Buy Home from The Builder: What are The Risks and How to Protect it

Buying a house under construction can have undoubted advantages – especially when the price savings is up to 20% – but there are also risks that you should not underestimate.

For example, there’s a high chance when the company got broke, and the buyer loses the sums paid in advance. For this cause, it is essential to know what the buyer’s warranties are and how to protect it.

If you are going to buy a house under construction, it is important to know that in case of bankruptcy of the construction company before the transfer of the transfer contract, only creditors with real estate collateral (such as the bank that has Financed the building by granting a mortgage) can substantiate their reasons.

Others, including buyers, will rarely be able to get back the sums already paid as a deposit or down payment, unless you pay twice the sums already paid.

Legislative guarantees for the buyer

The buyer has a number of safeguards provided by the legislator.

• Warranty obligation – The manufacturer is obliged to pre-guarantee against the sums paid in advance by the buyer up to the transfer of the property. Without warranty, the contract is considered null and void. Thanks to this, the constructor must restrain the purchaser all the sums he has received.

The developer company must provide for waiving the benefit of the principal debtor’s execution: the buyer can contact the bank or the insurance company immediately without first attempting to recover the credit from the builder.

• Ten-year Policy – The manufacturer must deliver a ten-year insurance policy as a guarantee for compensation for material damage resulting from possible property damage or serious construction defects. The policy is effective as of the end of the work.

Preliminary purchase agreement – Must contain buyer and seller data (personal data, VAT number, etc.), complete identification of the property, full description of the technical characteristics, any urban planning conventions, constraints or mortgages, timing Maximum construction and delivery costs, total price, payment methods, any contractors, details of the request and permission to build and details of the guaranty.

Preliminary law – In the case of auctioning, the law guarantees the purchaser the right of pre-emption if the home is used as a home.

Methods of payment – Work progress is followed: 6% of the total cost to the building foundation, 12% on completion of the supporting structures and 13% on the flooring.

Below are a number of tips for those who buy a home directly from the manufacturer:

• Verify the manufacturer’s reliability

• Visit other houses built by the same company

• Make sure that the manufacturer is covered by bank suretyship and insurance as provided by law

• Check that the ground is actually buildable and is owned by the builder

• Request documents and qualifying titles

• Please read carefully the specifications in which the type and quality of the materials and list of installers must be indicated

• Consider real estate measures