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IurisConsulting Property Lawyers Legal Purchasers Protection |
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| Protection established by the legislation regarding real estate purchase
By Juan Bertomeu Vallés
Guarantee of advanced payments
The protection of any payment made to the developer prior to completion is possibly the most important question to consider when purchasing a property from a developer. Most of the developers take monies from purchasers to finance the stages of construction of their properties. These advanced payments must be, by law, guaranteed. These guarantee may be in the form of bank guarantees or insurance policies. A purchase contract should include the following clauses: - The obligation of the developer to refund any advanced payments, plus interest, in the event that the developer does not begin the building’s execution on schedule agreed, does not complete the construction on time, or the building license –planning permit- is not granted. - Reference to the type of guarantee and indication of the guarantor,bank or insurance company. - Bank account where advanced payments must be paid, and account number.
Should the events which allow the refund of the monies occur, the purchaser has a double option: demand refund of the monies plus interest, or concede to the developer more time to honour his commitments. If the purchaser decides to execute the guarantee or insurance policy, must obtain documentary evidence of the ocurrence of any of the mentioned events, jointly with the original guarantee certification. General requirements
The conditions and clauses object of the protection in form of prohibition are, essentially, those imposed unilaterally by the vendor to the purchaser in the so called standard-form contracts. Any clause or condition stablished in a purchase contract must be clear, simple and concret, directly understandable (without reference to legal texts that are not provided simultaneously or before signing the contract), and of the clauses, as a whole, must be deducted good faith and fair equity, which excludes:
- Clauses which enable one of the parties to rescind unilaterally the contract, except those recognized to the purchaser. - Abusive clauses, understanding these as being unproportionally harmful for the purchaser, or placing him in a position of inequity with regards to the rights and obligations of the parties, to the detriment of the purchaser. - Abusive conditions of financing. - Total exoneration of responsibility of the vendor. - Inversion of the onus of proof in perjudice of the purchaser. - Rejection by the vendor to render typical services. - Imposition to the purchaser of abandonment of rights and defences. - In the first transaction of a urban property, those clauses which impose to the purchaser the obligation to assume the legal costs which, by law, should be paid by the vendor: declaration of new work, horizontal division or cancellation costs of an existing mortgage.
Any condition or clause which contradicts the previous requirements is considered to be null and void and will be deemed as not inserted in the contract.
Specific requirements
Whether the vendor is a developer, there are specific requirements which are of compulsory inclusion in the purchase contract:
- Name, domicile and, where applicable, registration details of the developer in the Companies Registry. - Plan of location of the property and plan of the unit itself, together with a detailed description of the electricity, water, gas, heating and airconditioning systems, and fire prevention devices installed in the unit. - Extensions of the property, and reference to the building where the unit is located, the common areas and accessory services. - Reference to the materials used in the construction of the unit, including heat and sound proof systems, and materials of the building where the unit is located, common areas and accessory services. - Instructions of the use and maintanance of the general installations which require special knowledge handling and also instructions relating to action to be taken in case of emergency. - Details of registration of the building in the Land Registry, or mention of the fact that has not been yet registered. - Price of the property and accessory services - Form of payment. - Copy of the building license or planning permit - Certification from the local planning authority. - By-laws of the Owners Community, and information regarding community services and supplies. If the Community is operating, must be also delivered an updated financial statement. - Information regarding taxes levied on the property.
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