Bank Guarantees - are they ring fenced?

Hi Maria,

Can you tell me please, when clients deposits are put into the bank are these "ring fenced" ? We were under the impression they were, and that it was our deposit which we are fighting to have returned to us, since the developer has stopped building.  Our solicitor told us on Friday that the developer will have used all the deposits for the build, and seeing as we have a guarantee from the bank, they will pay us out from their funds.  This being the reason why the bank cannot pay everyone out at once and payments are being staggered.

 Val, I hope Maria sees your post but I'm just going to poke my nose in.

This whole bank guarantee scheme just doesn't work properly here.  Even with a bank guarantee many people still have to fight to have their deposits returned.

The whole system needs to be reviewed and sorted, it is one of my recommendations to stimilate the property market again.  It just doesn't work and doesn't really protect the buyer.

Just my 2 cents.

Justin

 I want to swear but  I wont ! why why why are the BGs not worth a F### . I am  soooooooo  angry . I would never have parted with a penny with out one and I am still F ##### .Come on the Spanish system  banks ,courts etc  do  what  is right or I have been legally robbed and investing in Spain on any level  , private , business or corporate is gone for years and years to come .

Bank Guarantees for off plan purchases, according to Law  which regulates them are a reasonably good mean of  protection to your money. A different issue is that Banks are not very willing to pay first hand and show nonsensed excuses in order to... maybe...  gain time? or discourage the claimer?  and drive you to judicial affairs that take a long time in many occassions. Of course, interests play in your favour here.

If the developer is in difficult economic conditions, Banks are even more difficult to honour the Guarantee as they know their claim against the Bank might be a hard way to go.

Honestly, in my opinion, it is a matter of lack of regulation over the financial system and the excessive freedom Banks have been experienced. I think Bank of Spain should intervene more directly but they argument it is not a matter of their jurisdiction.

If you need to go to Courts for the execution of a Bank Guarantee or an Insurance Policy,the important things are:

- To have the original copy of the Bank Guarantee

-To prove the Judge there is no First Occupation license by the date of completion.

Best regards,

Maria

I read in this forum that BG is not a proper one if these words ("primer requerimiento" ) are missing.

Maria, can you please confirm if this is true?

Thanks.

It is not true. Any Bank Guarantee for money advanced in off-plan purchases are under Law 57/68 and needs to be honour if once completion deadline arrives, there is no0 hand over of the property.

This is part of a letter sent and published in the Costa Blanca News this week in response to yet again more people who are suffering regarding the Bank Guarantees and Developers not placing depositors money in a separate independent fund.  Like us their villa's have not been built and now the Developer is in administration and we are having to spend our own money to try and get it returned to us.

"If Spain wishes to regain any credibility with potential purchasers of property in the future the laws appertaining to the deposits and licences must be removed from the builders and held in a Government bond that can only be administered by the Government representatives and not left in the hands of unscrupulous developers to misappropriate the funds as they see fit."

If anyone is interested in reading and signing the petition which is being sent to the EU and Gordon Brown's office go to

(spanishpropertyscandelpetition)   only people power will force the EU and the British Government to see that our Human Rights are being flaunted by Spain.

mardel

Spanishpropertyscandalpetition. Good for Suzanne and her great efforts on behalf of off-plan purchasers.

My best wishes to her from here.

Maria

Thanks Maria for your reply. I wish people don't give false info in the forum which is annoying.