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
Lawyer
Maria de Castro is a Spanish Lawyer and the Director of the Law Firm www.costaluzlawyers.es.
She specializes in advising private foreigners in Spain and making the Spanish adventure a good dream. You can contact her at
mldecastro@costaluzlawyers.es