Some new construction projects in Spain are offered through a cooperative society. Investing in a Spanish cooperative society offers the opportunity to purchase property at lower prices and gives you a say in the project as a shareholder. However, this construction comes with risks, such as possible price increases and the obligation to provide a guarantee in case of financial problems. In this article, we discuss the main aspects of such a real estate investment.
How does buying from a Spanish cooperative society work?
A cooperative real estate company, or 'una cooperativa de viviendas', is a non-profit organisation responsible for the realisation of a specific real estate project. The cooperative acts as a construction promoter and manages the project through a board of directors, just as in a traditional company. In addition, the shareholders, or cooperators, have a say in important decisions through the general assembly.
As a prospective buyer, you become a shareholder or cooperator of this company and choose a future flat or house based on the project plans. This choice is recorded in an allocation contract ('contrato de adjudicación provisional de vivienda en régimen de cooperativa'). This contract is similar to a purchase contract and contains, among other things, the terms of payment.
What are the advantages of this construction?
The biggest advantage is that you can buy real estate Buy at an attractive price. As the cooperative is not for-profit, you do not pay commercial margins that are usually charged with traditional construction promoters.
Moreover, as a shareholder, you have a say in the project. Through the general meeting, you can submit proposals and participate in the decision-making process.
What should you pay attention to when buying through a Spanish cooperative real estate company?
Besides the usual concerns, such as building permits and bank guarantees, it is crucial to thoroughly understand the statutes and allocation conditions of the cooperative. Since, as a shareholder, you indirectly co-vouch for the project, there are some specific risks.
A key point is that there are often no fixed price is guaranteed. The price can be adjusted during the construction process, for example if construction costs are higher than expected, at the board's suggestion.
Also the project itself can be changed. The general meeting of shareholders - in which you have a vote - can approve or reject proposals by the board of directors. This means that decisions you consider important can be changed by a majority of shareholders. This limits your influence. You yourself can put proposals on the agenda under certain conditions, provided you have sufficient supporters.
In addition, there may financial risks are, such as surety. As a shareholder, you may guarantee certain debts of the cooperative society. In the event of bankruptcy, creditors may sue you for part of the outstanding debts. It is therefore essential to carefully review all documentation, including the memorandum and articles of association. These risks are usually not present in a regular purchase on plan.
Decision
Buying property through a Spanish cooperative society allows you to save on the costs of a commercial building promoter. However, these savings come with potential risks, such as price changes and security in case of bankruptcy. It is important to identify these risks carefully before investing.
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