros, ordinary procedure above that. Before suing, an appropriate dispute resolution method must be attempted with both (article 5 of Organic Law 1/2025). There is no direct claim against a contracting public authority (article 215.8 of the Public Sector Contracts Act).

Deadline

A five year limitation period running from the date your invoice or valuation became payable by the builder (article 1964.2 of the Civil Code), interrupted by a provable out of court demand (article 1973) and by the request for prior negotiation. But the amount you can recover from the owner is fixed on the day your claim reaches him, and if the builder is declared insolvent before you are paid, the claim against the owner is no longer admitted (articles 136 and 139 of the Consolidated Insolvency Act).

Who can bring it

Claimant: whoever put labour or materials into the works on the builder's instructions, whether a subcontractor, a subcontractor's subcontractor, a self employed tradesman or a supplier whose material was incorporated into them. Defendants: the owner or developer, whether a company, a community of owners or a private individual, together with the builder. Article 1597 requires no contract with the owner, nor that he knew of the subcontract.

Financial risk

If the owner proves that on the day of your claim he no longer owed the builder anything, the claim against him is dismissed and the general rule is that you pay his costs, unless there are serious doubts of fact or law. Against the builder you will win easily if the debt is documented, but a judgment against an insolvent company does not collect itself. Refusing prior negotiation without good reason also carries a cost in the costs award.

The owner is liable without having signed anything with you, but up to a cap

Article 1597 of the Civil Code states that those who put their labour and materials into works contracted at a fixed price by the contractor have no claim against the owner except up to the amount the owner owes the contractor when the claim is made. Read the other way round, it is a claim the law gives you against someone you never contracted with. It does not require the owner to have known of or approved the subcontract, nor that you first sue the builder, nor that the builder be insolvent.

The cap works as the lower of two figures: what the builder owes you and what the owner owed the builder on the day your claim reached him. If you claim fifty six thousand euros and the owner only owed eighteen thousand, the case against him is worth eighteen thousand, and the rest remains a claim against the builder. The Tribunal Supremo (the Supreme Court) has held that this is a genuine direct claim, not a subrogated one, and that owner and contractor are each liable within that limit. Suing them together is not compulsory, although it is almost always advisable.

The phrase works contracted at a fixed price is not read as requiring a closed price: case law is satisfied if the contractor's claim against the owner is certain and determined. Nor is it limited to the first tier. A subcontractor's subcontractor may proceed against each company in the chain in reverse order, and against the owner, provided that each link owes something to the next; if one of them owes nothing, the chain breaks there. A supplier whose materials were incorporated into the works is covered; one who sold material that never reached the site will find it much harder.

The deadline that really runs is the owner's payment schedule

The claim is time barred after five years, the general period for personal actions under article 1964.2 of the Civil Code, counted from the date your claim against the builder became enforceable, that is, from the due date of each invoice or valuation. Article 1973 allows that period to be interrupted by an out of court demand. If you work as a small scale self employed tradesman, expect the other side to argue the three year period that article 1967 reserves for the price of craftsmen's services, and do not let time run on the assumption that you have five.

That long period is misleading. What you can recover from the owner is not what you are owed, but what the owner still owed the builder when your claim reached him, and that balance falls with every valuation the owner pays. On works approaching handover there is usually little left: the last valuation, the final account and the retentions. Every month of waiting is money leaving the owner's account for the builder's, and it rarely comes back from there.

Retentions are often the only thing left, and they count. They are money the owner owes the builder even though their release date has not yet arrived. Your claim freezes them just like the rest of the balance, with one logical proviso: the owner will not have to pay them to you before the date on which he would have had to pay them to the builder. That is why the warning signs are specific: the site manager asking you to wait until the developer pays, the handover certificate drawing near, or the builder starting to pay with long dated promissory notes.

Your claim freezes the balance: whatever the owner pays afterwards, he pays at his own risk

The law refers to the amount owed when the claim is made, and the Tribunal Supremo has accepted that the claim may be made out of court, provided there is reliable proof of when and how it was made. From the moment the owner receives it, payments he makes to the builder do not discharge him towards you up to the amount claimed. If he pays, he may end up paying twice. That is the lever: a well advised owner stops paying the builder the very next day.

