Bank guarantee: legal protection for buyers of new construction in Spain
30.05.2023A bank guarantee is a form of legal protection for buyers of new construction in Spain. It provides buyers with financial security and protection against potential risks that may arise during the construction process.
Under Spanish law, in particular the Spanish Law on the Protection of Consumers in the Purchase of Homes, developers are required to provide a bank guarantee to buyers of new build properties. This bank guarantee (bank guarantee) aims to protect the interests of the buyers and to ensure that their prepayments are guaranteed.
The bank guarantee offers buyers several advantages.
- Firstly, it guarantees that the amounts paid will be refunded in case of non-fulfilment of obligations by the developer. For example, if the developer goes bankrupt or fails to complete construction work, buyers can claim the bank guarantee to get their money back.
- Secondly, the bank guarantee also covers any defects or shortcomings discovered after the delivery of the property. For example, if there are construction defects or other defects covered by the warranty, buyers can use the bank guarantee to obtain any repairs or compensation.
- It is important to note that the specific details of the bank guarantee may vary depending on the exact legislation and regulations in the particular region of Spain. It is advisable to seek professional advice and understand the specific terms of the bank guarantee before purchasing a new build property. Let your lawyer in Spain check this.
As a buyer, it is also important to ensure that the developer actually provides a bank guarantee and that it is valid. You can verify this by checking the relevant documents and certificates and contacting the relevant bank if necessary.
In short, the bank guarantee offers buyers of new construction in Spain legal protection and financial security. It is designed to protect the interests of the buyers and compensate them in case of problems during the construction process or after the delivery of the property.
In order to better protect the buyers, the law also establishes a mandatory content for all private off-plan purchase contracts, and this content must contain at least:
- That the developer is obliged to refund the prepayments made by the buyers plus the statutory interest on the money in case of breach of contract.
- A statement of the bank guarantee or insurance taken out, stating the name of the guaranteeing bank or insurance company.
- Indication of the special account to which the buyer must make all payments.
- Need advice about the bank guarantee?
Do you have any questions regarding this article? Feel free to contact me at info@medvillaspanje.com
This article has been compiled with great care. Nevertheless, no guarantees can be given with regard to the completeness and/or correctness of the above information. Please read our legal information