They say that you’re never too old to learn, and in light of the recent news that the largest builder in Spain has gone into voluntary administration, we would concur that this is indeed the case.  For out of the news that Martinsa-Fadesa is facing bankruptcy, we and many who have bought off plan properties from the company have learned an awful lot.

In this article we’ll detail the

The first thing is that all builders and developers in Spain who sell off plan property and require stage payments throughout the build are legally obliged to have bank guarantees covering every single payment that their clients make until the completed property is handed over to them.  The information relating to which bank or financial institution is guaranteeing the protection of your stage payments should be included in your sales contract.

If you have recently bought off plan, go and look at your contract and see if you can find this information.  If you cannot you should contact your solicitor and get the information from them.  If they cannot supply it you must immediately demand the information from your builder, and if they cannot supply evidence of the guarantees and insurances that they have in place protecting your money you can assume that they are acting illegally and that they have not protected their clients’ money.

In such a situation you have to register a legal complaint against the company.  The sooner you do this the better, because in the case of anyone who has no such guarantee from Martinsa-Fadesa which is already in voluntary administration, you would simply be lining up with a whole list of creditors who also have legal claims against the company.

The next lesson to be learned is that you shouldn’t believe a single word the company says – yes Martinsa-Fadesa has said that they will complete all homes and look after all clients, but their words are hot air at best and lies at worst.  They are facing bankruptcy, not only have they no right to make such claims, they have nothing to substantiate their so called ‘promises.’

Anyone who has bought off plan and who has ensured there are bank guarantees in place covering their stage payments is in a good position to at least claim back their money with interest should the company in question fail to deliver.  By the way ‘good position’ does not mean ‘guarantee’ – i.e., the insurances in place should mean that the banks pay up, but as we all now know, banks can also go bankrupt!  Anyway, looking on the bright side, say your builder fails to deliver your home and you have made stage payments, well, the moment they breach their contract with you and fail to deliver or fail to deliver on time, you can contact the company via registered mail to inform them that they are in breach and that you are exercising your right to reclaim the money you have paid to them with legal interest and that you expect repayment within a reasonable amount of time (e.g., a week or a month).

If the company fails to meet your demands you can then approach the financial institution which underwrote the guarantees backing your stage payments and inform them that you are making a claim against the builder.  Include copies of all correspondence to date.

Now for a word of warning – even for the 12,578 poor people who have been affected by Martinsa-Fadesa’s situation, it is true that one still has to keep making stage payments to the developer even though they are in financial hot water.  The minute you fail to do so you are in breach of contract and you will lose any right to claim back any money you have already paid.  Terrifying though it is, this is the advice from the Spanish consumer rights organisation FACUA.

If you find yourself in a difficult situation with your builder in Spain your first port of call must be your solicitor.  You need qualified legal advice on how to proceed and whilst the above published information is believed to be 100% accurate at the time of writing, it is not legal advice.

We wish anyone affected by the Martinsa-Fadesa debacle the very best of luck with their claims and their properties and the realisation of their dreams of a home in Spain.