Legal tip 187. Banks breached Law 57/68
Tuesday, December 1, 2009 @ 12:08 PM
Main ground of Law 57/68 is the protection of money advanced by individuals before construction work begins or during it, in many cases the savings of a lifetime.
The actual preamble or exposicion de motivos of the said Law establishes that all the "abuses in this type of businesses have made as necessary the establishment of general preventive rules which will guarantee both the real and effective application of money advanced by purchasers and prospective customers to the building of the house and to the refund in the event that the building does not take effect".
One of the preventive, general, inalienable obligations that the Law established was for banks or savings banks, where money was paid to by buyers, to secure the establishment of Bank Guarantees or insurance UNDER THEIR LIABILITY. Banks were therefore here established as guardians of legality.
There are therefore two responsibilities of Banks and Savings Banks:
1. - Common due diligence and professional duty.
2. - Special obligation of provision 1.2 of Law 57/68.
The question that really matters here is this one: Can Banks oppose to Consumer the fact that the developer did not deposit the money in a special account?
In my opinion they cannot.
The general, imperative and inalienable character of rights of Act 57/68 as established by the preamble of the Act and Article 7 makes this as non opposable against the consumer.
In any case, if the Bank can argue they did not know? that the money was for off-plan, and after being liable of the lack of Guarantees and pay compensation for it, will have an action against the developer who did not allocate those funds in a “special account”, which they will be able to prove very easily.