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El blog de Maria

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

Legal tip 566. Banks are guardians of buyers´interests in off plan
19 July 2011 @ 16:43

Two Contract Law Professors of Cadiz and Seville Universities which are part of our team  agree that liabilities of the Banks that receive deposits in off plan purchases can be claim against just provided we can locate money transferences being made to a Bank account held by a developer, even when there is no reference to development and unit and even if the private purchase contract for which those deposits were paid, do not mention about Law 57/68 nor the specific Bank account.

They both also agree that there is no such a thing as formal special account and when Law 57/68 talks about “special” means an account which is being “separated, differentiated”  of any other account held by the developer. Supreme Court in Spain has reiterated in a good number of occassions that the set up of a “ special” Bank account is an obligation of developer and bank and therefore, the lack of this, can never be detrimental to buyers. (Supreme Court decisions dated 22nd of September 1997, 1st of December 1998, 15th of November 1999, 8th of March 2001 and 19th of July 2004)

Navarra Supreme Court dated 22 of December 2008, which has the same value as Supreme Court ones declared that it is the developer who needs to deposit these amounts in a Special Account and the Bank needs to request the developer to do so and to mention this account in the sales contract. The Bank also needs to request the developer to obtain the necessary guarantees.

The Bank which receives deposits for off plan purchases has two obligations by law: 1) to separate developer´s  own funds  from funds paid by buyers as advanced deposits 2) to require the developer to obtain the necessary guarantees to protect these deposits.

Any breach of these obligations turns into a refund devolution by the Bank.

It is a very simple idea: Banks which received deposits are liable for refund if the building is not started or finished on time and the Bank Guarantees were not constituted. This comes from provision 1.2 of Law 57/68.

Valladolid 3 Court Decision 180/2010, in its legal argument number four also mentions the obligation of the Bank to request the hiring of the Guarantee according to what it is established in provision 1.2 of Law 57/68.

 Court of First Instance 57 in Madrid in a Court Decision dated April 2010 establishes that the receiver Bank, knowing  that the amounts of the account were advanced deposits for off  plan purchases,  should have request the developer to meet the legal obligations established in that Law ( separated account, constitution of Guarantees. As the Bank did not perform this duty, the receiver Bank is jointly and severally liable with the developer for the refund of advanced amounts plus legal interests.

Enough with a general Bank Guarantee

Regarding a different type of liability of Banks in off plan purchases, that liability attached to the issuing of a Guarantee, Vélez-Málaga 1 and Burgos Appeal Court has also established that once there is a general Bank Guarantee,  individual claimers can claim their deposits back from the Bank who issued those general Bank Guarantees, despite the  non existence of individual certificates of Guarantees.


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Ian Brierly said:
19 July 2011 @ 20:59

I have now been waiting over two years just for the PH stage of a case against PolarisWorld. If these are laws, why do your courts not uphold them?, and give all the innocent people their hard earned money back. Many of these people would probably buy again in spain!!!!
Ian Brierly

Chrissie1 said:
19 July 2011 @ 21:08

Always the proof is there in abundance but actions speak louder than words and words is all we get.

Regards Chrissie

Anne said:
19 July 2011 @ 23:16

In the case of a generic bank guarantee, do you also need to identify money transference to a Bank account held by a developer, before a claim for refund can be made?

Maria said:
20 July 2011 @ 08:06

In case of a Generic Bank Guiarantee for a development, we just need to have a contract signed by the developer.

Edwina Taylor said:
20 July 2011 @ 09:53

I was informed that the Bank Guarantee runs out if the site is completed, even though the Developer did not have the Habitation Licence until now from the Development being completed in 2005

Maria said:
20 July 2011 @ 10:58

If there is no Habitation License, you can still use the Bank Guarantee.

Tim Luther said:
20 July 2011 @ 13:14

Do we know of anyone who has actually had a refund of their deposit from a bank ?

