Bank guarantees or not

This topic contains 7 replies, has 4 voices, and was last updated by  Anonymous 13 years, 6 months ago.

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  • #51303



    Perhaps you would not mind making some points about guarantees clear.
    My situation is that I have paid stage payments to a development company, the development should have completed in 2003 and has not been finished. The development company appears to be having financial troubles. Only some buyers managed to acquire guarantees.

    1 What is a time limited guarantee? Surely the point of a guarantee is to cover the buyer if the developer fails to complete and it should continue to be valid until the certificate of first habitation is issued.
    2 Who is responsible for ensuring that the guarantee has been arranged by the developer? A UK solicitor tells me: ‘I have taken soundings on the issue of bank guarantees with other Spanish legal contacts and they confirm that in principle unless a client specifically instructs the Spanish lawyer to obtain a bank guarantee then the Spanish lawyer has no legal duty to see one is produced. This appears to be so in spite of the fact that Spanish law requires a developer to give one to the buyer when the buyer makes a part payment of the purchase price.’
    3 My contract specifically stated that I had a guarantee. This has been found to be untrue. I never had a guarantee. Do Spanish lawyers have a duty of disclosure to the authorities when they are aware that the guarantee does not exist?
    4 My contract stated that I was entitled to compensation for delayed completion. I requested my Spanish lawyers to invoke this clause but their response was: it is rather unclear, we will get one of our other lawyers to look at it and their preferred solution was to wait until completion and sort it out then. Who should I pursue for this money?
    5 I have had it indicated to me that the Illustro Colegio de Abogados Malaga may assist with a claim against my Spanish lawyers. Is it possible to go in person to ICAM with a lawyer to have a face to face discussion with a representative of ICAM? If so how should this be arranged?

    Many thanks for your very valuable contributions to this forum.

  • #59297


    hi i think you should leave this under SPANISH LAWYERS you will find a response there bun….

  • #59310


    Hi Jon.

    You’ll make my life easier if you all post your legal conveyancing queries on the thread “Spanish lawyers”.

    Addressing your queries:

    1. Correct.
    2. Wrong. The lawyer to the purchasing party of a new development should demand this bankguarantee/ insurance policy. It is in fact the developer themselves who ask for it in a bank or insurance company.

    90% of the law firm’s clients are not aware of this insurance/bank gurantee. If I had had to specifically wait for an order of them they would all be unprotected. My job, and that’s why I’m paid, is to look for the interests of my client at all times and enure they’re protected.

    Look at the thread spanish lawyers I mention specifically the laws and articles by which developers have to abide to comply with the laws and the sanctions imposed should they (=developers) fail to do so.

    3.The contract ? Look over my posts jon. The lawyer MUST fax you over the guarantee. Pester him until he does so, DO NOT TAKE HIS WORD FOR IT !! It is of paramount importance to ensure your payments should the developer default payments, and believe me they are already starting to default…

    4. Pursue the developer. Your lawyers ought to practice a retention upon completion amounting to the penalty which was agreed upon contractually. Your lawyers sound rather “easy-going”.

    5. Take the case to the ICAM shouldyou feel it is right . You phone them and arrange a meeting. Take a translator or someone fluent in Spanish.

  • #59322



    Thanks for the reply. One thing I did want to know was whether the purchaser’s lawyer MUST report the failure of the developer to obtain a guarantee to the spanish police or courts and if so, when should this happen.

    Hope you don’t mind running this topic outside of the ‘Spanish Lawyers’ thread.

  • #59347


    Your lawyer should warn you, this is highly irregular, there is no excuse to fail to obtain those bank guarantees. Is your lawyer lying you ?

    The law sanctions the developer that fails to provide guarantees on downpayments.

  • #59348


    The problem with legal sanctions is the length of time the courts take to deal with anything. Is there no fast-track system that can deal with issues when the consumer is at financial risk eg if the developer may go bankrupt or move their assets?


  • #59349


    Hi Drakan,

    Is this similar to being required to disclose a criminal act being carried out? Lawyers (and other professionals) have to notify suspicions of money laundering to the Authorities under legislation. The fact that my lawyer did not inform me about the failure of the developer to issue a guarantee is the subject of a separate claim for negligence at the moment but I would like to know whether the lawyer should have notified the courts or police that the developer was committing a criminal act.

  • #59377


    I wouldn’t go as far as saying it was acriminal act, because in legal terms it isn’t.

    Your lawyer must inform you asap on this, anmd should decide with you the next course of action.

    I would worry immediately If I smell the developer is giving me excuses because he just isn’t giving me/my client a BG for his downpayments. One must “amenazar” the developer to take him to court if he fails to bring up those guarantees in a reasonable a timeline, say a couple (2-4 months) after paying the developer for the 35& or 60% amount of the price (whatever has been stipulated in the contract).

    And beware everyone because developers are starting to default on payments, it happens always on economical crisis. So BGs are of paramount importance now, critical. With a BG you are safe, because the bank pays you or the insurance company against prove of the contract signed that binded both parties.

    Without a BG a court procedure can take up to ten years in Spain and it’ll be expensive… suing somepone must always be the last resort in Spain, always.

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