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El blog de Maria

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

Legal tip 1276.NEW! Supreme Court Rulings on Law 57/68
06 March 2015 @ 07:14

Excellent rulings by the Supreme Court. Hopes higher than ever before!


13 January 2015

The obligation to pay the off-plan funds into the Special Account is that of the seller (developer) and not of buyer. This obligation can never be imposed on the buyer and can never be an obstacle against his/her rights granted by LEY 57/1968.

16 January 2015

Initiation of action related to Article 1.2 of Law 57/68 is of 15 years.

Type of liability is LEGAL. Law is its source (no contract source, no negligence source)

Dies a quo: From the moment you cannot get your refund due to lack of Guarantee.

Interpretation of dies a quo always in favour of the party which is defending the existence of the right. Is the party which is trying to prove its extinction which has the weight of proving this.

Article 1.2 of Law 57/68 establishes a legal obligation on the Bank to which the off-plan payments are made, not to the financing Bank.

20 January 2015

The Supreme Court is changing its doctrine on Article 3 of Law 57/68.


Supreme Court is enhancing the virtues of a very advanced Law 57/68 for housing rights protection.

Full civil effects against past mere administrative (sanctions) of this Law.

Essential character of rights related to guarantees in off plan developments. (SSTS de 25 de octubre de 2011, rec. 588/2008, 10 de diciembre de 2012, rec. 1044/2010, 11 de abril de 2013, rec.1637/2010, y 7 de mayo de 2014, rec. 828/2012).

In cooperatives, it includes both land buying and whole building process till hand over of properties. 

Off-plan deposit amounts protected are the full amount which has been paid in the developer’s bank account, despite the fact that an Insurance policy or Bank Guarantee maybe issued for a lesser amount. (STS de 3 de julio de 2013, rec. 254/2011).

The Buyer can claim against both seller and insurer jointly and severally. Or even against Insurer without taking action against the seller (developer). (SSTS de 3 de julio de 2013, rec. 254/2011, y 7 de mayo de 2014, rec. 828/2012).

Company administrators are jointly liable for the lack of the legally required guarantee (STS de 23 de mayo de 2014, rec. 1423/2012).

Guarantees that limit amounts between Guarantor and buyer are null and void (STS de 25 de noviembre de 2014, rec.1176/2013).

Moving forward the Supreme Court is now stating that Article 3 of Law 57/68 brings contract cancellation rights to the buyer immediately the developer has failed to deliver the completed property in the time allowed by the contract (no time waiting after breach) always provided that the buyer sends an official cancellation notice to the developer (seller) before the buyer is called to complete the purchase.

Law 57/68 is special and therefore provision 1124 of Civil Code does not apply to cancellation of contracts which fall into the sphere of Law 57/68.

Some reasons for the above:

Inalienable, non renounceable character of rights included in Law 57/68 (article 7)

Article 3 sets automatic cancellation rights very seriously. If the buyer opts for an extension to the time allowed in the purchase contract, this needs to be expressly written in an additional clause of the contract (annex), specifying the new deadline and with the granting of a new guarantee.

Developer also has same rights – one payment default by the buyer gives the developer cancellation rights.

Prevention against contract imbalances.

Risk of developer’s insolvency and the low possibilities for the buyer in an insolvency procedure.

As an additional note, it will always be considered by Judges whether the cancellation rights are used by the buyer with ‘good faith’.

Like 0


ads said:
06 March 2015 @ 18:14

Maria and Keith,
Where does this SC ruling
"Article 1.2 of Law 57/68 establishes a legal obligation on the Bank to which the off-plan payments are made, not to the financing Bank. "
leave those with generic BG's and whose deposits went into other developer Bank accounts and not the Bank quoted in the generic BG against whom a case has been brought?

M11Block said:
07 March 2015 @ 10:14

Maria, Ley 57/68 seems to finally be acknowledged, but why then do the Banks not accept this as LAW and drag out the process to final Supreme Court Appeal, costing so much time and money?

Surely, if this Law is set in Statute there should be no question and once the evidence is presented the Banks should settle out of Court. For our case our case has taken over 12 months to reach the Preliminary Hearing next November. Are the Courts so so busy that this is the standard wait for cases to be heard or just those in certain areas, perhaps showing that the judges do not regard them as such an important case or Law.