The demand must identify the works, your contract with the builder, the overdue invoices or valuations and the amount; it must state expressly that you are exercising the claim under article 1597 and ask the owner to hold back that amount and tell you the outstanding balance. It is sent by burofax, the Spanish recorded delivery service, with certified content and proof of receipt, to the owner's address. On the same day another goes to the builder, interrupting the limitation period against it. An email or a message to the site manager fixes no date against anyone.

The owner will try to show that he had already paid, and a great deal turns on that. Handing bills of exchange or promissory notes to the builder is not payment until they have been honoured (article 1170 of the Civil Code), a rule the Tribunal Supremo has applied to this claim, and some Audiencias Provinciales (provincial appeal courts) have refused to treat as a discharge payments made ahead of their due date to empty the balance. If several subcontractors claim at once, the owner may pay what he owes into court (article 1176), and since there is no single rule for sharing it out, getting there first may decide who is paid.

If the builder is declared insolvent before you are paid, the route closes

The Consolidated Insolvency Act is blunt. From the declaration of the contractor's insolvency until the composition agreement takes effect or, if there is none, until the proceedings end, the civil court will not admit a claim brought against the owner under the direct claim of article 1597 (article 136.1.3), and if it admits one by mistake, everything done is set aside after being declared void. Claims filed before the declaration are stayed for that same period (article 139.2).

The Tribunal Supremo has given priority to equal treatment of the insolvent's creditors: your claim becomes part of the body of liabilities, like any supplier's, while what the owner owes the builder becomes part of the insolvency estate and is collected by the insolvency administrator. Having sent the burofax before the insolvency is not enough on its own. What is safe is a claim already completed before the declaration, that is, money the owner has already paid you in response to your demand.

That is why this claim is a race, and the strategy is built to get paid, not to win a lawsuit. With the balance frozen, the most effective outcome is usually a three way agreement during the prior negotiation: the owner pays you directly and deducts it from what he owes the builder. If the insolvency comes anyway, your claim is lodged with the insolvency administrator within the month following publication of the order in the Official State Gazette (article 255 of the Consolidated Act); if it arrives late, it is ranked as subordinated.

On public works there is no direct claim, but the law gives you other levers

If the owner is a town council, a regional government or any public authority, article 1597 does not help. Article 215 of the Public Sector Contracts Act provides that subcontractors are bound only to the main contractor and, in its paragraph 8, that they have no direct claim against the contracting authority. The only route to direct payment is the fifty first additional provision: if the tender specifications provide for it, the authority may pay the subcontractor directly, and that payment is treated as made on the contractor's behalf.

What the law does give you is leverage over the builder. Article 216 requires you to be paid within the periods of the Late Payment Act, counted from acceptance, which must take place within thirty days or is deemed given, and it makes those rights non waivable. In contracts subject to EU harmonised rules, and in those with an estimated value of two million euros or more, if you sue the builder over overdue invoices, the contracting body withholds its performance guarantee until it proves it has paid you what the final decision awards.

Article 217 allows the authority to check payments to subcontractors and makes it compulsory in works and services contracts with an estimated value above five million where the subcontracted share reaches thirty per cent of the price: the builder must provide, with each valuation, a certificate of payments to its subcontractors. And with a final judgment or arbitral award proving non payment, the authority imposes penalties of up to five per cent of the contract price, repeatable every month up to fifty per cent. The strategy is to sue the builder early and take the judgment to the contracting body.

How it is brought: prior negotiation with both, the claim and proof of the balance

The claim is a civil one, and since Organic Law 1/2025 a claim is only admitted if an appropriate dispute resolution method with the same subject matter was attempted first (article 5). Direct negotiation between lawyers counts. The requirement covers verbal and ordinary proceedings and also the monitorio (the Spanish order for payment procedure); it does not apply to the cambiario claim on bills and notes, to enforcement claims, to interim measures sought before the claim or to preliminary inquiries. What nobody warns you about is the identity of subject matter: if you only negotiate with the builder and then also sue the owner, the requirement may not be met as regards him.

The claim joins two demands: against the builder, the full debt with interest and the forty euros per invoice of the Late Payment Act; against the owner, a joint and several order up to the balance he owed on the day of the claim. It is filed before the civil section of the Tribunal de Instancia for the domicile of either defendant, as a verbal procedure up to fifteen thousand euros and as an ordinary one above that. The monitorio fits badly against the owner, because the decisive figure is not in your documents but in his. If the owner is a developer in difficulty, interim measures sought before the claim do not require the negotiation.

