Paulo Valério Comments on Law Amendment in Cases of Preliminary Contracts When the Builder Goes Bankrupt

The article from Advocatus, in the Eco newspaper, states that “banks will take precedence over homebuyers in the right to receive the loan amount or even the property when the builder goes bankrupt, according to a decree-law from the Government published late last week in the Diário da República. This change takes effect on August 24. This means that from that date, a family will no longer be able to be compensated first for the deposit made on the house in case of the contractor’s bankruptcy and breach of contract. Instead, the mortgage lender — that is, the bank — will have priority in the debt execution.”

Regarding this issue, VFA lawyer and APDIR President Paulo Valério stated: “There is a risk that prospective buyers will be more disadvantaged because the banks will receive first, and only afterward will they be entitled to recover double the deposit.” (…) The lawyer emphasizes that, at present, “the right of retention always prevails over the mortgage.” The decree-law from the Executive now limits it “to situations where there are expenses for the conservation and appreciation of the property,” Valério indicates.

You can read the full article [In Portuguese] by following this link: