If you did not receive bank guarantees on your stage payments and after you have sued the builder he has not got enough assets to pay you back there is now a new possibility thanks to recent sentences by the Supreme Court. The bank that received the money can in some cases be held responsible:
The Supreme Court in Madrid has made very clear the interpretation of the Bank Guarantees Act of 1968. Banks will be responsible to pay the money back to buyers of off plan, for not issuing the compulsory individual bank guarantees, if the money was paid into the developers segregated account. On the back of this sentence we are winning many cases against the banks that received the funds regardless of the situation of the builder that sold the property.
What is so important about this sentence is that even thought it was the builder that had the obligation to make sure the bank guarantee or insurance policy was contracted by him in favour of his purchasers the courts have held the bank that received the funds responsable for the policy or bank guarantee not having been issued and it does so on the basis that the bank on receiving these funds they where aware where for an off plan purchase should have taken the precaution of asking the builder who was issuing the policies to make sure that indeed another company or bank was issuing a policy or a bank guarantee. In other words before this sentence the banks would simply say that they knew the builder had an obligation so insure all deposits but that they had no way of knowing that the amounts where not being insured by a different insurance company or bank contracted by the builder and that therefore they are not responsable.
Buyers who received a Bank Guarantee or Insurance Policy to cover the payments made towards their property, or even those who never had it due to the developer or Bank failing to comply with the Law, are in luck today due to a very well received Judgment from the Supreme Court of Spain, which has ordered that these entities be pay back to the buyers of off plan properties, all the money they invested, plus legal interests from the time they made the payments.
The imperative and unalienable rules contained in Law 57/68 are compulsory to developers, banks and insurance companies. The breach of these obligations by developers and financial institutions, can never be to the detriment of the buyer. This Law 57/68 requires Banks to guarantee all deposited amounts but its wording was interpreted in different manners. However, now the Spanish Supreme Court has made clear recently that:
- if other buyers of the same resort received individual bank guarantees then all buyers should have received them and the fact of not having an individual bank guarantee would not stop them from claiming the money from the bank.
- if the amount covered by the bank guarantee is lower than the money actually paid to the developer the bank should pay back the full paid amount plus interest.
- if there is not an individual bank guarantee but there is a general bank guarantee this should cover all buyers as if they would have received an individual bank guarantee.
- there is no need to sue the developer before suing the bank.
- The bank receiving up front payments in the developer segregated account must request the existence of those Bank Guarantees under its own responsibility. Otherwise they will be held responsible for that.
Many buyers of off plan properties who put a deposit down some years ago, before the credit crunch or even made stage payments to buy a property in Spain, whether they received the compulsory individual bank guarantee or not, could enforce today their rights through art. 1.2 of this Act and ask for compensation if they paid through the Bank and they never received a Bank guarantee.
Unfortunately, the Bank Guarantees Act 57/1968 was amended on the 1st of January 2016 and buyers now only have 2 years to claim against the Bank, from the time the contract was cancelled.
The sentence has opened up a new opportunity for those buyers that have paid out stage payments on a construction in Spain. If they did nothing after loosing their money or sued the builder but have not been able to get their money back due to the builder not having assets they will probably now be able to sue the bank where they sent the money .
If you have never sued the builder because you where under the impression that they had no assets , had gone into liquidation etc and therefore the contract has still not been resolved then you may still have a good claim against the bank.
This is general information and no substitute for individualises advice after having access to your documentation and circumstances. Please not that a claim can be lost with costs .
Our barrister Mr. Ignacio Pellicer has won many of these cases against the banks for us and the clients have recuperated their funds.
Contact us for a free no obligation assessment of your case. If you have friends who have lost money on a construction in Spain please tell them about this opportunity . They have nothing to loose by coming to see us and possibly a lot to gain.
There are many clients who have walked away from the money lost on a failed purchase under construction, but the position of the judges in relation to the responsibility of the banks have given them in many cases a very good chance to get their money back .
To sue the bank that received the funds what we are looking for is:
- A builder that has not completed on a property.
- A private sales contract stipulating stage payments to the builders bank account.
- Proof of the transfers to the said account.(the transfer slips)
The key to these cases apart from having the documents above is for us to be able to convince the judge that the bank was aware that the payments where indeed stage payments on a property under construction and that the bank had reason to believe that perhaps the builder may not be complying with his obligation to request and pay for an insurance policy or a bank guarantee in relation to the said amounts.