Also can I ask are the Courts more frightened to give positive judgements against the bigger Banks who have more influence on the Country's economy?

Do you know of any Banks who have settled out of Court, in the Ley 57/68 cases to avoid paying years more interests by taking it to Supreme Court and possibly loosing at that stage, that is of course presuming that this is such a good Law and not one full of loopholes. Or is it again in our case that even despite the judgement being positive in our case the defendants just simply refuse to pay up?

If this is such a good law, the Banks and developers have simply BROKEN THE LAW AND SHOULD BE MADE TO PAY, full stop.

mariadecastro said:
07 March 2015 @ 12:42

There are some contradiction on this aspect among diffrent Appeal Courts. Possibly Supreme Court will establish on that soon, if the matter is brought to them.

Some Appeal Courts think once there is a General Bank Guarantee, the liabilities of depositing banks get extincted, other ones think that depositing Bank is liable if the inbdividual owner did not receive its Guarantee, despite a General Bank Guarantee existing.

mariadecastro said:
07 March 2015 @ 12:45


AS Supreme Court is finally very right and wisely interpreting all aspects of rights contained in Law 57/68, Banks will start to settle out of Court more and more.

It is reasonable that, before Supreme Court has established its interpretation of these rights ( never been interpreted before in such an extensive and detailed way), Banks tried to argument in their favour using the corresponding current of interpretation which favoured their position.

ads said:
07 March 2015 @ 13:50

Sadly Maria there is no guarantee that the Supreme Court will admit the lawsuit for review if a contra legem ruling of this nature was made by the appeal court, as this is subject to financial constraint applicability criteria, and as such the grave risks remain.

I totally agree with M11 that these constant challenges to inalienable rights by the Banks leave one sadly questioning the resolve of the Judiciary and Supreme Court in Spain to CONSISTENTLY resolve this issue once and for all and recognise all articles of the law, as was intended to prevent abuses of this nature.

These compromising issues need to be brought to the attention of the European Commission by those trusted and respected lawyers representing their clients, to demonstrate how the Banks are behaving and "playing the system of delays" and appeals to their advantage.

This would also demonstrate the current failure to safeguard the rule of law in Spain, given these are INALIENABLE RIGHTS and purchasers are entitled to fair and timely justice.

It is also very unjust to expect those pioneering these challenges to the Banks to "pay the price" yet again (just as they did with challenging developer abuse) and run such risks of not only non submission for review by the SC, but also, even if they win their lawsuit, they are subjected to loss of costs associated with challenging a developer who subsequently went into administration (this being the time period before it was possible to challenge jointly and severally).

Where is the disincentive during this interim period for Banks to continually abuse the right of appeal..... where is the "good faith" demonstrated by the Banks in this scenario. Good faith, that appears to be investigated by the SC associated with innocent purchasers who endeavour to fight for their inalienable rights!

This is WRONG Maria, and it needs to brought to the attention of the European Commission by trusted legal professionals, before even more abuses are allowed to occur.

grumpy121 said:
07 March 2015 @ 15:45

grumpy121 said:
07 March 2015 @ 10:13

Hi Maria

Regarding Ley 57/68 is it possible to find out how many appeals have been
won and money paid back.
Have banks won any appeals and were these appealed to Supreme Court .....
Is there case law in any cases.
How long does an appeal take to be heard

ads said:
08 March 2015 @ 00:37

Dear Maria,
I've just come across this legal argument from a generic BG ruling (in Valencia) and I cannot understand how this could ever be challenged, given the legal logic is so clear... it reads as follows:

"The court confirms that the lack of an individual bank guarantee cannot prevent the buyer to enforce the generic guarantee agreement against the Bank for recovering the deposit plus legal interest, as long as the 57/68 Act states that the rights of beneficiaries cannot be waived and the failure by the builder to perform the individual bank guarantees' delivery is not enforceable against purchasers."
This was back in May 2012 and was advised by Guadalupe.

Would you know if this was subsequently challenged by the generic Bank at appeal, and if so how did the appeal ruling go? If it was lost at appeal, then did this go to the Supreme Court for further ruling? Was it admitted for submission? Or is this all still in abeyance?

