Bank Guarantee For Renting Your Property

Published on 25/06/2007 in Your Spanish Home

The Bank Guarantee is a typical way of legal security, it is legally independent from the principal or main obligation, which is being guaranteed by this, therefore needs to be considered as a separate, different and autonomous contract but linked to the principal by the fulfilment or breaching of the payment obligation of the principal contract. The fulfilment of the obligation is not going to depend on the financial situation as if there is a breach of contract, the bank guarantee can be directly executed and the money can be recovered without judicially executing the main contract.

You all already know that the bank guarantee is a legal obligation to developers for the consumers securing the amounts paid in off-plan purchases in Spain since 1968. Today, I want to show another useful way to use the Bank Guarantee, this time for lettings or renting:  

A bank guarantee can be used for renting in order to secure the result and execution of the obligations included in the rent contract either as the guarantee which is legally prescribed in provision 36.1 of General Renting Act or, as a compliment, which is allowed by provision  36.5 of that General Act. This last modality is experiencing a very widespread use as a personal complimentary guarantee which is constructed as a means of immediate availability.

This has been declared by Decision of the Supreme Court dated the 15th in April of 1988.

This way, if there is a breach of contract, the landlord can claim against the bank (guarantor) the execution of the bank guarantee and he must obtain automatically and without any opposition, the amount which has been fixed in the Bank Guarantee. The Bank will then have the possibility to go to Court afterwards and claim the amount back from the tenant. Tenant will have this same means if he considers that the execution of the Guarantee was not justified. 

The guarantee deadline needs to be fixed in the same rental contract, determining the time for the landlord to execute the guarantee before the guarantor bank. If that deadline passes without executing it, the guarantee will be terminated.

Written by: Maria de Castro

About the author:

Maria de Castro is a Spanish Lawyer and the Director of the Law Firm www.costaluzlawyers.es.

Costa Luz Lawyers are contract and consumer real estate law specialists covering all parts of Spain. You can contact Maria at mldecastro@costaluzlawyers.es




Right arrow icon Send to friends   Right arrow icon Printer friendly version    Right arrow icon Submit your own article


Comments:

Alan said:
09 June 2010 @ 04:07

Dear Maria
That's a really great suggestion that can offer peace of mind to landlords - do you know, typical bank charges per month - for example on a rental of 500 euros per month; or as a % of rental income? Many thanks Maria
Alan



WINIFRED1 said:
24 September 2007 @ 17:28

WE WERE PLEASED TO SEE THE ARTICLE ON BANK GUARANTEES, SEPTEMBER 2005 WE STARTED THE PURCHASE OFF PLAN OF A VILLA, GIVING OVER 30% TO OUR SOLICITOR WE SOON FOUND THINGS GOING WRONG, HOWEVER WHEN FINDING THE DEVELOPER HAD BREECHED THE CONTRACT WE REQUESTED OUR MONEY BACK TO BE TOLD BY THE SOLICITOR THAT THERE WAS NO BANK GUARANTEE. CAN YOU CONFIRM THAT THIS IS AGAINST THE LAW, AS WE HAVE SINCE PUT THE CASE INTO ANOTHER SOLICITORS HANDS, AND TO DATE AFTER 5 MONTHS HE SAYS THE ONLY OPTION IS TO GO TO COURT, WHICH HE IS IN THE PROCESS OF DOING. WE FEEL HE IS COVERING FOR THE OTHER SOLICITOR AND AFTER READING YOU ARTICLE FEEL THIS IS CORRECT. WE WOULD APPRECIATE YHOU COMMENTS.


jackamo said:
26 June 2007 @ 14:52

What an excellent piece of information.
I am looking at the potential of renting my properties in Spain and this is the first I have heard of this.
Many Thanks Maria
Jack


Only registered users can comment on this article. Please Sign In or Register now.

Comment Using Facebook:




Related articles in this category

20 Home Staging Tips With a Difference

A Week in Spain

Achieving a Comfortable Temperature in Your Spanish Home

Are The Banks Paying Their Community Fees, IBI, Etc?

Bank Guarantee For Renting Your Property

Big Spanish Property Price Drop – Real Case Study

Bills, Bills, Bills

Can't Afford Your Mortgage In Spain? These Are Your Options

Can't Sell? Rent It Out With Option To Buy

Community Commotion

Coping with the limited space of an apartment

Counting The Costa Locking Yourself Out

Currency Update - Eurozone Jitters

Currency Update - Eurozone Jitters Continue Following Spanish Bailout

Currency Update - Is Spain in Trouble?

Currency Update - Sovereign Debt and the Euro's continued fall

Currency Update - What Is Happening To Europe?

Currency Update April 2011

Currency Update August 2011

Currency Update March 2011

Currency Update: Euroland and US - Where are we at the moment.

Demolitions in Spain

Do I Need To Pay Capital Gains Tax In Spain?

E.T Phone Home....but Maybe not from Spain

Entering a Community and the Role of the President

Euro Currency Update July 2011

Euro Currency Update: October 2011

Euro vs Sterling Currency Market Update

Expats Hit Hard By Property Tax Probe

Furnishing Your Property in Spain

Furnishing Your Spanish Property For Holidays Or Rentals

Getting Your Pool Ready for Summer

Home Insurance in Spain

Horizontal Property Act - Part 1

Horizontal Property Act - Part 2

Horizontal Property Act - Part 3

Horizontal Property Act - Part 4

Horizontal Property Act - Part 5

Horizontal Property Act - Part 6

Horizontal Property Act - Part 7

How Do You Value A Property In Spain?

June Currency Review of Euro Vs Sterling - Things Are Looking Up

Long Term Rentals in Spain

Maximising The Value Of Your Property

Mortgage Arrears – Is "Handing Back The Keys" A Solution?

NIE Numbers And Why They Are Important

Protect Your Home in Spain From Insurance Claims This Winter

Ratable Values Are Being Revised In Marbella

Recovering Community Fee Debts From Overseas Owners

Security Is The Key For Your Home In Spain

Some Spanish Property Market Good News?

Spain Ends Monopoly Of Electricity Supplies – Could Your Community Make Savings?

Spanish Property Market Values - What Is The Truth?

Sterling - Euro Reaches New Highs

Swimming Pool Regulations

Target the Spanish

The Day the Don Juan Community Defeated Don Juan

The Impractical Side Of Spanish Architects

The Nota Simple Explained

The Pound And Euro Face Uncertain Times

The Spanish Property Crisis - How long will it last?

The Stirling Euro Yo Yo Effect

There's Something About Spain

Tips On Selling Your Spanish Property The Distressed Way

Top Sales Tips: Get The Best Out Of Your Estate Agent

Top Tips For Insuring Unoccupied Holiday Homes In Spain

TRG for Sellers

Update On The Euro From Moneycorp

Valenica Land Law Abuses Fight For Justice Continues

Weekly Euro Update - 18 May 2010

Weekly GBP Euro Update - 20 July 2010

What is a comunidad de propietarios?

What The Future Holds For The Spanish Property Market

What to Do If Unable to Pay Off a Mortgage to a Bank in Spain?

What's Happening With Aifos?

Where Is The Eurozone Economy Heading?

Why Do So Many Still Put Spain Down?

Why Is My Spanish Property Not Selling?

Why to Insure Your Spanish Home in UK

Wills in Spain - No Will....No Way

Your Property on the Web - Simple!

Click here for a list of all the articles from our magazine 

Spain insurance services


This site uses cookies. By continuing to browse you are agreeing to our use of cookies. More information here. x