Sparkes Spanish Lawyers

Letter from reader Mrs Susan Porch

Last October we paid 3,000 Euros to reserve a 500 plot of land on which the developers are to build a 3 bedroom bungalow. We have not yet signed the official contract, as we have not seen sight of the title deeds or building licence. The developer is waiting for the first stage payment. Because there was a change of mayor and administration, the project was frozen, but apparently the development which is over 100 houses, has now been passed with the infrastructure due to start in May.

We are concerned if we don't pay something soon, the developer will sell to someone else at a higher price than agreed with us as the house will be in a prime position near the sea. Is there any kind of insurance policy we can take out to protect any monies that we pay to the developer via the Solicitor if things go wrong?

The Spanish Government has passed laws in order to protect the buyer from some of the dangers that might arise in this type of purchase.The Spanish law protects the buyer when instalments are paid in advance to the promoter in the Act 57/1968 (Ley/57/1968, reguladora de las percepciones de cantidades anticipades en la construccion y venta de viviendas).

This Act compels the promotor to supply the purchaser with a guarantee to refund the buyer all the instalments paid in advance of completion, along with 6% interest per annum, if the construction is not started or completed at the contractually agreed times. There are two types of guarantee that can be provided by the promotor. An insurance policy which is issued by an authorised company, or a bank guarantee issued by an authorised bank.

The promotor also has the obligation to deposit the amounts received from clients in a bank or special bank savings account kept separate from all the promotors other funds. The amounts deposited in these special accounts are only permitted to be used for building purposes. In your case your lawyer should check the promoter complies with these requirements (as well as his usual checks) in order to give you full protection in your purchase. In addition if your lawyer is negligent you are also protected by his civil liability insurance provided by the Law Society with which he should be a registered member.

The promotor also has the obligation to deposit the amounts received from clients in a bank or special bank savings account kept separate from all the promotors other funds.

The amounts deposited in these special accounts are only permitted to be used for building purposes. In your case your lawyer should check the promoter complies with these requirements (as well as his usual checks) in order to give you full protection in your purchase. In addition if your lawyer is negligent you are also protected by his civil liability insurance provided by the Law Society with which he should be a registered member.