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When is my deposit secure when buying from a developer?

Property Law

Antonio Flores Vila

21st of January 2001

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

    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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