Never done this before, so hope i’ve got it right.
We are in the process of purchasing an offplan property in Costa Blanca. We have just been advised by our lawyer that part of the private contract will be to agree to take on the developer’s mortgage upon completion. We were not aware of this at the time we paid our reservation fee. We had always indicated that we would not be undertaking a mortgage and that we were cash buyers. Apparently we are supposed to take on the mortgage, but can cancel it immediately, but this will cost us a penalty of E1,200.!!!!!!!!!!
The estate agents have advised us that this is normal practice for new build as it acts as protection for the developer. Can anyone please advise as to whether this is correct. Do we have to take over the mortgage, only to cancel it by paying it off immediately?
It is quite usual that in the contract with the developer it is mentioned that the whole building (therefore every apartment in it ) is charged wich a mortgage, that mortgage helped the developer building the complex so it is quite common. What you can not be forced to sign is a clause saying that you WILL take that mortgage, I mean : that sort of clase can only give you the right to take that loan if you wish giving enought notice to the seller.
And about the cancellation fees: That clause forcing the buyers to pay for the cancellation of the seller’s mortgage is abusive, any good lawyer should know this, even the Courts have declared that clause NULE , that means that even if you sign a contract with that clause it would be like non existing, you can not be forced to coply with it as it is nule. Contracts containing clauses like this can be reported to the Authorities of the Comunidad Autonoma where you are buying.