Bank Guarantees: All That You Ever Wanted to Know but Were Afraid to Ask

[Lawbird Lawyer]

Dear Mrs Hearn,

Under Spanish law, law 57/68, banks or insurance companies have to pay you the accrued legal interest, besides the principal, whether the bank guarantee or insurance policy mentions it or not.

Please contact us and we will gladly deal with your matter.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[vito]

I am acting as a broker and have investors interested to purchase bank guarantees from Portugal. I am looking a binding contract to secure my commission in case I successfuly cause the transaction between the buyer and the seller.

[stanley brewer]

the lawyer i had in spain failed to get my bank
guarantee, and now is asking for a lot of money for there services, the builder is going out of buisness, can i sue the lawyer for not getting my guarantee as i will loos a lot of money could take years to get my money back through the courts, i am a pensioner an cant afford to loos that money

[Lawbird Lawyer]

Dear Mr Brewer,

Please read the detailed reply we have written in post number 19 of this thread:

http://www.marbella-lawyers.com/foru...t=78&page=2#19

A lawyer may have requested from a developer a BG but the developer may not have issued it. If your lawyer is able to prove he sent registered letters or faxes requesting a Bank Guarantee your case against him will most likely fail.

The obligation to issue BG's following our laws is only of the developer, not of the lawyer.

Moreover, laws sanction only the developer, not the lawyer, on failing to provide an off-plan buyer with one.

Which is why when lawyers are sued over the issue of Bank Guarantees most of these actions fail because of the above two reasons. If in addition the lawyer can prove he actually did request them the case is bound to be turned down,

Yours sincerely,

[Graham Embleton]

I purchased a property on the Almanzora country Club in Mazzaron in May 2005. The development has since been abandoned due to planning problems. And I subsequently cancelled the contract. I recieved a bank guarantee for my first stage payment after much harrassment.I have had this money paid back. However I could not get a guarantee for my 2nd payment of 30,000 euros despite numerous e-mails to the builder Huma Medditteraneo SL. Have I any legal recourse on the bank directly to pay back the monies deposited in there bank.

[Lawbird Lawyer]

To be honest it's difficult but not impossible. It will depend on your risk threshold to assume more or less risk litigating.

We've recovered client deposits with only photocopies of bank guarantee and at times with not even with a copy at all and at others even executing collective bank guarantees. But it's fairly difficult and lengthy. If you take this path you must be fully aware of the risk you take.

It boils down to the wording of the purchase contract, to whether the bank did open a special escrow account to deposit off-plan payments as per Law 57/68 and if the money is still being held there etc. It's not an exact science.

Yours faithfully,

[Lin and Tez Mayne]

We also purchased on Almanzora Country Club but never received any BG's for any of our stage payments. We won our legal action against the builder but are still waiting for our money. We bought through an agent and they were supposed to apply for the BG's but again we never received them, despite constant promises from the agent that they were on their way. The agent ignores all our correspondence and has refused to help us, so we are completely on our own apart from our solicitor, who we appointed when we cancelled our plot. What can we do now as we are due to retire in only 3 years time and are now living in a rented property, so we will not be able to survive once we retire, as we sold our family home to purchase this doomed property? Do we have any recompense against the agent? Thanks

[Lawbird Lawyer]

Dear Mr and Mrs Mayne,

I'm sorry to hear your case.

Regarding your legal query, an estate agent cannot be held liable on failing to provide Bank Guarantees securing your off-the-plan stage payments.

No estate agent does this, nor is it their professional duty.

Our laws clearly state that it's the developer's duty to hand them over as explained in the article which starts off this thread.

As a sidenote, only because you lack a BG does not mean you will never be refunded or your money is lost. Many off-plan buyers retrieve their deposits litigating and they were never issued a bank guarantee in the first place.

You can read further:

Is Litigation Against Spanish Developers Worthwhile? - 23rd May 2008


Lawbird's Blog

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[Susan Hughes]

Dear Lawbirds,
If first occupation licence is granted on the only complete phase of a site that is having major subsidance problems on another phase and the third phase will not be completed in the forseable future, should the bank guarantee still be valid?

[Lawbird Lawyer]

Dear Madam,

As per law 57/68 a BG is only valid until a Town Hall issues a LFO.

The moment the developer attains a LFO, the BG securing the stage payments for those properties included in the LFO ceases to be valid (Art 4 of the said law).

Quoting my article on Licence of First Occupation:

The Licence of First Occupation Explained - 29th January 2009

Is Every Off-plan Development Issued a Habitation Licence?

Yes. As previously written, each dwelling has its own individual LFO granted, although in large developments they are normally grouped for simplicities sake. A detached villa will have its own individual LFO whereas large developments consisting of various phases will have grouped LFOs issued. Each of these phases normally has its own LFO. So for example in a huge development of 300 units grouped in 4 phases there could be four different building licences and you would have one all-inclusive LFO granted for each individual phase grouping 75 dwellings at a time. This could well mean that even within the same finished development some properties may be legal (with a LFO granted) yet others are not legally deemed as habitable yet. You could only tell which are which by means of thorough legal analysis. Another matter being if the local authorities actually pursue those who live in, or let properties which lack the mandatory LFO, but I’ll reserve that for another occasion.

As I explain above, a development normally comprises three or more phases. Normally a LFO is issued for each of these phases as each one will have its own Building Licence. So if in your case you have three separate phases and only the first one is finished BG's for phases two and three should still be enforceable as no LFO has been attained.

In any case to make sure I would need to review the documents.

I hope the above clarifies your query.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt