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Spanish off Plan
Developments
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Bank Guarantees
for Spanish off Plan Developments
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Know
Your Rights!
The Aval Bancario (Bank Guarantee) or Insurance
Contract were both established by a 1968 Law to protect buyers in
off plan developments.
Article. 1. - The developer must guarantee the return of the deposited
amounts plus 6% of annual interest, through an insurance contract
or by bank guarantee, in circumstances where the construction doesn’t
start or doesn't finish in the agreed time.
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They also
need to open a special bank account for your amounts (different
from the general one of the developer) and have it expressly written
in the contract.
Article. 2. - In those contracts where the
parties agree on anticipated amounts the developer must expressly
state:
a) That the developer will give back to the buyer all the advanced
amounts plus the 6%, in circumstances where the construction fails
to start or end within the agreed deadline, or the certificate of
habitation is not granted.
b) Reference to the bank guarantee or insurance contract, this must
indicate the name of the Bank or the Insurance Company.
c) Specification of the Bank or financial institution and the account
number where the buyer’s money is deposited.
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At the signing of
the contract, the developer will give the buyer the document that
contains the guarantee (the Aval or the Insurance Contract) and
the document must have a reference to the amount that is anticipated.
Article 3. – If the deadlines for starting or finishing the
development are not met, the buyer can choose between cancelling
the contract with the return of advanced amounts plus 6% annual
rate, or to concede a time extension, which will be stated in an
additional clause in the contract, specifying the new deadline with
the date for finishing the construction and completion.
The insurance contract or the bank guarantee together with the document
that fully proves that the work has not been started or that the
completion deadline has not been met nor complied with, will have
executive power as it is stated in the Title XV of Book II of Civil
Procedure Law, to demand from the insurance company or the bank,
the amounts that the buyer is entitled to, without prejudice of
any other given rights also applicable.
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UK Office: Buy Spain, Pum-erw-Road, Cardiff, South Wales
Tel: 02920 256 096
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