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El blog de Maria

Your daily Spanish Law reporter. Have it with a cafe con leche.

Legal tip 1243. NEW! Case won against Eurohouse and Caja Rural
18 December 2014 @ 11:56


Notification sent today to a group of our clients who had reserved off-plan properties from the developer, PROMOCIONES EUROHOUSE 2010 S.L. at FORTUNA GOLF RESORT & PUEBLO LA SAL in San Pedro del Pinatar, informing them that their group action against CAJA RURAL CENTRAL had been won in the First Instance Court in Orihuela.

Please find attached Sentence number xxx/2014 from the First Instance Court No.3 in Orihuela.

Your case against CAJA RURAL CENTRAL has been won.

The final paragraph of the First Instance Sentence delivered on 10 December 2014 and notified on 17 December 2014 states:

“Substantially estimating the Lawsuit filed on behalf of xxxxx 16 BUYERS xxxxx against CAJA RURAL CENTRAL SOCIEDAD COOPERATIVA DE CREDITO, and must condemn the defendant to the repayment of the amounts paid on account of the purchase price of homes deposited in the account of the defendant CAJA RURAL in the name of the Promotor PROMOCIONES EUROHOUSE 2010 S.L., allocated as per the second article of this Sentence, amounting to a total of 406,385.52 Euro, plus legal interest from the date of payment to the developer until full payment & legal costs”.

So CAJA RURAL is liable to refund the total amount of 406,385.52€ plus legal interest from the date each amount was paid to the Promociones Eurohouse account at CAJA RURAL until full payment to the Court.  Legal costs are also imposed on CAJA RURAL.

The Sentence explains in great detail the liability of CAJA RURAL according to its obligations under LEY 57/1968 for the off-plan deposits paid to accounts opened by the developer, PROMOCIONES EUROHOUSE 2010 S.L. in CAJA RURAL.

Particular points of interest stated by the Judge in the Sentence are:

“The main defence argument from the Bank is that the buyers have no contractual relationship with the Bank and that the Bank had not given an individual guarantee to those buyers for the Promotor PROMOCIONES EUROHOUSE 2010 S.L.

However, despite the fact that financial institutions are not party to the Purchase Contracts between the Promotor and the Purchasers, the truth is that they are not alien to their content or the performance of the obligations arising thereof and must therefore ensure compliance with the guarantees established by LEY 57/1968.  The possibility of controlling the contracts of sale of the promotion in question reveals its obligation to monitor compliance with the obligations derived from LEY 57/1968.

So in this case, since it is an account linked to an off-plan promotion, there rests the responsibility of the financial institution for such security and failing to ensure compliance with all legal obligations relating to consumer protection results in the lack of incorporation of the Guarantee derived from an improper attitude to meet the statutory duty to secure all amounts paid in advance.  Therefore, buyers of a house in an off-plan promotion acquires a condition of security from the moment of signing the contract with the promotor, without that security being affected by the breaches of the developer in the constitution of the guarantee.

The plaintiff argues in the Lawsuit that the account should have been a ‘Special Account’ as per the requirements of LEY 57/1968.  However, in the interrogation of the Caja Rural employee, Mr XXXXX XXXXX XXXXXXX (Director from 2005 until today of the branch in which the account was held and where the buyers payments were made), he said that although he acknowledged that he knew EUROHOUSE was a company selling off-plan projects he had not checked the millions of Euros of income being paid into the account from OLE MEDITERRANEA S.L. to EUROHOUSE, because that was not his job, adding that he was unaware if EUROHOUSE used the account opened in his branch for off-plan promotions, confirming that he did not know the purpose of the account, which was a normal current account,  because he only checks accounts that have incidences.

From the interrogation of the defendant regarding the revenues in the account opened by EUROHOUSE in the CAJA RURAL branch in Orihuela, without a credible and consistent argument regarding the large amount of income paid to the accounted opened with that entity, knowing that it was a dedicated property development client, we must remember that the legal mandate is clear, stating that the Bank that receives the amounts paid by the purchasers of homes must deposit them in a Special Account; these amounts can only be used for the purposes of the housing promotion and must ensure, under its responsibility, that they are guaranteed.  Therefore, there is a clear responsibility which originates from the obligations derived from Article 1.2 of LEY 57/1968 and if the Bank violates the legal obligation to require the sufficient security then the breach of the law falls under its responsibility.

In this case and in view of the interrogation of the defendant, although they knew that EUROHOUSE was engaged in real estate activities, without offering a strong argument for their ignorance of the source of millions of Euros of income received into the account, not opened as a special account for the receipt of amounts paid in advance by purchasers, so it became the legal duty of the Bank to ensure the funds paid into the account were secured by insurance or guarantee.  Having breached its legal duty the liability of that entity is generated.

Consider that Article 1 of LEY 57/1968 in its effort to protect purchasers of off-plan homes, also involves financial entities in which the accounts are opened, establishing an obligation for them, which is simply to demand “under its responsibility, the guarantee referred to in the above condition”, so under its responsibility, it must ensure that the developer has guaranteed the amounts paid into the account.  This does not mean that it is the financial entity in which the account is held that must guarantee the repayment of the amounts, as the guarantor may be another entity.  But the term ‘under its responsibility’ cannot be interpreted without the sense of making it liable for damages arising to buyers for accepting the advance payments without guarantees, since the buyers could not then obtain repayment of the amounts paid in the event that the promotor failed to deliver the housing.

In other words, the bank should not allow the opening of accounts or the placing of funds in the account without previously confirming that the promotor has assumed the legal obligation of guaranteeing the amounts paid into the account and if it fails in this legal duty then it is liable for the damage that failure has on the buyers who then cannot obtain a refund of amounts paid in advance.

For all the above legal reasoning, the defendant bank is responsible for the amounts of money that was spent on the construction of the houses for the buyers, and the lack of guarantee, and so must be respond to the breach of the developer in the cancelled purchase contracts.

In this case we know that the promotion was not finished, so the frustration of the purpose of the contract is clear, as are the amounts that were entered by the buyers into the account of the defendant bank.

Thus it shall order the defendant, CAJA RURAL CENTRAL, to also pay legal interest on the amounts claimed and such interest shall be calculated from the date the amounts were paid to the developer’s account”.

Orihuela, Alicante, Eastern Spain

Like 3


antifreeze said:
18 December 2014 @ 22:09

This is a victory for the clients. I assume this is your case Maria.

Was the development started or was it started but not completed? I assume the deposits were paid but not returned as the contracts were cancelled by the developer?

ads said:
20 December 2014 @ 09:11

Given that purchasers have inalienable rights in this regard Maria and that the articles of law have been recognised, if the Bank subsequently try to appeal this ruling, will the judge be able to make an executive decision to conclude that it would be a pointless exercise to progress to (admit) an appeal given these are INALIENABLE rights as defined in existing law? How does the judicial system deal with appeals that are in effect pointless and equally wasteful of time and precious resources?

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