Something that came up recently with a client of ours who we were arranging a Spanish Mortgage for:
Upon checking the documentation on the off-plan property there was a discrepancy in the price. the price on the purchase copntract was €4,000 higher than the price the property had originally been advertised for.
I asked my client for clarification and they told me that they remember being offered a bank guarantee for the new build as an “optional extra”. This is odd for a number of reasons:
- Bank guarantees are compulsory on all new build projects in Spain
- Generally a guarantee is in place for an entire project phase or it is not
- If a Guarantee is in place, as it should be, it is not to be charged to the purchaser, the developer must bear the cost
The bank guarantee they had paid for was therefore wrong and as such we approached the lawyer and the selling agent and queried the €4,000 payment. the estate agent wasn’t interested, the money had been added tot he purchase price and the guarantee was in place and that was that,.
Thankfully the lawyer did their job and investigated, going over all the paperwork from the initial contract and through all the other paperwork they had received from both the developer and estate agent. It wasn’t good news, the developer had covered their tracks, they had agreed with the client (who had no idea about the laws governing the issuing of bank guarantees in Spain) that they would pick up the €4,000 bill and had amended all paperwork to show the price+€4,000 as the original price so money down the drain.
The developer is clearly wrong in doing this but what is more wrong is that the estate agent “family company” “promise of security” “20 years in the business” involved had helped sell the guarantee, telling the client it was a good idea to have it. What they should have been telling them is the truth – as that is their job surely???
Makes you wonder who the estate agent is really representing during these off-plan sales: the developer – no, the buyer – certainly not. more like they are simply looking after themselves. Also begs the question – why are they pushing policies onto clients? Are they in some way incentivised to do so???
All, in all it was too late in this case and €4,000 has been lost for no good reason so if you are in the process of buying off-plan, take a good look through your documentation – ask difficult questions and make sure you know what you are signing and what you should be paying for.
Use our Tenerife property purchasing service and ourselves along with an independent lawyer will do all this work for you and keep you informed, plus it saves you money!
For more information about bank guarantees have a read of the following article on this Marbella-lawyers website. It is very well written and clearly lays the laws and your rights when it comes to Bank guarantees in Spain and Tenerife.
Feel free to Contact Us for information and advice about buying property in Tenerife safely and with transparency.
Please leave your comments on any aspect of this article, the service we provide and the benefits we offer. If you have purchased property in Tenerife before, we would like to know about your experiences. Were you given all the information? Did you pay for a bank guarantee?
Would you do things differently if you were to do it all again? We value your opinions and appreciate your feedback!