Legally- Where do i stand?

Written by Noelia Poveda

Readers Question
Dear Noelia
I am looking for some advice regarding resolving a house contract. We have been told that our developer won’t agree to resolve the contract even though he is 13 months past the completion date. Although our house is now ready we can't move because there is no habitation certificate. We have been told that we must take him to court and that will be expensive and very long (2 years +). Do you have any advise, could we offer him a financial incentive and if so how much. Our house costs 250.000 euros. Looking forward to your reply.
Thank you ,
David
Dear David,
I suspect you are in the typical situation where the developer does not have the right paperwork to complete, which is causing the 13 month’s delay. You mention in your e-mail that the developer will oppose to resolving the contract.   If you are aware that the only existing problem is to wait for the Town Hall to issue the habitation certificate (and not others) then my recommendation is to put some pressure on the developer by way of either:
1.- Filing a formal complaint at your local Consumer´s Right office (OMIC).
This will be communicated to the developer in order to adhere to the procedure that will take a decision on the matter without having to commence legal proceedings. If he accepts this procedure then you need to wait for 4 months maximum to hear the tribunal´s decision and it’s free. However I doubt he would accept to enter into this way of resolving the conflict.
2.- Sending a burofax stating the 13 month’s delay he has incurred and remind him that he is in breach of contract. I would then give him 2
options:
    a)   Either resolve the contract whereby you would be returned all
monies paid up to date plus any penalties stipulated in the private purchase contract (to which the developer will oppose),
    b)   Formally request that he issues a bank guarantee in the sum of all monies paid to the company up to date. By Act 57/1968 it is compulsory that any developer taking deposits or installments from purchasers to fund the construction of their property should issue a bank guarantee in the sum of the amounts paid to them in order to protect consumers in the event of delays in the construction, no finalisation of works or not having the habitation certificate in place. Should you already have this bank guarantee in place it would be now enforceable at the appointed bank plus should return you 6% interest more.
         Most likely you will not have this bank guarantee in place, however it is not too late to request it as it was an obligation from the developer to include it in the contract, and it is therefore against consumer’s rights if he did not. You can then offer him to
extend the enforceable date on the bank guarantee for, lets say 3-4 months more within which he should obtain the habitation certificate . If he does not obtain it by then you would be entitled to enforce the
bank guarantee and resolve the contract after that period.   This
possibility is contemplated on sec. 3rd of Act 57/1968 .
3.- Request him formally through the notary ("requerimiento notarial) to attend completion at the notary on an appointed date to start preparing the case for Court.
        If after the burofax and the bank guarantee request with the offer to postpone it for a few months more they do not accept any of these terms then I am afraid you will have to start legal proceedings. However, if the only objection to complete is to obtain the habitation certificate, which could take them a couple of months more, then I do not see any opposition to issue the bank guarantee you are entitled to with a postponed date.
Any further questions or similar issues can be addressed to Poveda & Associates Lawyers
Noelia Poveda
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