Act 57/1968, of 27 July regulating the collection of amounts paid in advance for the construction and purchase of dwellings.
(Official Spanish Gazette No. 181 of 29 July 1968)
It is frequent in contracts for the transfer of dwellings for the offer to be made on special terms and conditions which oblige transferees to hand over amounts before or during construction as a result of their need for family accommodation.
The justified alarm which in public opinion has arisen as a result of the repeated commission of abuses which, on the one hand, constitute serious prejudice to social coexistence and on the other are clearly criminal acts, causing irreparable harm to those who, trusting and in good faith, agree without objection to the said offers, make it necessary to establish general preventative rules which ensure both actual and effective application of the financial resources advanced by buyers and future users for the construction of their dwellings and the repayment thereof in the event that the construction does not take place.
The proposed guarantee measures were established for dwellings constructed with State protection under the Decree of 3 January 1963, which are considered necessary to extend to all types of dwellings and which integrate with other measures of a governmental and criminal nature which adequately penalise both offensive conduct against the highest interests of the community and engaging in acts of a criminal nature. The former and latter are covered by the Public Order Act of 30 July 1959 and by the Criminal Code, specifically with the interpretation made by the courts of offences falling within sections 2 and 4 of Chapter IV, defrauding, by creating the so-called single, mass offence, since acts which are carried out and affect the community or social coexistence and the public interest are worthy of greater protection, which was echoed by the Prosecution Service of the Supreme Court in its circular of 1 December 1965, alluding to the function of promoting action by the justice system of the Ministry of Justice in matters concerning the public interest.
Nevertheless, there are Bodies or Organisations amongst the diversity of developers engaged in the construction of dwellings who, as a result of their rules of constitution, their organisation, functioning and purpose can offer sufficient guarantees to be excepted from application of these measures, which for these purposes must be authorised by the Government in order that it may so resolve on proposal by the Ministry of Housing when it considers it appropriate.
Pursuant thereto, and in accordance with the Act approved by the Spanish Parliament, I have sanctioned:
Individuals and legal entities who promote the construction of dwellings, which are not dwellings with official State protection, for use for family residence or domicile, whether on a permanent basis, or temporary, circumstantial or seasonal residence and who attempt to obtain the handover of money from transferees prior to or during construction, must comply with the following conditions:
- 1. To guarantee the repayment of amounts handed over plus 6 percent annual interest in the event that construction does not commence or is not completed for any reason in the agreed period, by means of an insurance contract entered into with an insurance entity authorised and registered in the Register at the Sub-Directorate General for Insurance, or by means of a joint and several guarantee provided by an entity registered in the Register of Banks and Bankers, or Savings Banks.
- 2. To receive advance payments made by transferees through a Bank or Savings Bank in which they must be deposited in a special account, separate from any other type of funds belonging to the developer and which the same may only utilise for purposes arising out of construction of the dwelling. In order to open the said accounts or deposits the Bank or Savings Bank shall, on its own responsibility, require the guarantee referred to in the previous condition.
Contracts for the transfer of dwellings referred to in section 1 of these provisions in which the handover is agreed to the developer of advance payments must expressly state:
- a) That the transferor undertakes to repay to the transferee amounts received on account plus annual interest of 6 percent in the event that construction is not commenced or completed within the agreed periods determined in the contract or no Certificate of Habitability is obtained.
- b) A reference to the guarantee or insurance contracts specified in the first condition of the previous Section, indicating the name of the guarantor or insurer.
- c) Designation of the Bank or Savings Bank and account through which the transferee must deliver amounts which the same has undertaken to advance pursuant to the contract entered into.
At the time of execution of the contract the transferor must deliver to the transferee the document evidencing the guarantee referring on an individual basis to the amounts which must be advanced on account of the price.
On expiry of the period for commencing works or handover of the dwelling without the one or the other having taken place, the transferee may elect between rescission of the contract with repayment of amounts handed over on account, increased by annual interest of 6 percent, or grant an extension to the transferor which must be recorded in an additional clause of the contract entered into, specifying the new period with date of termination of construction and handover of the dwelling.
The insurance contract or guarantee together with a certified document evidencing notification of the works or handover of the dwelling shall constitute title to enforcement for the purposes of Title XV of Book II of the Civil Procedure Act in order to require the insurer or guarantor to hand over amounts to which the transferee is entitled in accordance with the provisions of this Act.
The provisions of the foregoing two paragraphs shall be without prejudice to the other rights which the transferee may have in accordance with current legislation.
After the certificate of habitability has been issued by the Provincial Department of the Ministry of Housing and handover is demonstrated of the dwelling by the developer to the Buyer, the guarantee provided by the insurance company or guarantor shall be cancelled.
It shall be an essential requirement for the advertising and publicity of the transfer of dwellings with receipt of amounts on account prior to commencement of construction or during the construction period, that they record therein that the developer will act and contract in compliance with the requirements established in this Act, with express reference to the guarantor entity and the Banks or Savings Banks in which amounts advanced must be paid into the special account therewith. The said matters shall be specified in the text of the advertising carried out.
Breach by the developer of the provisions of this Act shall be penalised by a fine for each infringement which shall be imposed in accordance with the provisions of the Public Order Act (cited), 49/1959 of 30 July, without prejudice to the powers and functions of the Courts.
Failure by the developer to repay all amounts advanced to the transferee in infringement of the provisions of Section 1 of this Act shall constitute an offence or misdemeanour penalised by Sections 587.3 and 535 of the current Criminal Code, respectively, with the penalties under Section 528 imposed in their maximum degree.
Repealed by sole repealing provision 1 f), RCL 1995\3170, of Act 10/1995 of 23 November (RCL 1995\3170).
The rights granted by this Act to transferees shall be incapable of waiver.