Claiming back your deposit on Spanish Property

All those British and Irish investors who purchased off-plan property in Spain and who unfortunately do not have a valid bank guarantee may lose their deposits if their developer files for bankruptcy. This potential threat of insolvency has soared at an alarming rate during 2009.

With many developers in breach of contract for not delivering properties on time, or not delivering them at all, begs the question whether or not it' is a good idea to start a legal action to recover deposits paid plus compensation.

If developers are penniless, they may not be able to return the funds even if there's a favourable court ruling.

Litigation should only be used always as last resort. Lawyers endeavour to negotiate on behalf of clients a reasonable settlement with the developer prior to going to court. This avoids lengthy and protracted legal proceedings thus saving both time and money.

Unfortunately this is not always the outcome with some developers.

A typical case would be the purchase of an off-plan property where according to the contract's clauses the development was due for completion in two years time. Five years on, the development remains unfinished because, due to planning illegalities, the developers have not obtained either a building licence or a Lcence of First Occupation which are granted by the local town hall. The property cannot be completed as no bank, other than the developer's of course, is willing to grant a mortgage because the development lacks the required administrative licences.

With no bank guarantee securing any stage payments, in the event that the developer folds, it is likely all the deposits would be lost.

For more information on how you can reclaim your deposit or execute a bank guarantee, visit www.spanishpropertyactiongroup.com