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The Spanish Lawyer Online

Is it risky to pay 50 percent of the property price to the builder upfront?

Property Law

Antonio Flores Vila

4th of October 2001

Q. I have signed the builders contract and deposited £2000. Half of the house purchase is to be given to the agents within 6 weeks of doing this, which is £40000. Why are the agents asking for so much money in such a short time? And how can I find out whether or not my agents are trust worthy and run off with this money or default on the finishing of the building as the property is only a shell at present?


    A. My first advice would be for you to seek some legal advice. Money is very tempting and taking as much as possible in advance is a great business move for both the agent and the builder.

    You need to ensure that you will receive some sort of guarantee from the developer, if you are purchasing from a habitual property developer. You have to receive either a bank guarantee or an insurance policy. If you are engaging the services of a builder-developer who does not give guarantees, I simply recommend you do not pay that amount of money.

    Even if you own the land where it is built on, the risk is high. Recently, some clients of mine, who had bought a property in Monda (province of Málaga) engaged a local builder to make some reforms. Their choice was not appropriate as the builder turned out to be a gambler, and they could not even proceed against him as he was penniless.

    If the deposit contract does not envisage any schedule of payments, you are able to make an offer to the builder. If the payment structure is contained in the deposit contract, you need to renegotiate it.

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