# Buying off-plan in Spain. Bank Guarantees



## felix (Mar 24, 2008)

Law in Spain specifies that a promoter selling dwellings and asking any payment before they are completed must take out a bank guarantee or insurance policy in order to refund these advances if the developer does not handover the dwelling past the deadline.
All that money paid plus interest will be repaid to the purchaser even in the event that the promoter does not obtain the first occupancy permit which will be considered as an unfinished completion. 
The buyer must have the guarantee in his hands because there are situations where purchasers have been told that and endorsement exists but they have not asked to see it and when the property was not built the deposit is lost, therefore is important to get the original before paying any money even the reservation fee and understand what the document says.

I want to call attention to the fact that the buyer or practitioner does not peruse this important document. Several points should be examined in the analysis of the guarantee offered by the promoter:

1º The expiry date of the endorsement which has to be the day when is granted the first occupancy permit. Many guarantees remain in full force and effect for just a period of time and the problem arises when the property is not finished among this period 
2º The guarantor must be a financial institution, bank or insurance company authorized to operate in Spain
3º What is stated in the warrant about the cases in which is possible to execute the guarantee and what will be the procedure for execution
4º Should have the name, passport number, the address of the property.
5º It should be guaranteed each stage payment even the reservation fee

Spanish consumer authorities can fine developers failing on their promise to provide bank guarantees with penalty of 25% of the amount paid by the buyer without guarantee. 

Spanish Law Firm
fljordan


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