Do you have a proper BG

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This topic contains 12 replies, has 5 voices, and was last updated by Profile photo of Anonymous Anonymous 8 years, 6 months ago.

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  • #54077
    Profile photo of Anonymous
    Anonymous
    Participant

    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

  • #84253
    Profile photo of Anonymous
    Anonymous
    Participant

    Spanishlawyer

    Excellent clear and concise post, the definitive answer to BGs

    This information should be on the wall of every estate agent in Spain,by law.

    Steve V

  • #84066
    Profile photo of Anonymous
    Anonymous
    Participant

    Spanishlawyer

    Excellent clear and concise post, the definitive answer to BGs

    This information should be on the wall of every estate agent in Spain,by law.

    Steve V

  • #84261
    Profile photo of Anonymous
    Anonymous
    Participant

    Spanishlawyer

    May I respectfully just query your second point re. the amount (%) of legal interest.

    As far as I understand, the original 54/1968 law did state 6%, but there was an addition to the law made in 1999 which changed that to legal interest being the Bank of Spain’s rate for each particular year. As you know it changes from year to year (every year the BOE, Spain’s official Law Gazette, states the official legal interest).

    Certainly, in our court case, legal interest was calculated in this way. Over the three year period, a different rate of legal interest was awarded/calculated for each year.

    There are some contracts that specifically state 6% legal interest will be paid in which case obviously that is what a purchaser should receive.

    A sad example where judges are even playing with legal interest – I know of a case where a judge only awarded legal interest from the day the purchaser’s lawyer originally submitted his case. The previous three years during which the developer was sitting on the purcaser’s money was ignored and he received no interest for that period. Shameful.

    ……………………………………………………………………………………………..

    Your third point was a very important one to emphasise.
    Many (bad) contracts will state completion must take place when the architect’s End of Works Certificate is issued which is wrong and an illegal clause. All this certificate means is the architect has finished his job and will mean nothing with regards to legality in the eyes of the Town Hall. Only the Town Hall’s Licence of First Occupation (LFO, FLO, Habitation Licence) can deem a property legal. If you sign your contract, you are agreeing to this clause so be warned.

    Many contracts (as ours did) will have an end date which can cause two problems. If the building is delayed, the date can expire rendering the Bank Guarantee a useless piece of paper, you will be financially exposed – and your lawyer will probably have a fight on his hands to get it renewed. Or as in our case, the expiry date will be far in advance – so even if no building has taken place due for example to a cancelled building licence, they will use this date as an excuse why they don’t have to return monies in the meantime until that date.

    There should be no expiry date on BG’s and a good lawyer would not accept it – it goes totally against the spirit of the law – it is supposed to cover you until the LFO is issued.

    Spanishlawyer – until our experience in Spain, I admit we were totally ignorant of all these facts. Our original lawyer, having a vested interest with the developer, nicely stitched us up in accepting/signing a terrible contract.
    It is excellent that you have brought this subject again to the fore.

  • #84070
    Profile photo of Anonymous
    Anonymous
    Participant

    Spanishlawyer

    May I respectfully just query your second point re. the amount (%) of legal interest.

    As far as I understand, the original 54/1968 law did state 6%, but there was an addition to the law made in 1999 which changed that to legal interest being the Bank of Spain’s rate for each particular year. As you know it changes from year to year (every year the BOE, Spain’s official Law Gazette, states the official legal interest).

    Certainly, in our court case, legal interest was calculated in this way. Over the three year period, a different rate of legal interest was awarded/calculated for each year.

    There are some contracts that specifically state 6% legal interest will be paid in which case obviously that is what a purchaser should receive.

    A sad example where judges are even playing with legal interest – I know of a case where a judge only awarded legal interest from the day the purchaser’s lawyer originally submitted his case. The previous three years during which the developer was sitting on the purcaser’s money was ignored and he received no interest for that period. Shameful.

    ……………………………………………………………………………………………..

    Your third point was a very important one to emphasise.
    Many (bad) contracts will state completion must take place when the architect’s End of Works Certificate is issued which is wrong and an illegal clause. All this certificate means is the architect has finished his job and will mean nothing with regards to legality in the eyes of the Town Hall. Only the Town Hall’s Licence of First Occupation (LFO, FLO, Habitation Licence) can deem a property legal. If you sign your contract, you are agreeing to this clause so be warned.

    Many contracts (as ours did) will have an end date which can cause two problems. If the building is delayed, the date can expire rendering the Bank Guarantee a useless piece of paper, you will be financially exposed – and your lawyer will probably have a fight on his hands to get it renewed. Or as in our case, the expiry date will be far in advance – so even if no building has taken place due for example to a cancelled building licence, they will use this date as an excuse why they don’t have to return monies in the meantime until that date.

    There should be no expiry date on BG’s and a good lawyer would not accept it – it goes totally against the spirit of the law – it is supposed to cover you until the LFO is issued.

    Spanishlawyer – until our experience in Spain, I admit we were totally ignorant of all these facts. Our original lawyer, having a vested interest with the developer, nicely stitched us up in accepting/signing a terrible contract.
    It is excellent that you have brought this subject again to the fore.

