BANK GUARANTEES

Upon the event that you were buying a new house, you will always have three different guarantees:

Private sale and purchase contract which should be signed once the building license is granted.

Bank guarantee, and;

The bank that receives the payments from the buying party

It is highly important to understand that you are entitled to have this bank guarantee, and obliged to give the bank document back to the Developing Company on completion when the house construction is completely finished, and all living licenses granted to be occupied.

It is highly important to understand that bank guarantees will work as a real guarantee providing that you bought a house from a Developing Company that was granted the correct administrative License to build. Upon the event that no license were granted (yet), and a house purchase contract were signed, and payments made to the Developing Company, the buying party will be the only one responsible, assuming 100% the risks that something went wrong.

Upon the event that the Developing Vompany refused to give this bank document to the buying party, should our recommendation be to the buying party contacting the bank that received the payment, and let it know about the decision being made by the Developing company against their legal interests. The bank will always be responsible to supervise that every payment that comes into any account in the name of any Developing Company is used towards the building of one particular project, and one particular house, and consequently the bank will be responsible as well if the house were not finished in time, built differently to how the buying party was promised, or whatever any other reason the Developing Company being in breach of the sale and purchase agreement. This is in accordance to one of the Spanish Supreme Court Sentences such as STS Sala Primera, de lo Civil, 733/2015, de 21 de diciembre. Recurso 2470/2012-SP/SENT/834945 «Without the bank demanding the Developing Company the opening of a special account and the corresponding guarantees to the buying party in the evento of a sale and purchase of any properties legally ruled by Law 57-1968, bank institutions that receive deposits from buyers into any Developing Company bank account will be liable to buyers for the total amount advanced by buyers and deposited into the account or accounts that the Developing Company has opened in such financial institution»

Accordingly to Spanish rule of Law, financial institutions will not always be unlimitedly responsible for the repayment because their liability case. However,  it is necessary and highly important to the buying party to make the bank 100% aware of it in order to them be able to demand from the bank a minimum profesional diligence to supervise the destination of the payments made for the acquisition of a house under construction, and that, despite this, the bank accepted it without demanding the Developing Company either the opening of a special account or the contracting of the appropriate guarantee. In other words, the bank will be failing to comply with its work of control over whatever payments came into these accounts.

The bank institution liability comes from the the breach of their legal obligation established in Art. 1.2 Law 57/1968, responding jointly with the developer for the return of the amounts advanced. The responsibility and obligation to repay is restricted to the amount actually paid into an account , considered a special bank or not, being opened in the name of the Developing Company. The house buying party will have the obligation to evidence the reality of the payment. ( TS, First Chamber, Civil, 344/2024, of March 11. Appeal 2649/2020 -SP/SENT/1214231 ; TS, First Chamber, Civil, 306/2024, of March 4. Appeal 6351/2019-SP/SENT/1213454 )

In case that our Firm were assisting you in the buying process, we shall guarantee that we have these important guarantees in hand along the time that takes the house to be built.

Our Firm will be of course assisting you in this complex process along the way.