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El blog de Maria

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

12 November 2015 @ 13:28


We were pleased to inform our clients today that we had won their case against Caixabank in the First Instance Court.  The clients did not receive an individual Guarantee from the developer, Promociones Eurohouse 2010 S.L. or from the Bank to which their off-plan deposit was paid, CAIXABANK (formerly LA CAIXA).



Please find attached Sentence number xxx/2015 from the First Instance Court No.4 in Orihuela.

Your case against CAIXABANK has been partially won.

The final paragraphs of the First Instance Sentence delivered on 23 October 2015 and notified on 28 October 2015 state:

“That partially upholding the Lawsuit filed on behalf of Mr xxxxxx xxxxxx & Mrs xxxxxx xxxxxxx against the entity CAIXABANK S.A. I must condemn and order the defendant to pay the plaintiff the amount of xx,xxx€ plus legal interest from the date of payment of the amounts to current account of the company until the date of full payment.

There is no express imposition of costs”

So CAIXABANK is liable to refund the amount of xx,xxx€ plus legal interest from the date the payment was made to the Promociones Eurohouse account at CAIXABANK until the date of full payment to the Court. 

The Sentence explains the liability of CAIXABANK 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 CAIXABANK.

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

It must not be forgotten that when interpreting and applying LEY 57/1968, of July 27, regarding the receiving of advance payments during the construction and sale of housing, one should take into account the objective pursued by the Law to protect consumers against property fraud.  Specifically, in the preamble of the Law it states that the justified alarm in public opinion has been due to the repeated abuses, which, on one hand, constitute serious impairment in social interaction, and on the other are evident crimes, besides causing irreparable damage to confidence and good faith.  Therefore the Law establishes general preventive rules ensuring both the real and effective protection of the amounts paid by buyers of off-plan homes and for its return should the building not take effect.

Such is the consumer protective purpose of LEY 57/1968; it has led to Courts to clarify that the interpretation of the terms of the law should not be formalistic or to the detriment of the consumer.


As to the character of the amounts paid to the Eurohouse account opened at Caixabank, the branch manager of Orihuela, Mr. Moreno Lopez, who appeared as a witness at the trial, maintained that he did not know that the quantities accepted into the Eurohouse accounts by the Bank were payments on account the price of housing promoted by his client, Promociones Eurohouse as Caixabank, did not fund the housing project in question and because it was a normal current account, and not a special account.  But the fact remains that he knew perfectly well the business of his client, Eurohouse (a real estate developer who built 5,000 or 6,000 homes, which had been granted funding by Caixabank sometimes, but not for this particular promotion).  He argued further that his office did not open any Special Account because in this case it was not requested by the developer.  It is evident, therefore, that we have a special account, due to the origin and destination of the funds, though just not given the title of Special by the parties.

Therefore, we should not forget that although insurance companies or financial institutions are not parties to contracts of sale, the truth is that they are not alien to their content or to the performance of the obligations arising thereof.  They must ensure that they themselves meet the guarantees established by LEY 57/1968.

Precisely for this reason, the Ministerial Order of 29 November 1968 was issued.  It gives possibility for the bank or insurance company to control the purchase contracts of the promotion in question, to enable it to monitor compliance with the obligations of LEY 57/1968.

There must be a Guarantee or Insurance Policy for all such quantities that buyers entered into the special account of the defendant for the purpose of buying off-plan housing.


The Bank cannot avoid this part of its responsibility on the grounds that the developer did not ask for the issuance of a guarantee or on the basis that they did not require the developer to furnish guarantees or insurance for all amounts or by relying on the assumption that it was an ordinary current account, where it has been proven otherwise.

The fact that neither the developer nor the Bank has been concerned with the legal obligation to issue individual guarantees can in no case harm the consumer.


The bank has a legal duty to ensure that the amounts paid to its branches were guaranteed by insurance policy or bank guarantee and this failure has generated a liability according to LEY 57/1968.