  • #84267
    Profile photo of Anonymous
    Anonymous
    Participant

    Charlie your knowledge about spanish law is absolutely perfect. You surprise me again and again. I am finding everyday useless BGs even in clients with solicitors. It would be a good idea to upload a valid BG. I think there are thousands of buyers thinking that they have a proper BG and soon they’ll realize that they don’ have anything.
    Also point out that the reservation fee must be included in the total amount and stress who is keeping the original of the BG

  • #84073
    Profile photo of Anonymous
    Anonymous
    Participant

    Charlie your knowledge about spanish law is absolutely perfect. You surprise me again and again. I am finding everyday useless BGs even in clients with solicitors. It would be a good idea to upload a valid BG. I think there are thousands of buyers thinking that they have a proper BG and soon they’ll realize that they don’ have anything.
    Also point out that the reservation fee must be included in the total amount and stress who is keeping the original of the BG

  • #84269
    Profile photo of Anonymous
    Anonymous
    Participant

    @spanishlawyer wrote:

    Charlie your knowledge about spanish law is absolutely perfect.

    😳

    My knowledge is very limited, mainly concerning BG’s because of our problems, and all learnt from this forum….mainly from Drakan (he was a patient teacher!!).

    It has been suggested on this forum before that the Government should issue a standard Bank Guarantee that must be used by all developers, so it’s conditions can never be tampered with. A simple idea that could save so much heartache (and jiggery pokery 😉 ).

    It’s not a rocket science idea, but often the simplest ideas are the best.

    It is supposed to be that developers are compelled to issue a Bank Guarantee by law regarding off-plans, but in so many cases they don’t bother and get away with it, even in court.

    Even reporting lawyers who don’t obtain BG’s to the Colegio de Abogados gets the response: “By our rules, they haven’t done anything wrong”.
    It makes one wonder why they bother to write many of Spain’s laws.

  • #84074
    Profile photo of Anonymous
    Anonymous
    Participant

    @spanishlawyer wrote:

    Charlie your knowledge about spanish law is absolutely perfect.

    😳

    My knowledge is very limited, mainly concerning BG’s because of our problems, and all learnt from this forum….mainly from Drakan (he was a patient teacher!!).

    It has been suggested on this forum before that the Government should issue a standard Bank Guarantee that must be used by all developers, so it’s conditions can never be tampered with. A simple idea that could save so much heartache (and jiggery pokery 😉 ).

    It’s not a rocket science idea, but often the simplest ideas are the best.

    It is supposed to be that developers are compelled to issue a Bank Guarantee by law regarding off-plans, but in so many cases they don’t bother and get away with it, even in court.

    Even reporting lawyers who don’t obtain BG’s to the Colegio de Abogados gets the response: “By our rules, they haven’t done anything wrong”.
    It makes one wonder why they bother to write many of Spain’s laws.

  • #84273
    Profile photo of Anonymous
    Anonymous
    Participant

    Charlie and I had a joint action against the developer. Our first (in bed with the developer) firm of Lawyers wrote to us and told us that our apartment was not to be built as it had the building licence revoked: Our option was:

    Accept a bank guarantee of a full refund plus 6% interest in December 2006

    .

    despite the fact we were told we would have a BG soon after our initial deposit was paid, this didn’t happen. It was issued 15 months later with a forward end date.(18months) My husband was quite emphatic about when we would get cover from a BG. All was confirmed in writing by the lawyer!!(lies)
    Another quote from the Lawyer.:

    Therefore, you have the right to cancel the private purchase contract and recover the payments made to the developer plus 6% legal rates from the signing date of the private purchase contract.

    We had to go through the Court to action our “right” to cancel the ppc! The developers were dishonourable as well as disreputable.

    As Charlie has said, we were given year on year interest at a lower rate average 4%. It was not compound interest either.

  • #84076
    Profile photo of Anonymous
    Anonymous
    Participant

    Charlie and I had a joint action against the developer. Our first (in bed with the developer) firm of Lawyers wrote to us and told us that our apartment was not to be built as it had the building licence revoked: Our option was:

    Accept a bank guarantee of a full refund plus 6% interest in December 2006

    .

    despite the fact we were told we would have a BG soon after our initial deposit was paid, this didn’t happen. It was issued 15 months later with a forward end date.(18months) My husband was quite emphatic about when we would get cover from a BG. All was confirmed in writing by the lawyer!!(lies)
    Another quote from the Lawyer.:

    Therefore, you have the right to cancel the private purchase contract and recover the payments made to the developer plus 6% legal rates from the signing date of the private purchase contract.

    We had to go through the Court to action our “right” to cancel the ppc! The developers were dishonourable as well as disreputable.

    As Charlie has said, we were given year on year interest at a lower rate average 4%. It was not compound interest either.

  • #84292
    Profile photo of Anonymous
    Anonymous
    Participant

    charlie

    the standard Bank Guarantee, what a simple but brilliant idea.

    With a few more ‘standard’ documents in the buying process that can’t be tampered with, many people could have saved a small fortune. It cuts both ways as well. Agents/lawyer/developers would know where they stand much earlier in the building/selling process, so could be far more transparent…..well the good ones anyway! The bad guys would also be shown uo earlier, with less excuses.

  • #84092
    Profile photo of Anonymous
    Anonymous
    Participant

    charlie

    the standard Bank Guarantee, what a simple but brilliant idea.

    With a few more ‘standard’ documents in the buying process that can’t be tampered with, many people could have saved a small fortune. It cuts both ways as well. Agents/lawyer/developers would know where they stand much earlier in the building/selling process, so could be far more transparent…..well the good ones anyway! The bad guys would also be shown uo earlier, with less excuses.

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