Essential advice for those considering buying property in Spain comes from Louise Reynolds of Property Ventureî, an independent, UK-based agent, which aims to assist Spanish property buyers buy more safely.
Buying off plan property in Spain has seen a decline since the global financial crisis however guidleines and procedures in the Spain aim to protect the buyer.
Property Developers, who receive money from buyers before they start building, or during the construction, are required by Spanish Law, to have an Insurance policy or a Bank Guarantee, provided by an entity listed in the Register of Insurers, Banks, or Saving Banks, to protect against the situation where construction is not commenced, or not finished, for any reason by the agreed deadline. This has been enshrined in Law since 1968.
“It is the responsibility of banks, to ensure deposit amounts need to be placed in special accounts, separate from any other kind of funds belonging to the developer or promoter”, comments Louise Reynolds of Property Ventureî. “It is in effect a type of developerôs Escrow account, controlled by the Bank.”
“So if Banks or Savings Banks have accepted sums advanced by purchasers, highlighted as deposits for off-plan purchases into accounts, even if not classed as ‘Special Accounts’ (Cuenta Especial) and no Bank Guarantees or Insurance Policies were handed to the buyer, the financial institution is, liable to refund those amounts to the buyers if, with a minimum level of due diligence they would have realised that the said funds were deposits for off-plan purchases.”
Banks in Spain are regulated by the Banco de Espana or Bank of Spain and must incorporate strict financial controls to prevent money laundering and fraud. These controls together with their own due diligence must result in the Bank or Savings Bank having a clear understanding that the funds were for off plan purchases and therefore subject to the legal requirements.
Top Tips for Property Buyers
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An individual might want to negotiate and get the bank or developer to offer a property at todayôs price, if they feel they have a valid claim (credit) against them
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An individual can take legal action against the developer and the Bank, with whom money was placed on deposit. This can be an expensive option and not always recommended as a first port of call
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Take group or individual actions against the banks – which might be more cost-effective – and an established group, which is bringing pressure to bear on Banks, may be noticed more
If a solicitor was used during the purchase, and no Bank Guarantee was given, a claim against him/her (who should have professional liability Insurance) might be possible.
For more information contact visit http://www.property-venture.com
