Do you have a proper BG ?

Smiley:

Fully correct regarding interest included in 57/68 Bank Guarantees. I am afraid that if the Bank refuses it, an executive procedure will be needed  for sure. 

Know that executive procedures are easier and faster than the regular ( declarative) ones.

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We gave signed POA to our solicitor on 28th March 2008 to execute our Bank Guarantee, knowing it expired on 25th April 2008.  Our solicitors told us they need to send the developer a burofax and wait 40 days (we now know this is not true).  We know the solicitors had our signed POA on 25th April so they could have just executed the Bank Guarantee.  Instead, our bank guarantee has now expired.  We feel really bitter towards our solicitors as we feel they have been negligent.  Our solicitor told us the developer has agreed to give us our money back but no other staff member at the solicitors is aware of this.  Is our solicitor trying to cover her own back?  Should we believe her and hang on or should we take a different route?

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Do I have a proper Bank Guarantee?

The BG was drawn up in Spanish in August 2006 against our deposit and two stage payments totalling €82K against an off-plan build, completion 31 March 2008.  No translation was supplied.  We are identified as the purchasers and the developer is named as well.  The specific property is identified.  OK so far.

The third paragraph is where it all starts to go wrong, I think:

La presente garantía se extiende hasta el 20 DE ABRIL 2008, o en el momento en que "El Promotor" haya terminado la citada vivienda, quedando entendido que la responsabilidad máxima que asume "El Banco", dentro del plazo de vigencia queda cifrada en €82K, no pudiéndosele requerir de pago cantidad superior.

"El Banco", siempre que fuera requerida de pago fehacientemente dentro del plazo de vigencia del presente aval, satisfará, dentro de los diez días siguientes al citado requerimiento, las cantidades que se reclaman hasta la concurrencia máxima anteriormente citada, y sin que tenga que entrar a considerar de la procedencia del aviso y/o pago.

El presente aval ha sido inscrito en el Registro Especial de Avales con el número XXXXXX.

Would I be correct to say that the expiry date is an abusive clause?

Would I be correct to say that the refusal to pay one cent more than we paid, ie no interest whatsoever, is also an abusive clause?

Does it also mean that the Developer can execute the Bank Guarantee without the Bank asking any questions?

There does seem to be a brighter note though, they agree to pay within 10 days of the Bank Guarantee being executed.

Or, am I completely wrong?

Needless to say, we haven't completed yet and there are other problems in addition to the fact that the Cédula de Habitabilidad has not been issued yet, it was apparently applied for on what should have been our completion date - 31 March 2008.

Please help.
Many thanks in anticipation,

Diane

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When the buyer has a bank guarantee and decides to execute it in order to obtain a refund ,he or his practitioner goes to the bank to ask for the monies but sometimes banks don't want to pay alleging the expiry date of the BG or any other reasons.

The only possibility that the buyer has in this case is to sue the bank by means of a special proceeding called executive procedure which is theoretically faster and easier than others. It will be the judge who'll decide if the bank is liable in spite of what was stated in the BG.

To give an idea of how our Courts are judging in these cases and to provide a legal perspective on this matter it may be helpful to mention a judgement of a County Court from Madrid in April 2007 when court order refusing leave to proceed was issued when the plaintiff brought his case, the court considered the case dismissed because of the expiry date.

The claimant successfully appealed that ruling and in September 2007 the appeal court explained in his judgement that the illegal terms agreed between banks and developers can't be detrimental to the beneficiary . Broadly speaking the Court deemed non existent the expiry date because in the law is clearly stated that the BG has to be in force until the First Licence of Occupation is granted.

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This message was last edited by spanishsolicitor on 7/31/2008.

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Dear Diane:

Please have answers below in bold green ( same text of your message):




Do I have a proper Bank Guarantee?

The BG was drawn up in Spanish in August 2006 against our deposit and two stage payments totalling €82K against an off-plan build, completion 31 March 2008.  No translation was supplied.  We are identified as the purchasers and the developer is named as well.  The specific property is identified.  OK so far.

The third paragraph is where it all starts to go wrong, I think:

La presente garantía se extiende hasta el 20 DE ABRIL 2008, o en el momento en que "El Promotor" haya terminado la citada vivienda, quedando entendido que la responsabilidad máxima que asume "El Banco", dentro del plazo de vigencia queda cifrada en €82K, no pudiéndosele requerir de pago cantidad superior.

"El Banco", siempre que fuera requerida de pago fehacientemente dentro del plazo de vigencia del presente aval, satisfará, dentro de los diez días siguientes al citado requerimiento, las cantidades que se reclaman hasta la concurrencia máxima anteriormente citada, y sin que tenga que entrar a considerar de la procedencia del aviso y/o pago.

El presente aval ha sido inscrito en el Registro Especial de Avales con el número XXXXXX.

Would I be correct to say that the expiry date is an abusive clause? You are correct.

Would I be correct to say that the refusal to pay one cent more than we paid, ie no interest whatsoever, is also an abusive clause? It is an illegal clause as the Law which regulates these guarantees include the covereing of interests.

Does it also mean that the Developer can execute the Bank Guarantee without the Bank asking any questions? Second blue paragraph means that the Bank needs to refund the buyer, without consulting the developer on the matter.

There does seem to be a brighter note though, they agree to pay within 10 days of the Bank Guarantee being executed.

Or, am I completely wrong?

Needless to say, we haven't completed yet and there are other problems in addition to the fact that the Cédula de Habitabilidad has not been issued yet, it was apparently applied for on what should have been our completion date - 31 March 2008.

You can go for the execution now. 

Please help.
Many thanks in anticipation,

Diane

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Many thanks to SpanishSolicitor and María de Castro for clarifying the situation for us.

Thanks again.

Diane

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Wonderful you are clear now.
Best wishes,
Maria

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Hi there, We are buyers at Cortijo del Mar. Our builders (Grupo Labaro) went bust and the development was taken over by FM Consulting who saif that they would finish the apartment but not until 2010/11 - our original completion date was 2009. We decided to pull out of the purchase and asked our solicitor (Lawyers from Spain) to execute our bank guarantee. She originally said that we would get our money back no problem. This morning however, she has emailed us to say that we are in breach of contract because we didn't pay our second 10% installment which was due on August 4th and that in order to get our money we must first prove to the notary that we had intended to complete the purchase before Grupo Labaro went bust. Her solution is that we should transfer the money to their account and they will pass it on to the notary. Then Lawyers from Spain will go to the court in Madrid and represent us by getting all of our money back. Does any of this make sense? I thought that a bank Guarantee was an insurance policy against builders going bust - if this is the case can't we just ask the bank to honour the bank guarantee. Also, how can we be in breach of contract when Grupo Labaro broke the contract by going bust. Any insight or help would be gratefully appreciated. skc247

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Hi, welcome. We have a brilliant lawyer who posts on here, Maria de Castro. She posted before you so will get email notification that someone has added to the thread & will come in, hopefully advising you.  Just be patient.

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Thank you. I read some of her advice in the past. She does seem very good - I will wait to hear more. skc247

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