Bank Guarantees

This topic contains 10 replies, has 3 voices, and was last updated by  Anonymous 13 years, 10 months ago.

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  • #51220


    Hope someone can answer my questions.

    I would like to know what happens to the interest made on money from a property deposit (say 30%) that sits in the bank while we await completion.
    Does the bank keep it as their fee or wiould it go to the developer?
    Also what would happen to the interest in the event of someone being unable to complete and getting their deposit back (minus any penalties)


  • #58708


    It is my understanding that the deposit you pay is usually forwarded direct to the developer so they can begin building, therefore it does not ‘sit’ in the bank to accumulate interest.

  • #58709



    So essentially the bank guarantee is an insurance policy that covers the amount paid in incase of builders going bust etc?

  • #58711


    From the Spanish Building Act 1999 which is now in force:

    “The collection by developers or administrators of payments on account during the building process shall be guaranteed under an insurance policy which indemnifies the breach of contract….
    The guarantee…shall extend to the amounts paid in cash or by any other means, which amounts shall be deposited into a special account set up for such purposes as forseen in the Act.
    The guaranteed repayment will include all amounts paid plus the legal interest at the rate in force at the time of repayment.”

  • #58712


    Read my extensive postings about our problem with lawyers/developers and Bank Guarantees! The 1999 Act means “diddly squat” when it comes to actioning a BG, as we have found out! 👿

  • #58715


    The 1999 “new developments” law is quite clear as Mrs C translates into english, ALL moneys plus legal interests have to be paid back to the purchaser in the case that building is not started or completed within the agreed dates.
    I am so sorry for Claire’s awful experience but I have to say that if the contract signed with the developer and the bank guarantee are properly drafted and done there shouldn’t be any problems enforcing the bank guarantee.


    Jose Maria Sánchez Alfonso
    Abogado / Lawyer
    Málaga, Costa del Sol

  • #58719


    Claire, I am sorry for the problem you are having with your particular developer. However, as far as I can ascertain from your postings, the problem in your case lies not with the law (in this case the Spanish Building Act 1999) but with, it seems, the unfortunate combination of (possibly) unscrupulous developer and lawyer you initially had the misfortune to deal with.

    I sincerely hope that you get all your money back with interest and soon, as you are entitled. But just because you personally have suffered from this one bad apple doesn’t make the law an ass. As they say.

    Your experience is a hard lesson to all to do their homework thoroughly, completely and utterly, trust no one initially and leave nothing to chance before parting with what is, after all, possibly your life’s savings.

    If you buy a used car you do an outstanding HP credit check. If you so much as spend 50 quid on a microwave you make sure you get a guarantee. If you rent out a house you take up references on your new tenant. If you buy a new house in the UK you go for an established, reputable builder who offers NHBC warranties, complies with or exceeds all Building Regs requirements and furthermore has copies of all the planning permissions etc pinned up in the site hut or available to see in their head office. So why do things differently in Spain?

  • #58720


    Dear Mrs C,
    Without meaning to appear rude,the last paragraph of your post makes “grates”. We are reasonably intelligent people 🙂 ! My husband, who is a Chartered Accountant and an ex Finance Director of a merchant bank, and by his very nature is cautious in all his busines dealings, obtained financial searches on the development company (a sizeable organisation with what seemed a good track record) and we were satisfied with both the quality of their developments and workmanship. They are still building 3 more quality developments. Their moral standing did not appear !

    Our lawyers, were recommended by the Estate Agents, and THIS was our BIG mistake. 😳 At no time did we feel uneasy about them, until March this year. We never dreamt that there were some lawyers in Spain, who would be as untrustworthy and incompetent. It is not unreasonable to assume that ethical standards were in place. Not withstanding this, we did get our bank guarantee in April, this year.

    We are not the only ones caught up in this development. Recently, “Graham” posted on the forum. He bought on the lower section of Green Hills. He should complete by October. “Siobhan” and her partner bought on the same blocks as we did. They went to another Lawyer in Marbella, and they, to date, have NO bank guarantee ! Like us they have changed lawyers and are continuing to pursue the return of our deposits. We are not investors. Many of the people who did buy , are. Apparently, from our enquiries, these “investors” tend to move on to other developments whilst waiting for the “hiccup” to run its course. We certainly haven’t invested “life savings”, but it it is a significant sum of money. It would be great if others affected by this “no build” would come forward!

    Leave all of that aside…..the estate agents and the lawyers. What we DO accept is that we are unfortunate in that the building has not and will not take place. It happens. What we DO NOT accept is this. We have a valid bank guarantee, but we cannot execute it until October 2006. ( this is due to the lawyers not acting with our best interest, but working WITH the developers!) but the developers refuse to return our deposit at the end of our contract, which expires on October 31st 2005. We are now incurring more expense in persuing this. Why, under the 1999 Act are we not protected? Why do we have to go through the courts? 😕

    I want to make another point. We do not think ALL Spanish lawyers are the same. As in every field, there are good & bad. Unfortunately, as several people here have written, there are 3 bad law firms in Marbella. Hindsight is a wonderful thing!!

    I personally know of many people who have bought property in Spain. As is obvious, we asked them about their experiences (as well as doing our own research). At no time did any of them have our experiences. UNLUCKY …yes. STUPID…NO!!!

  • #58724


    Claire, I live near the development. I think you have been very unlucky as it could have happened to anyone and this developer did have a good reputation.

    I think there are still units for sale in the other blocks, would it not be possible to transfer your deposit to them, or would you not want to do that?

  • #58725


    Hi “guest”

    We decided not to buy on the lower part as when we bought, the top section was more expensive as it had the wonderful views to Gibralter and the Atlas mountains. Now the lower section is a comparable price…without the views…just lots of trees! We had “prime choice” when we put down our deposit. A good size terrace with a south westerly aspect on the second floor. WHEN we get our money returned to us, we can then decide what to do. Personally, I think we should just rent one of the “thousands” of apartments that people are trying to rent out as an investment. That way, we are not tied. A “Get up & Go” situation. There is plenty of choice ! 😉
    We are having a trip to Frigiliana soon and IF I can persuade my husband, I’d love to go and see the show apartment. Somehow, I don’t think that will happen! ! 🙂 Yes, we were just unlucky. 🙁

  • #58726


    Opps…didn’t log in above!!

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