hi , i am new to the forum and appolagise if this has been dealt with previously .
i have a contract with a developer which states they will hand my property over no later than 18 months from the granting of building licences which were granted dec 2008 , they have also written stating “therefore the latest date on which your property may be handed over to you is may 2010” .
if the property is not complete by this date is the contract “null and void “and would i be entitled to my deposit back or would i have to go to court and exercise the bank guarantee ? .
any factual information would be greatly appreciated .
hi , i am new to the forum and appolagise if this has been dealt with previously .
i have a contract with a developer which states they will hand my property over no later than 18 months from the granting of building licences which were granted dec 2008 , they have also written stating “therefore the latest date on which your property may be handed over to you is may 2010” .
if the property is not complete by this date is the contract “null and void “and would i be entitled to my deposit back or would i have to go to court and exercise the bank guarantee ? .
any factual information would be greatly appreciated .
Dear Peter
We would have to check your purchase contract and the terms and conditions of your bank guarantee. In principle, my opinion is that you should be entitled to claim your deposit back from the bank which issued the bank guarantee. However, first of all you should send a formal request to the developer (burofax)requesting the cancellation of your contract and the refund of your deposit plus interests, and if they don’t attend your request, then you should claim against the bank. Bearing in mind the deadline you mention in your post, my advice is to start collecting and arranging all the necessary documents you will need to arrange the cancellation of your contract (certificates from Town Hall confirming the First Occupation License hasn’t been granted yet, litigation power of attorney for your lawyers, etc).
Should you need more specific information, I would be more than happy to assist.
Sorry Peter, but I can not agree with the lawyer’s advice on this one.
Before this global crisis/chaos, it was the norm that any court would make allowances for about 3 months delay on a contractual date. Anything can be cited by the developer as an excuse including building delays due to bad weather (and we all know how bad it’s been in the last few months).
Secondly, I’m not a lawyer but from experience I can tell you that even if there was a year’s delay you will have a hard time. Remember with a Bank Guarantee it is the bank who pays up and as in our case, they will fight you tooth and nail in court not to pay. I know dozens of people, mainly through this forum and beyond, who have been totally unsuccessful in calling on their Bank Guarantee because it’s just a fact the courts are often more than willing to side with the developer.
I don’t want to depress you, but in our case the developer hadn’t even built anything (building licence got revoked), we called on our Bank Guarantee and the bank still made us go to court to claim on our BG. It took one year before we got our day in court. Imagine the delay today with thousands of cases backlogging. The bank of course lost, they didn’t have a leg to stand on with a no-build and guess what….they appealed! Another six month delay.
Another example concerns the bit our developer did build. About a year late in completion, still no valid building licence and no LFO (Licence of First Occupation). You would think the purchasers would have a good case for opting out. Some didn’t even have a bank guarantee which is against the law. All developers have to provide one. Guess what….regardless of the delay, regardless of the fact the developer broke the law by not providing a BG (the judge said “well you don’t need one anyway now, the building’s complete”!), and regardless that there was still no valid building licence nor the all-important LFO, the purchasers were still ordered to complete by the court. They appealed and after having to wait about another 6 months for the appeal hearing, they lost. Everything this judge ruled went against the law, but there you go.
This is not to depress you, it is to show you how hopeless it ‘can’ be by thinking you’re in your legal right to get monies back if there is a breach of contract. Look at least a year before you go to court, the cost of a lawyer, and if you’re unlucky as in my example above you will also be liable for the developer’s costs.
Javier is right when he said “in principle, my opinion is that you should be entitled to claim your deposit back from the bank which issued the bank guarantee”. In practice, in Spain, what you are entitled to by law and what actually happens in reality can be two totally different things. I feel the reply to your question has been over-simplified and over-encouraging at this early stage. If your property is only going to be a few months late or even a year late, in this day and age in Spain, this is nothing to go to court about. Just be happy if you have a valid building licence so at least your electricity etc. will be connected.
My advice, sit tight – and if you are absolutely determined to go to court do not contemplate doing so until at least 6 months has passed the official completion date and be prepared for a long long wait until a court date. You might just as well complete and enjoy the place you bought.
All in my opinion of course. I wish you good luck in whatever you decide.
I would like to remark that I haven’t stated in my previous comment that the process of recovering the funds would be an easy one, which is what charlie has understood as per his reply.
The process of claiming the money could be a long, costly and distressful process which could take years. It could also be an smooth process in which you can recover the funds quickly. In my experience I have found both scenarios, depending on many aspects.
At the end of the day, there are not black or white forecasts in these situations.
I didn’t say you said recovering funds would be easy, but you didn’t say or infer it could be difficult either. My statement re. the over-simplified bit was exactly that, with you just explaining the law/procedure and what Peter should do next…. “and if they don’t attend your request, then you should claim against the bank” without pointing out the usual time-delays that are accepted by the courts.
The over-encouraging bit was referring to you simply showing how the law is on Peter’s side but not pointing out what often happens in reality.
I respect your contributions on SPI, you offer a free, legal opinion which is always appreciated by members. But on this occasion I couldn’t agree with your rather simplistic reply based purely on ‘procedure’ without putting Peter in the picture regarding some facts of what actually often happens in these cases, regardless of the law.
Peter did ask: “any factual information would be greatly appreciated.” I thought I would offer some facts as per my experience and that of others I know when it comes to claiming on Bank Guarantees.
I didn’t say you said recovering funds would be easy, but you didn’t say or infer it could be difficult either. My statement re. the over-simplified bit was exactly that, with you just explaining the law/procedure and what Peter should do next…. “and if they don’t attend your request, then you should claim against the bank” without pointing out the usual time-delays that are accepted by the courts.
The over-encouraging bit was referring to you simply showing how the law is on Peter’s side but not pointing out what often happens in reality.
I respect your contributions on SPI, you offer a free, legal opinion which is always appreciated by members. But on this occasion I couldn’t agree with your rather simplistic reply based purely on ‘procedure’ without putting Peter in the picture regarding some facts of what actually often happens in these cases, regardless of the law.
Peter did ask: “any factual information would be greatly appreciated.” I thought I would offer some facts as per my experience and that of others I know when it comes to claiming on Bank Guarantees.
No offence was intended Javier. Far from it.
No offence was taken Charlie, thank you for your comments.
You are right in stating that I didn’t mention how hard the process was going to be, and the reason was simply because it doesn’t have to be necessarily that difficult and that is just the worst case scenario. As I said, in my experience you can face different scenarios, sometimes hards as you described sometimes not that difficult.
Nevertheless, thanks to this dialogue Peter will have now a better understanding on what sort of expectations he can have when it comes to claim his funds to be refunded, and this is why I think this forum is a great channel to share information and thoughts.
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