It should be noted that Article 1 of Law 57/1968 in its desire to protect purchasers of off-plan housing, also involves financial institutions in which the accounts are opened, establishing an obligation to them, which is none other than to demand "under its responsibility, the Guarantees referred to in the previous condition”. That is, to require, under its responsibility, that the developer has guaranteed the repayment of the amounts paid in advance (I understand that is the amounts paid to the accounts opened by the developer in this entity). This does not mean that it is the receiving bank that must issue the Guarantees, as the guarantor may be another entity.  But the term under its responsibility, is interpreted in the sense of making it responsible for damages arising to buyers to whom the security has not been provided, since by this failure, the consumers could not obtain reimbursement of the amounts paid in advance in the event of breach of contract by the developer.

In other words, the bank should not allow the opening of special accounts and allowing deposits from buyers in such accounts, without first making sure that the promoter has assumed a legal obligation to ensure the return of the amounts paid on account, and if it fails in this legal duty, the Bank is liable for the damages that such a breach creates to the buyers who cannot obtain the repayment of their advance payments.

Regarding the payment of default interest shall apply Article 3 of Law 57/1968 which states that "Upon the expiry of the initiation of the works or delivery of housing, the assignee may either terminate the contract with repayment of the amounts paid on account, increased by six percent annual interest, or grant the transferor an extension, which shall be recorded in an endorsement to the contract awarded by specifying the new period for the date of completion of construction and delivery of housing".

However, that article was amended by the Law of Construction Planning of 1999, to which the first additional provision refers to the law 57/1968, albeit with certain modifications among which is:

c) the guaranteed return must include quantities delivered plus legal interest on those quantities until such time as the repayment is made.

Therefore it is appropriate to order the defendant to pay the legal interest on the amounts claimed and such interest shall be computed from date the buyers paid to the account of the developer”

Lagunas de Gallocanta, Zaragoza, Aragon, North east of Spain


Like 1


ads said:
13 November 2015 @ 17:03

Once again Maria we see a judge sadly unwilling to demonstrate moral authority to issue imposition of costs on the Bank who has been made liable.

This without doubt is proving of benefit to the Banks and fails to act as disincentive against repetitive appeals by the Banks as they continue to deny their responsibilities according to existing law. Appeals that are being increasingly subsequently ruled against in favour of claimants, but who fail to gain full imposition of their ongoing costs.

This appears immoral given that Banking malpractice of this nature has given rise to innocent purchasers being subjected to immense stress and financial hardship (many putting their lives on hold during these abusively interim lengthy time periods), as Banks continue to deny their responsibilities via repetitive appeals which apparently are not subject to any "adhesion to existing rulings" and thereby prevent many, many equal claims (not to mention save resources on courts currently overloaded).

To deny imposition of costs in this way does a grave disservice to making Banks fully accountable for their unethical behaviour and disregard/denial of their responsibilities under existing law during this last decade.

M11Block said:
13 November 2015 @ 19:24

Maria is this ruling after the First Instance Final hearing Court Case? And does the Bank now have 20 days to appeal or are they unlikely
to appeal if they don't have to pay Legal Costs?

M11Block said:
13 November 2015 @ 19:26

Maria is this ruling after the First Instance Final hearing Court Case? And does the Bank now have 20 days to appeal or are they unlikely
to appeal if they don't have to pay Legal Costs?

mariadecastro said:
16 November 2015 @ 11:47

Yes, Bank can appeal now

mariadecastro said:
16 November 2015 @ 12:02


I guess once Supreme Court explains clearly this liability through pending Court Decisions, Judges will start imposing legal costs to Banks. It is a yet non-definitive matter till Supreme Court explains.

We are patiently waiting for one of our clients´Supreme Court Decision on this.

ads said:
16 November 2015 @ 14:43

Good luck Maria and keep us posted.

Can judges not apply moral authority in the interim period? Is this being brought to the attention of the judiciary?

mariadecastro said:
16 November 2015 @ 20:07

Judges can impose costs in the interim period of course.
Only way to bring these matters into the "attention of the judiciary" as you say is through the corresponding appeals.

ads said:
07 January 2016 @ 17:31

Has Caixa Bank appealed this ruling Maria, and have you as yet received the SC ruling that you made reference to above?

mariadecastro said:
08 January 2016 @ 11:32


Checking with members of the team. Some of them are still on vacations so possibly no answer till mid of next week



ads said:
26 January 2016 @ 18:15

Do you have any update as yet on this Maria? (i.e. Has Caixa Bank appealed this ruling, and have you as yet received the SC ruling that you made reference to above?)
Many thanks.

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