What is a Spanish Bank Guarantee?
It is a guarantee for the deposits you pay for your off-plan property to a developer. It can be issued by a bank or an insurance company. If you are buying an off-plan property you should think about securing the amounts paid in advance to the developer. Having a bank guarantee is mandatory and you should request it to the developer.
Issuing a bank guarantee has costs and the developer should be in charge of paying the commission to the bank or insurance company. Please bear in mind that you would also need to keep record of all the payments you have made, and especially if you make them to an agent or intermediaries you should ask for proof that the money has been paid to the developer’s bank account.
Having a Spanish Lawyer as your legal advisor will help you with this and he/she will be in charge of requesting the guarantee to the developer and dealing with the bank if it has to be renewed.
Expiration of a Bank Guarantee
A bank guarantee only expires once the Town Hall grants the Licence of First Occupation for the property. Nevertheless, most banks establish an expiration date, so if your guarantee has an expiration date, please contact with the bank to renew it before it expires to have your deposits secured until your property is handed over to you. The bank guarantee should be a specific document issued with your personal information, the developer’s information and including the exact amount guaranteed. You should keep the original document issued by the bank which should include the bank’s information and its seal.