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Why should I request guarantees when buying from a developer?

Property Law

Antonio Flores Vila

1st of May 2001

Q. I intend to purchase a property from a developer in Los Boliches. The developer is a small but apparently well respected one in the area. I have not done this before and so wonder what things I should do or ask for from the developer in terms of guarantees and assurances. My plan is to buy the property at the plan stage and sell it on before completion, avoiding an ´Escritura´ charge.

John Brennan

    A. You should request from the developer a solid form of guarantee to cover your money. Bear in mind that a lot of horror stories related to purchasing property have their origin in an adverse financial situation of the developer, and not always because the developer may have been crooked.

    A property takes around 1 year to 1 and a half years to be built, and many things may happen meanwhile: family problems, litigation with suppliers, litigation with partners, death of developer, separation or divorce, and on top of it all, creditor banks with mortgages registered against the land where your house is being built.

    Any of these circumstances may put your investment in a difficult situation. Therefore, we recommend you seek legal advice in order to make sure the monies are correctly guaranteed and that the the contract stipulates that you are able to pass the rights of the contract you sign to a new purchaser. The developer may refuse to let you do that in certain circumstances.


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