Do you have a proper BG ?

 

Do you have a proper BG ?

 

Be careful with some developers and Banks producing useless BGs, usually they show you a copy of a bank certificate which is general for the whole development.

If you have a BG please check whether is referred :

1º The name of the guaranteed (beneficiary) Your name and NIE or passport number

2º The amount guaranteed. The exact amount you have paid plus 6% (interests)

3º The deadline Must be until the FLO is granted

4º How can I execute the BG.  Check the words "a primer requerimiento". If you don't have these words you have to go to Court in order to execute the BG

5º What is really covering the BG

 

If you don't have a BG with all this elements you are not protected against bankruptcies or  endless developments 

Don't believe in Agents Lawyers etc, check these points personally even if you don't understand spanish and you'll realise whether or not you have a valid BG

Hi thanks for the BG info but what is FLO What should I look for on the BG document to tell me this

I think it refers to the licence of first occupation.  I would like to know where to look for "a primer requerimiento". Thanks for the info.

Hi

When I purchased off plan 2 yrs ago I was told by my solicitor that we had a bank guarantee.

I purchased at San Cayetano and the builder is Taray.

I am now having a lot of problems and asked my solicitor for a copy of the bank guarantee. She said they had not got one.

When they asked Taray for a copy they have not produced.

Does this mean I have no guarantee? and is the builder in breach of contract for not producing it.

Any help appreciated.

Dave

I have a section in my contract that says

Amounts Already Dispursed
In order to guarantee all amounts already disbursed by the Purchaser towards the purchase price, TARAY, S.A.U. shall set up a line of bank guarantees with the bank the company may think fit.

It is my understanding that all off plan builds should by law 57/68 be issued with a BG.

Failure of the developer to issue such guarantees after each stage payment means the vendor can cancel the contract and get all monies plus interest refunded.

Can you confirm.

Cheers

Dave

Hi Spanishsolicitor what about ALVA   on  BGs another solicitor has said this is the important thing if you have this on it you dony need to execute it through the courts .Is there any truth in this. thanks

Excuse me Julie,what does ALVA mean ?

I want to add, in order to leave some stress, pressure and fears off that, even if the Bank Guarantee is not validly issued ( i.e.- It is subject to an expiration deadline or, ir does not cover full interests or have any minor error...) by the force of Law 57/68 and General Building  and Consumers Act, it is fully enforceable till the First Occupation License is issued as the expiration deadlines or the omission of coverage of interests are illegal and therefore null and void. The word of the private document it is implemented by the force of the Law.

So my advise is.... once you have a Bank Guarantee ( even expired) do and execute it: it is quite probable that the Bank or the Insurance Company will not honor it first try but.... a good executive defense ( with the help of a good litigation lawyer) will succeed for sure... There is Case Law which covers this approach, of course.

Thanks to the Law!!

Cheers!

Maria

This message was last edited by mariadecastro on 7/2/2008.

Thanks for that Maria.

In my case I paid my deposits in 2006 but Taray  never issued the bank guarantees.

My solicitor has just requested from Taray the guarantees to cover the payments I made.

My questions are.

1. How long do I give Taray to produce the guarantees before I ask for deposit back due to breach of the law.

2. If they do produce the guarantee are the still in breach for not producing at the correct time.

Cheers

Dave

What is the stage of the building at the present moment?

Building is completed but the LFO has not been granted yet. They think about Septrember 2008 for the LFO to be granted.

Dave

We have a Bank Guarantee with BBVA they are willing to pay the amount stated on the Guarantee but not the legal interest is this normal, our solicitor has sent them 2 burofaxes which they have not responded to. Are they within their rights legally only to pay what is on the guarantee? We do not want to take them to court as this would take too long.

Cathie

Hi Cathie

"I want to add, in order to leave some stress, pressure and fears off that, even if the Bank Guarantee is not validly issued ( i.e.- It is subject to an expiration deadline or, ir does not cover full interests or have any minor error...) by the force of Law 57/68 and General Building  and Consumers Act, it is fully enforceable till the First Occupation License is issued as the expiration deadlines or the omission of coverage of interests are illegal and therefore null and void. The word of the private document it is implemented by the force of the Law.

So my advise is.... once you have a Bank Guarantee ( even expired) do and execute it: it is quite probable that the Bank or the Insurance Company will not honor it first try but.... a good executive defense ( with the help of a good litigation lawyer) will succeed for sure... There is Case Law which covers this approach, of course."

Posted by Maria below. I am not a lawyer but I think the interest is enforceable in law and BBVA cannot dodge the issue. Guess your lawyer needs to advise them that you will go to court for full recovery if they are not willing to reconcile your claim and fulfil their obligation.

This message was last edited by Smiley on 7/4/2008.

Hi
I posted this on my off-plan forum and one of my posters suggested this thread would be a better place for my posting. Any comments appreciated.


"I asked my solicitor for a copy of our bank guarantees for deposit and stage payments made a year ago on an off-plan in San cayetano, Murcia and have just had this reply. Here is a quote from her email -

'regarding the bank guarantee we have been promised by TARAY that the mentioned document is on its way and you can rest assured that we will contact you further as soon as a copy of this bank guarantee reaches us'

 As far as I can see this means that my solicitor DOESN'T have copies of our guarantees!!! Shouldn't they have got these for us in the course of acting on our behalf! Do we really have to tell our solicitor what to do? 

We bought our phase 2 quad villa last July and made our deposit and stage payment whilst we still out there on our Parador inspection trip, so Taray have had our money for over a year now!

Any comments as to the professionalism or otherwise of our solicitor appreciated."

I guess No Comment would be the most appropriate. Your lawyer should really have made sure there was a BG in place and provided a copy to you (IMHO). Some lawyers in Spain do not have the same level of expertise or degree of professionalism as others - this does not necessarily mean that biggest or highest profile is best either. I have heard of serious failings in terms of big legal practices that one would have thought would provide a  better service than they have. It is highly possible that some of the smaller less well known ones can be better as they are more dependent on personal recommendation.

You just have to press your solicitor all the time
Some developers just produce them quickly, others delay and delay as it cost them money
They are in breach of the regulations and I understand that they can be fined up to 25%  of the amount of the guarantee amount
Get your solicitor to give them a deadline to produce it and if they do not get them to take legal action
As everyone seems to be on holiday in Spain in August I suppose now it will be September before you can take any action 

In the current economic climate you either want your BG right now or your money back [ or at least put in a joint account until you get a BG]

The quad you have bought is very nice but the builder will want to keep you as a customer so you can apply as much pressure as you want

Anyway, there may be some better options out there now and at least you would have changed your deposit at a good rate compared to today

So just chase hard ....important
    

Rymski:

Ask your solicitor to:

1.- Send inmediate burofax to developers requesting the guarantee under the consequence of cancelling the contract ( it is possible if you have reiteratedly asked for it ( need to have written proof) and have not been granted with one.

2. I would also suggest, given the passive approach of your solicitor to ask them to show the sending of the burofax to you or even....


to change to a more proactive and determined solicitor, accorring to what you have told, I see very few guarantees with the present one, does not seem to be very cocerned on the lack fo that important document. Essential always. Most essential in the current state of real estate market.

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.

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?

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

 

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.

 

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

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

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

Thanks again.

Diane

Wonderful you are clear now.
Best wishes,
Maria

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

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.