The evidence of the balance is in the owner's hands: the main contract, the valuations, the payments and their dates. That is why the claim asks for them to be disclosed (article 328 of the Civil Procedure Act); if he refuses without justification, article 329 allows the court to give weight to your account of their content, and the rule on ease of access to evidence in article 217.7 works against him. The owner will try to reduce the balance with penalties for delay or defects attributable to the builder; that argument is won with the site records and, where needed, with the expert the firm works with.

How we run the case, step by step

1. 1

   Rebuild the chain and the debt

   We identify who owns the works (the building permit, the site board or the Land Registry will say), what contract you have and with whom, which invoices or valuations are overdue and what stage the works have reached. If there are intermediate subcontracts, we check what each link owes the next.

2. 2

   Serve demands on the owner and the builder on the same day

   A burofax with certified content to the owner, exercising the claim under article 1597 and asking him to hold back the amount and state the balance; another to the builder demanding the debt. The delivery date of the first fixes what the owner can no longer pay to anyone else.

3. 3

   Find out the owner's outstanding balance

   We reconstruct what remains to be paid: outstanding valuations, the final account and retentions. The owner's answer, or his silence, is kept as evidence for the case.

4. 4

   Negotiate three ways before suing

   Prior negotiation is opened with the owner and the builder, in a document separate from the demand, proposing that the owner pay you directly and deduct it from the builder. It satisfies the requirement of article 5 of Organic Law 1/2025 as regards both and interrupts the limitation period.

5. 5

   Sue both and seek disclosure

   Without agreement, a joint claim before the civil section of the Tribunal de Instancia: the full debt against the builder and a joint and several order against the owner up to the balance, with a request that he disclose the main contract and proof of his payments.

6. 6

   Watch for insolvency and collect

   While the case runs, the Public Insolvency Register is monitored; if a declaration comes, the claim is lodged in time. With a judgment, enforcement goes first against the owner, who is usually the solvent party. On public works, the judgment is taken to the contracting body.

The law that applies

• Art. 1597 CC. Those who put their labour and materials into works contracted at a fixed price by the contractor have a claim against the owner, but only up to the amount the owner owes the contractor when the claim is made. Case law treats it as a direct claim, which may also be made out of court and along the chain of subcontracts. BOE-A-1889-4763
• Arts. 1964.2 y 1973 CC. Personal actions with no special period are time barred five years after performance of the obligation could be demanded. Limitation is interrupted by bringing the claim before the courts, by the creditor's out of court demand and by any act by which the debtor acknowledges the debt. BOE-A-1889-4763
• Arts. 136 y 139 TRLC. From the declaration of insolvency until the composition agreement takes effect or the proceedings end, claims brought against the owner of the works under the direct claim of those who supplied labour and materials are not admitted, and those filed before the declaration are stayed for that period. BOE-A-2020-4859
• Art. 5 LO 1/2025. For a civil claim to be admitted, it requires prior recourse to an appropriate dispute resolution method with the same subject matter, including direct negotiation between the parties or their lawyers. It covers declaratory proceedings and the special proceedings of book IV of the Civil Procedure Act, save for listed matters such as the cambiario claim, and is not required for enforcement claims, interim measures sought before the claim or preliminary inquiries. BOE-A-2025-76
• Arts. 216 y 217 LCSP. In public procurement, the contractor must pay its subcontractors within the periods of Act 3/2004 from acceptance, and these rights cannot be waived. In harmonised contracts or those worth two million euros or more, the subcontractor's claim triggers retention of the performance guarantee, and non payment proven by a final decision allows penalties of up to five per cent of the price, repeatable monthly up to fifty per cent. BOE-A-2017-12902
• Disposición adicional 51.ª LCSP. It allows tender specifications to provide for direct payments by the authority to subcontractors, which are treated as made on the main contractor's behalf as payments on account. The authority is not responsible for delay caused by the contractor's failure to approve the subcontractor's invoice. BOE-A-2017-12902
• Arts. 328 y 329 LEC. Each party may ask the others to disclose documents that are not at its disposal and relate to the subject of the proceedings. If the refusal is unjustified, the court, taking the remaining evidence into account, may give evidential weight to the copy provided or to the account of the document's content given by the party that sought disclosure. BOE-A-2000-323

Each article checked against the consolidated text published in the BOE (the Spanish official gazette).

Frequently asked questions