There is a vast amout of good information posted in the general area of this forum regarding the laws and BG, especially concerning expiry dates
Recently in Spain there have been a number of test cases, which can be referenced and set a legal precedent, where a BG with an expiry date is against consumer law, should have been renewed by the builder and where have in the Courts and the noney has been paid to the buyers
It is also ilegal under Spanish Consumer Law not to issue a BG and an owners that doesn´t have one can bring an action against the builder for failure to issue one
There are 4 problems with the process the first is the expense of such an action, the time it takes to get to Court, the gamble that the builder will still be trading and finally finding a good independant lawyer to take the case, most of the good ones are so busy they are not taking on any more work at present
On another forum for another Peinsa development a lawyer is claiming that there may be grounds for a criminal action, possibly fraud, if certain things, line the holding of deposits in a seperate a bank account, and using them to fund other developments, may be viewed as against the trading laws
A good source of information is OMIC the Spanish consumer protection organisation
Know Your Rights!
The Aval Bancario (Bank Guarantee) or Insurance Contract were both established by a 1968 Law to protect buyers in off plan developments.
Article. 1. - The developer must guarantee the return of the deposited amounts plus 6% of annual interest, through an insurance contract or by bank guarantee, in circumstances where the construction doesn’t start or doesn’t finish in the agreed time.
They also need to open a special bank account for your amounts (different from the general one of the developer) and have it expressly written in the contract.
Article. 2. - In those contracts where the parties agree on anticipated amounts the developer must expressly state:
a) That the developer will give back to the buyer all the advanced amounts plus the 6%, in circumstances where the construction fails to start or end within the agreed deadline, or the certificate of habitation is not granted.
b) Reference to the bank guarantee or insurance contract, this must indicate the name of the Bank or the Insurance Company.
c) Specification of the Bank or financial institution and the account number where the buyer’s money is deposited.
At the signing of the contract, the developer will give the buyer the document that contains the guarantee (the Aval or the Insurance Contract) and the document must have a reference to the amount that is anticipated.
Article 3. – If the deadlines for starting or finishing the development are not met, the buyer can choose between cancelling the contract with the return of advanced amounts plus 6% annual rate, or to concede a time extension, which will be stated in an additional clause in the contract, specifying the new deadline with the date for finishing the construction and completion.
The insurance contract or the bank guarantee together with the document that fully proves that the work has not been started or that the completion deadline has not been met nor complied with, will have executive power as it is stated in the Title XV of Book II of Civil Procedure Law, to demand from the insurance company or the bank, the amounts that the buyer is entitled to, without prejudice of any other given rights also applicable.
Written by: Maria de Castro
consumer advice amd information is OMIC, every Town Hall has one attached, the Spanish consumer department
Maria de Castro is a Spanish Lawyer and the Director of the Law Firm www.costaluzlawyers
This message was last edited by inspectahomespain on 1/7/2009.