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El blog de Maria

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

Legal tip 677. European banks made the Spanish greed. Spain Off plan: perfect business for European Banks
03 January 2012 @ 14:02




Someone on the forum has been recently asking why it is so difficult to obtain the refund of your money despite a case being won:





It is simple. Because individual certificates of bank Guarantees were not delivered to off plan buyers, these, when claiming had to start with an action against the developer and try to obtain the refund out of developers´assets. Very difficult and very unfairPerfect situation for Banks which enjoyed a perfect business with no risk for years.



Very difficult: If developer is bankrupted, liquidated or repossessed, ( in most of the cases pressurised by Banks), the effective enforcement of the Court decission against the developer gets an almost impossible exercise.



At the end, developers made some earnings but in depth were just the silly tool by which Banks kept high the lending levels of those years ( a necessary instrument). In many cases, same Bank officers left Bank jobs to start development companies in Spain. No casuality.





Very unfair: Becuase Law provides an automatic instrument for inmediate refund in these cases: Bank Guarantees or Insurance Policies whose existence,banks receiving deposits for off plan business had to controll, under its liability.









If the individual certificates of Bank Guarantees had been provided the refund would have been an easy, almost instantaneous exercise. But Banks did not want to put things that easy or that legal. They wanted the whole business from themselves. We all know now. Spanish Banks had lots of availability for European money which run in businesses where Consumers guarantees were not protected, against what Law required as irrenouncable rights of individual people.




In Spain, due to great Law 57/68, there is existing  case law condemning Banks who issued  bank Guarantee and did not provided the individual certificates to buyers. The best punishment against what it was for banks during a long decade ( both spanish and europeans) a golden an illegal business.




But... what if general  Bank Guarantees do not exist? In our opinion, provision 1segundo of Law 57/68 and also professional indemnity of lawyers should cover this.We will comment more extensively about this tomorrow.

Sierra Nevada

"Sierra Nevada", Granada, Spain, by Jexweber.fotos. at


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Sandra said:
03 January 2012 @ 18:12

As I have previously commented, 'Banks thought themselves above the law and, as Maria has pointed out, they behaved accordingly' The extent of their wrongdoing is now slowly being revealed.
Spain's new Government has asked banks to reveal the true value of real estate stock held on their books. They should be forced to liquidise all those assets BEFORE any kind of government or EU bailout. Anything less will lead to the same sort of 'sticking plaster' rescue that has contributed to the even bigger mess they are now in.
They should also be obliged to reveal the amount of money deposited with them for off-plan property and show exactly where those funds are now. The amount has been guesstimated at 175 million euros but I suspect that figure is barely touching the tip of the iceberg and is much, much more.
The banks have created an unholy mess and should not be allowed to further conceal it's true extent.

Anne said:
03 January 2012 @ 21:21

Maria I would like to understand why it is that when a developer appeal is lost why all judges at that point do not follow through as a matter of course Law 57/68 by reviewing/requesting details relating to any Bank guarantee (generic or individual) made available at that time. This would ensure cases relating to offplan purchase are speedily resolved as was the intention of this BG law from the outset.
Banks should not be able to cherry pick when this law is made applicable. The bottom line surely is that consumer protection via this existing law should be enforced at the point of proven developer breach of contract and should form part of the appeal resolution shouldn't it?
Perhaps you can advise why this approach is not adopted/adhered to by the judiciary?

Sandra said:
03 January 2012 @ 21:56

I wish that I had Anne's problem solving skills or better still that Spanish judges had Anne's problem solving skills/
Well said Anne!

Maria said:
05 January 2012 @ 15:19

Anne: You should move to Spain and come to help me at the practise. You have a strong and accute sense of justice, surely, after all these long years of wait.
Law 57/68 is shortly and bad understood. In my opinion, we, lawyers need to propose the good use to it to Judges but of course, they, as Judges should also need to know Law and apply it as it is convenient.

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