Anne said:
20 July 2011 @ 14:05

Good question Tim but I suspect that given the existing systemic failure of judicial enforcement in Spain that this is the main problem compromising all too many innocent purchasers. We have to get this problem addressed ASAP for purchasers to feel reassured that following legal routes to recompense such as this will actually be enforced. Maria and team appear to be doing a great job to identify these legal routes/strategies for return of monies, but we need to know that they will be ultimately enforced and not sit for indefinite and compromising time periods, awaiting judicial resolution.

Rosemary said:
20 July 2011 @ 16:00

In your reply to Anne you say to claim against Bank Guarantee you only need the contract signed by the developer. Why is it so difficult then for us to claim when we have everything needed, the Judges decision in our favour against developer, the judges petition to seize assets, all of which have failed, but we do have the contract signed by developer, cheque signed to agent, and agents signed cheque to developer, so why have we still not got our money. You make it sound so simple but it isn't is it, otherwise the money would be in our account.

Ian Brierly said:
20 July 2011 @ 19:59

Well put Rosemary WHY WHY WHY do we need to go through lengthy and costly courts to get your own money back from corupt developers and banks....

Anne said:
21 July 2011 @ 02:15

I think there might be some misunderstanding here as I was referring to generic BG's and not individual BG's.
Also I suspect that each case has to be viewed on an individual basis relating to claims against the bank, especially where cheques were the form of transference of deposited monies rather than via a bank transfer. It's complications like this that have to be reviewed to establish credible legal strategies.
It needs stressing that the bank claim legal route to gaining recompense is not as simple as some people believe.
The irony however is that in principle a BG for offplan purchase was supposed to have simplified the process for return of monies when breach of contract occured! We all know now that this has certainly not proved to be the case in Spain. Hence Keith's petition calling for a means to fast track recompense to all those affected.

Chrissie1 said:
21 July 2011 @ 20:33

legal tip number 966 - the british people will be ripped off and they dont have a leg to stand on.

Kind regards


Anne said:
22 July 2011 @ 15:28

It has come to our notice that it is important to provide evidences that the payment was credited into a developer's bank account, (i.e. the bank in which a cheque was credited), so perhaps it is not sufficient to state that "In case of a Generic Bank Guarantee for a development, we just need to have a contract signed by the developer ".
Please could you clarify this as this might be a little confusing for those reading this blog.
Many thanks.

Anne said:
22 July 2011 @ 16:22

It has come to our notice that it is important to provide evidences that the payment was credited into a developer's bank account, (i.e. the bank in which a cheque was credited), so perhaps it is not sufficient to state that "In case of a Generic Bank Guarantee for a development, we just need to have a contract signed by the developer ".
Please could you clarify this as this might be a little confusing for those reading this blog.
Many thanks.

Rambi said:
25 July 2011 @ 13:27

I agree with a lot that has been said. If the law has been broken why don't the authorities act?
I think the banks know that much of the deposit money they are holding has been paid for by pensioners. They also know that by delaying things for ten to twenty years will lessen the amount claimed in the end because a vast number will have died.
Sick? maybe, but these evil, corrupt and greedy individuals don't see us as people but as numbers on a balance sheet.

Maria said:
26 July 2011 @ 13:00


There is no need of proving reception of amounts by developer in an special account if there is a general bank Guarantee.

No doubt about this!



redman said:
14 August 2011 @ 03:12


I am owed in the region of 74000 euros by developer San Jose including 6% legal interest from monies paid in 2006. Can I claim tax back from that which I have to pay on my current spanish property??

Also, noted how BBVA announced massive profits this year, no doubt includes many thousands from deposits taken/stolen from unwitting buyers.

Tony said:
28 December 2011 @ 16:09

Redman we received notification this morning from our lawyers that they were going to apply for a refund from BBVA, and that they had 100% success bearing in mind that we have already shelled out £4000 in legal fees, I am a scoptical that I could shell out more money and not see any return, this is what is worrying me, thanks again


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