Buying property off plan in Spain – Protecting buyers
The law governing Insurance and Solvency of guarantees of 20/2015 has come into effect to bring more certainty with an insurance/guarantee system to protect buyers of off-plan property. The original law dates back more than 50 years. The Ley 57/1968 needed modifying to bring it into line with modern insurance and banking guarantees.
There are important changes to the previous law which purchasers relied on when a development was not completed. Before entering into any offplan purchase your lawyer will need to check the building licence. All the payments once the licence is in place must be protected either by a bank guarantee or an insurance policy. The guarantee or policy must cover all payments plus taxes and legal interest from the date of payments to the date set for completion.
If the construction is not completed by the date set the buyer can make a formal demand to the developer for the return of monies paid. In Spain this should be by a burofax to ensure there is a record of delivery and receipt. If the monies are not returned within 30 days the claim should be served on the bank or insurance company who provided the guarantee.
It is very important to make the claim within 2 years or the right to claim prescribes or lapses automatically. Another point to note is that once the Licence of First Occupation is obtained the buyer must complete the purchase or lose the right to the return of monies paid.
Buying properties offplan or under construction in Spain is safe and secure provided your lawyer ensures that the guarantees or insurance policy is in place to ensure return of monies paid if the property is not completed.
For more information from our specialist Conveyancing team contact us on email@example.com or call on + 34 952 527014.