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Important changes made to legislation on bank guarantees for off-plan payments
The Spanish Parliament have changed regulations relating to off-plan payments on properties which have important implications for off-plan buyers.
The new bill on Spanish insurance regulations substitutes Law 57/1968 and also modifies parts of Law 38/1999. Law 57/1968 is what has up to now given buyers protection on off-plan payments. at least theoretically.
The new legislation means that now for off-plan payments to legally require bank guarantees they must be made after the construction licence (Licencia de Obras) has been obtained for the property by the developer.
Under Law 57/1968 all off-plan payments were required by law to carry bank guarantees and, although in practice many payments were not guaranteed, it gave buyers the right to request that they were with such requests being backed up by Spanish law.
The new legislation will enter into force in January 2016 although any cases which have been brought against developers for past infractions will be dealt with under the legislative framework which was in place at the time.
The new situation means that it will most likely become even more important to hire a good solicitor’s services when purchasing a property in Spain as it is important that either no money is paid for an off-plan property before the construction license has been obtained or that there are legal safeguards put in place if any money is paid before this point.