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When is my deposit secure when buying from a developer?
Property Law
Antonio Flores Vila
21st of January 2001
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Q. I am buying a property from a developer, covered by a bank guarantee, through a property company, and will make a down payment of 50%. Is this secure?
John Johnson
Letchworth, UK
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A. Regardless of through who you are buying a property, the bank
guarantee needs to be in your hand in order to be secure 100%. This
applies equally to an insurance policy.
Some contract state that the downpayment are secured by either bank
guarantee or insurace as per 1.968 Act. However, they only state it,
without delivering any document serving the purpose of a guarantee.
If you are buying through an agent, property company, or whichever
denomination given, who acts as a middle man between yourself and the
developer, you should beware, as these agencies tend to avoid
demanding guarantees to the developer, in order to avoid putting under
strain their commercial relationship.
In some instances the same agency offers a lawyer to assist the
purchaser. Needless to stay the independence of this professional is
seriously compromised.
Seek sound legal advice and make sure that you obtain a valid bank
guarantee, payable on first call.
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