Carlos Baos – Property under construction

Legal Actions against Property Developers in Spain. Property under construction.

Buying a property under construction in Spain, from a developer, can be a very secure option, provided that all the guarantees established by law are met. Unfortunately, contract violations by developers are commonplace in the real estate market. Developers are required by law to secure all payments received by buyers through one of the two methods established under Spanish Law: surety bonds or bank-issued guarantees. These legal safeguards are crucial and must be clearly outlined in all contracts or reservations signed between buyers and developers.

Regulatory Framework

Spanish law (specifically Legislation 38/1999 (LOE) on Construction Regulations, provides significant guarantees to buyers of off-plan properties. Developers must put in place a special bank account to receive payments. This account must be specifically designated for construction purposes, separate from the developer’s other accounts. Also, developers must secure the payments received either a Surety bond or bank coverage acquired upon receipt of the building permit. In cases where developers fail to deliver the property as per contract terms, buyers have the right to demand contract resolution. And developers are obligated to refund received payments along with legal interest.

To initiate legal proceedings against a developer, it is essential to verify that the bank guarantees or insurance bonds are properly constituted. Since non-compliance could allow for potential claims against the insurer or bank involved. As they have the obligation, prior to the developer receiving funds in their account, to verify that these requirements have been met.

Building deficiencies, Construction flaws & Habitability Certificate.

Construction issues are also a common concern with developers. According to the type of problem (finishes, occupancy, or structural) there is a legal warranty period during which the developer is responsible. If these defects are not addressed, you could claim against your developer. Liability extends also to other participants in the process such as architects, builders, etc. This topic is so crucial that we will dedicate an entire article to it.

What about the administrative licence for first occupancy? As many of our readers probably know, in the Valencia Community this licence has been replaced by a statement of responsibility issued. While initially presumed valid, municipalities retain the right to review and declare such declarations ineffective. Ineffective declarations may warrant legal action against the developer.

At White-Baos Lawyers, we specialise in representing clients in cases involving breaches of purchase contracts by property developers. If you need legal advice or wish to discuss initiating a claim, feel free to reach out to us.

Off plan property purchase. Documentation to be required from the promoter BEFORE handing over the keys. Legal guarantees. Minimum information.

 

Off plan property purchase in Spain. Tips and Legal advice. What should be considered?

 

New Court Success with off plan payments being refunded to buyers at Residencial Santa Ana Del Monte (Herrada Del Tollo SL)

 

Carlos Baos (Lawyer)

White & Baos.

Tel: +34 966 426 185

E-mail: info@white-baos.com

White & Baos 2024 – All Rights Reserved.

 

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Carlos Baos
Written by

Carlos Baos (Lawyer)

Lawyer Carlos Baos has been advising on variety of expat-related legal issues for years and weekly column offers free weekly insights.

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