For purchasers to have to be exposed to this form of continuing legal lottery, (legal limbo), without consistency of judicial rulings or judicial recognition of well considered legal logic/arguments with regard to inalienable rights, just beggars belief.

How can purchasers continue with their fight for justice so long as this remains unresolved? The risks associated with such a "lottery" cannot be underestimated.

Is there nothing that the European Commission can do to protect your clients from this ongoing legal lottery in Spain? Given the lack of time constraints on these legal processes, how many more decades will have to pass before consistency of judicial rulings can be achieved?

Estepona and Malaga's court delays are now so great that you are lucky to get to preliminary hearing stage within two years, let alone gain a ruling to advance to first instance court.... then another couple of years to gain a first instance ruling (if you are lucky), followed by a repeat performance if the Bank appeals. The result being that you are lucky to gain a final ruling within 5-7 years. And this on top of a battle in the early days to prove developer breach which spanned all too many years due to more court delays, not to mention cynical delays by non independent lawyers who proved reticent to provide financial evidence required to proceed with action against the Banks. But then after all this time to be subjected to an unknown legal outcome depending on where your case is heard is the final straw.

How bad does this have to become before Banks are made consistently accountable in Spain?
And how bad does this have to become before these court delays and delays to judicial rulings are recognised as being counter to the rule of law?
How bad does this have to become before respected lawyers in Spain join together in consistent action to get this resolved once and for all, not only for their clients, but also for the reputation of the Spanish Justice system?

belucky358 said:
08 March 2015 @ 11:51

Dear Maria,
I see that there is a sentence in your article which states as follows....."INITIATION OF ACTION RELATED TO ARTICLE 1.2 OF LAW 57/68 IS OF 15 YEARS"
Can you please explain exactly what this means as some of us started this "fiasco" in 2004, and it has dragged on for so many years, I can quite easily see it crawling along for a few more. Heaven forbid we don't want to run out of time at this late stage.

ads said:
09 March 2015 @ 11:28

Dear Maria,

This is going to be difficult to express as I don’t wish this to be perceived as personal criticism, as you have been so educative and pioneering in the Ley 57/68 saga for which we are extremely grateful, but I have to now ask some uncomfortable questions of the Justice System in Spain…..

How can clients possibly assess the risks involved in litigation when on the one had they are told that cases have been won against the Banks, but in reality this is only at first instance court level, and as we can see we have little feedback relating to how successful Bank appeals have been, or for that matter the scale of Bank appeal failures? Likewise for cases submitted to the Supreme Court.

Until recently the inconsistencies of judicial interpretations at appeal level have been hidden and we are understandably fearful that this could become a repeat of events, not this time at developer level but at the Bank claim level.

In the early years clients were advised to go against the developer, which now transpires to be a lengthy and very costly process (since legal costs have been deemed not recoverable against the developer if it subsequently proves necessary to go against the Bank due to developer insolvency etc). Now it is far more effective to go against the developer and Bank as being jointly and severally liable (which appears to have been recognised by the SC).

So I have to ask, given the inconsistent rulings across different regions, are we now in a similar position with the Banks in that litigation should be against the Generic Bank AND developer Banks where monies were deposited, to make them all jointly and severally liable?

If so how will this impact those cases against Generic Banks (where a generic BG was in place) that are already in the legal system?
Are they bound to fail in those regions where inconsistent first instance or appeal rulings have worked in favour of Generic Banks (by them suggesting the responsibility lies with the Banks where monies were deposited and not the generic Bank)? Are innocent offplan purchasers going to be then left financially disadvantaged again with the need for further litigation against the Bank(s) where monies were deposited but yet have no individual BG’s in place to protect them? Have I misunderstood this scenario? I would be really grateful for clarification.

Offplan purchasers appear to be subjected to so many risks within the litigation processes and I personally find it extremely hard to rationalise, when from the outset we were told that monies were safely protected from abuse of this nature by an existing law intended to protect those subjected to developer breach of contract. A law providing offplan purchasers with inalienable rights.

How can the Spanish Justice system turn a blind eye to these inalienable rights and allow innocent purchasers to be the pawns in this sorry saga of increasing litigious challenges where developers and Banks deny their responsibilities and not be made to adhere to existing law in a timely fashion?

Why should the judiciary and SC be allowing this to happen in such a piecemeal fashion that places innocent purchasers at such financial disadvantage and risk?

