12 May 2015 – Expansión
The Government is going to modify the insurance (legislation) that covers payments made by house buyers against possible breaches by property developers.
The Popular Party has presented an amendment in Congress to the Law for the Regulation and Supervision of Insurance Companies to modify its coverage, which (to date) “has not been sufficient to address the deficiencies that prevent effective protection for buyers, including advanced payments for these purchases”, says the justification for the amendment, signed by the PP.
The governing legislation requires that property developers take out collective insurance policies, through insurance bonds, and then subsequently sign individual policies with (house) purchasers.
But in practice, these second policies are not being signed and the coverage for buyers is not working. Several changes are being introduced “to eliminate this false appearance of insurance”, including the requirement to deposit advanced payments in a special account managed by credit institutions, where the funds may only be allocated to the property developer concerned.
The Law for the Regulation and Supervision of Insurance has completed the first stage of the parliamentary process and has now moved onto the Senate. This law transfers EU legislation (Solvency II) into Spanish legislation and is expected to come into force on 1 January 2016.
Original story: Expansión (by E. del Pozo)
Translation: Carmel Drake