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El blog de Maria

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

17 February 2016 @ 18:34


We were extremely pleased to inform our client today that we had won their case against BANCO SANTANDER & PROMAGA in the First Instance Court.

The developer completed the property one year late and Banco Santander had issued an individual Bank Guarantee to the buyer but had refused the enforcement of the Guarantee.  The developer & Bank both maintained that the purchase contract had been fulfilled.  The Bank was also of the opinion that the buyer was an ‘investor’ and not protected by LEY 57/1968.  Therefore, it was necessary for a Lawsuit to be filed asking for cancellation of the Purchase Contract and the joint and several liability of the developer & bank to refund the off-plan deposits paid by the buyer.

PO xxx/2014

Please find attached Sentence No. 10/2016 from the First Instance Court No.3 in La Linea de La Conception.

Your case against PROMAGA & BANCO SANTANDER has been won.

The final paragraph of the First Instance Sentence delivered on 8 February 2016 and notified on 11 February 2016 states:

“Fully upholding the Lawsuit filed on behalf of xxxxxx xxxxxx against PROMAGA S.A. & BANCO SANTANDER S.A., I must declare cancelled the purchase contract dated 17 January 2007 signed between the buyer & promotor for a property situated in Residencial Vista Hermosa in the town of La Linea de La Conception and must condemn PROMAGA S.A. & BANCO SANTANDER S.A. jointly and severally to pay to the plaintiff the amount of xx,xxx€ plus legal interest from the date of filing of the Lawsuit with the imposition of procedural costs on the defendants”

So your purchase contract is cancelled.  PROMAGA & BANCO SANTANDER are sentenced jointly & severally to refund the amount of xx,xxx€ plus legal interest from the date of filing of the Lawsuit.

Costs of the legal proceedings are also imposed on Promaga & Banco Santander.

Interesting statements from the Judge in the Sentence were:

“The facts alleged in the Lawsuit are that the purchase contract was signed on 17 January 2007.  Completion was due by November 2008 with a 3 month grace period.  Banco Santander had issued a Bank Guarantee for the buyers off-plan deposit.  On 7 January 2010 the buyer sent a burofax to the developer to cancel the contract.  On 10 January 2010 the developer replied recognising the delay but denying that it was grounds for termination of the contract.

On 22 August & 12 September 2012 the buyer sent burofaxes to Banco Santander to enforce the Guarantee.  Banco Santander ignored the first burofax, but replied to the second burofax and requested several documents to be provided.  On 20 September 2012 the buyer sent the requested documents to Banco Santander.  The bank did not reply.

On 31 July 2014 this Lawsuit was filed.

Banco Santander submitted a timely defence in which it alleged that LEY 57/1968 does not apply in this case as the buyer is an investor who lives abroad and was buying 2 properties on this development.  Santander stated that the developer had fulfilled its obligations to deliver the property on time.

The developer, Promaga, also submitted a timely defence in which it stated that the delay was not sufficiently important to result in the cancellation of the purchase contract.

So we must determine in this case whether the delay in the delivery of the housing has decisional character or merely some reimbursement for delay where appropriate.

In the tenth clause of the purchase contract signed on 17 January 2007 it states that the property would be completed and delivered in November 2008 with an additional grace period of 3 months which could extend the completion deadline to February 2009.  The property was completed in November 2009 with the final works certificate being issued on 3 November 2009.  The First Occupation Licence was issued on 14 January 2010.  On 5 February 2010 the developer sent a burofax to the buyer confirming completion of works and the issuing of the First Occupation Licence.

So the completion came one year after the period provided in the contract and nine months after the three month extension period.  The developer did not claim that the delay was for reasons beyond its control, but instead said that the delay in delivery was normal for these types of off-plan projects.

The buyer confirmed that he did purchase 2 houses in this development, one for his family and one for their in-laws and that the houses were required as they were working in the colony of Gibraltar.  According to the buyer the delivery of the property according to the contracted dates was important because he needed an address for his job.  The buyer paid the amounts stated in the purchase contract and as so it must be concluded that the buyer has fulfilled his obligations.

Given all of the above it is correct to terminate the purchase contract dated 17 January 2007 and condemn the defendant developer, Promaga, to refund the amounts paid on account of the purchase.

As the purchase contract is cancelled it must now be determined whether the co-defendant Bank should be jointly and severally liable as guarantor of the payments.  The Bank considers the buyers as investors and outside the protection of LEY 57/1968.  However, the burden of proving this assertion lies with the party claiming this.  The facts in this case cannot be considered as proof of it.

The Supreme Court Sentence of 21 December 2015 has set as case law as follows: ‘In the house sales governed by Law 57/1968 credit institutions that receive income from buyers into the promoters account without requiring the opening of a special account and corresponding warranty/guarantee are liable to buyers for the total of the amounts anticipated by the buyers and deposited in the account or accounts that the developer has opened in this organization’.

So the Bank is liable for all sums advanced by the purchaser and in this case should be liable to refund the full amount paid”

BANCO SANTANDER & PROMAGA have 20 working days from the date of notification of the Sentence, which was 11 February 2016, to comply with the Sentence or to file an Appeal to the Provincial Appeal Court.

If an Appeal is filed by BANCO SANTANDER or PROMAGA it will be necessary for us to file an Opposition to the Appeal on your behalf.

You also have the right to file an Appeal to the Provincial Appeal Court regarding the fact that interest was only awarded from the filing of the Lawsuit (31 July 2014) and not from the date you paid the off-plan payments to the developer’s bank account in 2007.

Our litigators recommend an Appeal for additional interest.

Like 3


briando55 said:
18 February 2016 @ 18:37

Heartening news Maria, you have our case in first instance court in June this year.

Are clients awarded the original money at first instance when they win there?

mariadecastro said:
19 February 2016 @ 10:18

Yes, of course.
Unless Bank appeals

briando55 said:
19 February 2016 @ 10:38

Sorry, I should have asked more accurately.

If the first instance says the original debt is awarded, but then only the interest and costs are appealed by the bank.

Is the original money (paid as a deposit) awarded and paid out in a quick time frame?

mariadecastro said:
19 February 2016 @ 13:46

Yes, as soon as Courts allows it after an initial, provisional enforcement of First Instance Court decision by us-

briando55 said:
20 February 2016 @ 13:28

Thank you

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