Why aren’t offplan purchasers provided with timely return of their monies once developer breach has occurred (from wherever monies were deposited) and let the Banks fight amongst themselves as to who is responsible for this total mismanagement of deposited monies and fiasco of events? (Control of which was stipulated in law).

Aren’t offplan purchasers being used as pawns, in effect trialing the justice system, without taking any account of inalienable rights that are in effect just that, INALIENABLE (incontestable)?

How do all of these inconsistent recent rulings now impact upon ongoing cases and what is your advice to those desperate to minimise their risk and financial exposure to this sorry saga of events?

mariadecastro said:
09 March 2015 @ 19:42

As an aswer to all your concerns I would say that... all in lie takes time.

Law 57/68 was never used by lawyers before as it has been during the last years. That is the reason case Law has been progressively created and now is reaching Supreme Court level, where we are receiving very right and fair interpretations of Law 57/68.

It is true path has not been simple ( for us and form many other law firms) but... it is clear now that right allegation and strategy drive to solutions to clients. Now at the highest level.

Of course, I agree there is much to work about. Let´s keep proposing measures to the corresponding instances: that is a sign of good and healthy citizenship.

Let´s keep the way ahead together!

ads said:
11 March 2015 @ 11:46

Dear Maria

How can inalienable rights ever be overidden when an offplan purchaser is covered by a Generic Bank Guarantee, no individual guarantees were provided, deposited monies were placed into what is deemed "developer accounts" (after years fighting to gain evidence), plus a cancellation of contract with costs and interest awarded at appeal level (but never able to be redeemed), due to proven developer breach?

How could any judge thereafter (at any level or in any region for that matter) then subsequently rule that as part of a second phase to have their inalienable rights recognised (the only option now open to the innocent offplan purchaser, since they have no individual bg's and developer now insolvent during this lengthy fight due in no small part to major court delays) that the generic guarantor according to the legal guarantee is not liable to meet their legal obligations and return deposited monies with interest and costs?
It makes a complete mockery of a generic guarantee which in effect would appear useless.....

And this on top of the purchaser already being subjected to nearly 10 years to date of fighting for their inalienable rights to be recognised, and still waiting for a preliminary ruling following submission of a lawsuit against a generic bank (some two years prior), that would appear to be at great risk of failure, so long as some judges (hence the legal lottery), remain unwilling to recognise the generic guarantor as being legally liable for return of deposited monies!

Is this justice? Is this recognition of inaliable rights? Have I misunderstood the situation?

If this is correct then it isn't just a time issue, this appears to be a justice system reluctant to consistently recognise all facts relating to a generic guarantee case, including inalienable rights and timely return of deposited monies following proven developer breach and cancellation of contract..

Please can we have some clarification on this Maria as there could be many exposed to this scenario.

Many thanks as ever.

mariadecastro said:
12 March 2015 @ 11:16


General Guarantoor will not be liable just in those cases where it is proved by the Generic Guarantoor that it never received the payments of the buyer.

In all other cases, it is liable


ads said:
12 March 2015 @ 12:58

Thank you Maria.
Will this information/evidence re payments received have to be presented by the Generic Bank at preliminary hearing stage so that a case cannot be submitted to first instance under a wrong assumption that monies were received by the Generic Guarantor?

mariadecastro said:
12 March 2015 @ 13:19

It has, in my opinion.

ads said:
13 March 2015 @ 09:12

Thank you Maria.

Does a generic guarantor {where no other developer bank guarantees existed) and where mention (link) of that generic bank is stipulated in the purchase contract, does that generic bank not have a legal obligation to establish and identify with the developer the special account where depositors monies are to be placed and therefore be jointly and severally liable for protection of those monies with the developer?

If this is not done, has the generic bank under theses circumstances failed in its legal obligations to safeguard purchasers deposited monies?

Also when the SC makes mention of the "financing bank" that is not liable in this ruling, does this refer to the developer bank that was subrogating the developer mortgage as opposed to the generic bank as was stipulated in the purchase contract?

In other words according to this SC ruling does a generic bank named in the contract that was not the bank subrogating developer mortgages, and did not nominate a special account for protection of depositers monies, remain liable for return of those monies once developer breach has been fully proven?

What exactly is the definition of "financing bank" in this SC ruling?

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