They should check if they have a bank guarantee for the property and a personal letter from administrator that should have been sent to all creditors.
In particular buyers affected by the collapse of Compañía Inmobiliaria Masdevallia should inform the Spanish court as soon as possible, or appoint a lawyer to do so on their behalf, a legal expert is warning.
Masdevallia, the developer behind the ambitious Nueva Ribera and Nueva Ribera Golf Club developments in Murcia, and One Properties, which marketed the schemes, are in a voluntary insolvency arrangement and administrators have been appointed to supervise their management.
'The administrators will detail the companies' resources and assets as well as the debts and point out any possible ways of saving them. This procedure takes time and could prove extremely complicated and frustrating for those who are not familiar with Spanish law,' said Antonio Guillen, a Spanish lawyer with legal firm DWF which has offices in London, Leeds, Liverpool, Manchester and Preston.
'Creditors of the insolvent company and that includes purchasers of properties off-plan or owners of properties that have not been fully finished, should inform the administrators and the court of their credit as soon as possible,' he added.
Under the Spanish Insolvency Act all creditors should receive a personal communication from the administrators. 'But this does not always happen. Therefore it is advisable for anyone affected to contact a lawyer versed in Spanish insolvency law and provide them with any documents that can help to prove the payments they have made. These will have to be lodged with the court to ensure they are included in the final list of creditors,' he pointed out.
It is also necessary for property investors to ascertain whether the developer has a bank guarantee in place to cover any amounts paid by the purchasers towards the construction. This is a requirement under Spanish law although not all developers comply.
'This document is extremely important as it could make all the difference between creditors losing all their money and getting a refund,' added Guillen.
He is also currently representing clients of Martinsa-Fadesa, Spain's largest property developer and the largest insolvency in the country's history, as well as another Spanish developer Herrada del Tollo S.L.