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Enforcing bank guarantees Spain.

Our Law firm in Alicante can help if your Spanish property was never completed. Same if the developer never obtained the Occupancy Permit or Habitation Permit (Licencia de primera ocupación). If this is your case and your off-plan property in Spain is left unfinished or does not have the habitation permit, you can claim the refund of the deposits or payments on account made to the developer or builder by enforcing the bank guarantees in Spain.

This is a document issued by a bank or insurance company hired by the developer, promoter or builder. The document must to secure the amounts you pay for the construction of your new home, second residence or investment in Alicante, Torrevieja or the Costa Blanca area. Normally, after you make the payment, the developer requests the document guarantee for that and gives it to the buyer. Having bank guarantees is mandatory by law. However, many promoters do not hire a guarantee policy to avoid the financial or insurance company’s fees.

How can I enforce a bank guarantee in Spain?

This requirement was introduced in 1968 through Law 57/68 as a response to abuses and scandals related to off-plan developments and stage payments.

A summary is:

  1. Request Requirement: Developers in Spain are legally obligated to provide a guarantee to safeguard the stage payments made by buyers during the construction of a property.
  2. Separate  Account: The law requires that stage payments be deposited into a separate  account designated for the construction project.
  1. Refund in Case of Non-Completion: The guarantee should provide buyers with the ability to recover their payments plus interest if the construction is not completed on time. In some cases, it may also cover the cost of completing construction.
  2. No Expiry Date: The guarantee should not have an expiry date and must remain in place until the house is finished, as indicated by the issuance of the Certificate of First Occupation or Habitation Certificate.
  3. Spanish Supreme Court Judgement: We were the first law firm to set precedent for deposit reimbursement according to Ley 57/1968 at the Spanish Supreme Court. We set a precedent that helped to successfully recover the deposits of many clients. Who though that had lost their savings because the property was not completed and the builder went bankrupt. These rulings establish that it is compulsory when selling off-plan properties to the public. If the promoter fails to fulfill their obligations, the purchaser is entitled to recover their money, even if none was issued. Both the developer and the financial entity are jointly liable for returning the money.
  4. Expiry Date Exception: If a the document has an expiry date, it does not apply, and the guarantee remains in effect until the Occupation License is issued by the Town Hall.
  5. Limitation Period: The limitation period for making a claim in cases where the promoter does not fulfill their obligations or the property is not completed is 15 years.

CC Lawyers 20 years Experience Enforcing bank guarantees Spain.

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What is covered with the Spanish bank guarantee?

It serves as a form of insurance for property buyers, providing financial protection in case of various scenarios, primarily related to the completion of the property and the developer’s obligations. Here’s a breakdown of what is covered by this security:

Its primary purpose is to ensure that buyers can recover the payments they have made toward the property if the developer fails to fulfill their contractual obligations.

Interest: In addition to recovering the principal amount paid for the property, the security document should also cover any accrued interest on the payments.

CC Lawyers Alicante is your trusted law firm in the Alicante area to Enforcing bank guarantees Spain.

It’s important to note that while the law sets out minimum requirements for bank guarantees, the specific terms and conditions of each one may vary depending on the developer and the agreement between the buyer and the developer. Buyers should carefully review the terms of the security received provided to them to ensure it meets their needs and provides adequate protection.

When hiring our purchase service for an off-plan home, you will get the assurance that we will make sure that the developer or builder gets them so you are protected in case the home is not finally built so you do not loose all the money you put into the investment. Additionally, consulting with legal experts or professionals familiar with Spanish real estate laws is advisable to navigate any potential issues or claims.