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Spanish Off-Plan Property - Bank Guarantees - LEY 57/68

This blog is for all those Off-Plan property purchasers in Spain who have not received Bank Guarantees for their deposit funds as required by Spanish Law, in particular LEY 57/68 Article 1.1 and 1.2 and are now at risk of losing their money.

In addition many purchasers who did receive Bank Guarantees are now finding that the Spanish Banks are refusing to honour them without legal action being taken by the purchaser.

Friday, April 26, 2013



Foreign & Commonwealth Office
Overseas Residents Service Unit
Consular Assistance Group
Room WHMZ 4.2
King Charles Street

25 April 2013

Our Reference: MIN/*****/2013

Dear Keith,

Thank you for your letter of 04 April to the Prime Minister about his recent visit to Spain. Downing Street have passed the letter to me and asked me to reply.

Firstly, I want to extend my congratulations to you and all those involved over the recent Albacete Appeal Court decision dismissing the Banco CAM appeal and ordering them to pay the costs of the appeal. You must be really pleased with this decision. Myself and colleagues at the British Embassy in Madrid – including the British Ambassador, Giles Paxman - have been monitoring the case and were thrilled to hear of your success. Your success is a valuable case study for us to reference in discussions on property matters with Spanish authorities - particularly when talking about bank guarantees.

In your letter to Prime Minister you ask that he raise bank guarantees with Mariano Rajoy. I can confirm that the Prime Minister discussed a range of issues during his visit, including reform of the EU and prosperity priorities. Unfortunately, property issues were not covered. I can confirm, however, that bank guarantees in Spain remains a subject that UK Ministers are aware of and raise where they have the opportunity. Mr Paxman and officials at the British Embassy do likewise during their meetings with Spanish officials. This is an issue that we know continues to affect British Nationals and we will continue to urge the Spanish authorities to address it appropriately.

Yours sincerely,

Stelios Kyriakides

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Tuesday, April 16, 2013







  2006 - No legally required Bank Guarantees for Off-Plan deposits totalling 1.5 million
  February 2011 – Lawsuit 1 against CAM Bank & developer Cleyton GES SL filed to Court

  12 January 2012 - First Instance Court Preliminary Hearing
  21 & 22 May 2012 - Trial held in First Instance Court - Hellín

  8 June 2012 - Judgment released in favour of Finca Parcs Action Group
  CAM Bank and Cleyton GES SL sentenced to return deposits amounting to almost 1.5   
    million Euros to the buyers with the addition of legal interest and costs
  July 2012 - CAM Bank appeals the First Instance Court Judgment
  July 2012 - Finca Parcs Action Group submits Opposition to the CAM Appeal
  July 2012 - Finca Parcs Action Group file Provisional Enforcement Order to the Court
  August 2012 – CAM Bank pays full amount of deposits plus legal interest and costs
    to the Court
  Appeal to be heard by the Albacete Appeal Court
  4 March 2013 - Appeal Magistrates to meet for deliberation & voting on the CAM Bank Appeal
  11 April 2013 – Appeal court dismisses the CAM Bank Appeal and confirms First Instance   
    Sentence in full and imposes costs of Appeal on CAM Bank



Section 1 of the Albacete Provincial Appeal Court has confirmed the Sentence issued by the First Instance Court No. 2 of Hellín, which sentenced the developer Cleyton GES SL and CAM Bank (now SabadellCAM) to repay almost 1.5 million Euros to 47 buyers at the Las Higuericas Finca Parcs development near Murcia, Spain.

Following the Trial in May 2012, Spanish property developer Cleyton GES SL and financing bank BANCO CAM SLU were sentenced to repay in full the off-plan deposits paid by members of the Finca Parcs Action Group plus interest and costs.  Cleyton GES SL did not appeal the First Instance Court Sentence which as a consequence is now ‘firm’ against them; however CAM Bank did Appeal.

The Albacete Appeal Court Magistrates met for deliberation and voting on 4 March 2013 and they have just announced their decision.

The CAM Bank appeal has been dismissed and the First Instance Sentence issued by the First Instance Court in Hellín on 8 June 2012 has been confirmed in full with all costs of the Appeal imposed on CAM Bank.


The First Instance Sentence that has now been ratified concluded that both the developer and Bank failed to fulfil their legal obligations.

The court convicted jointly and severally both defendants, the developer Cleyton GES SL and the sole financial entity of the project, Caja de Ahorros del Mediterráneo (CAM), to return the off-plan deposits paid by group members totalling almost 1.5 million Euros for houses that were never built at the abandoned Las Higuericas, Finca Parcs development close to Agramón, Albacete.

The First Instance Judge declared the 55 sales contracts terminated due to “serious breaches” by the developer and stated that CAM Bank “failed in its legal obligations to control the use of off-plan deposits paid in advance for this development”.

Regarding the involvement of CAM Bank, which claimed it has no relationship with the buyers and that it was ‘oblivious’ to the off-plan deposits paid to accounts at its branches, the First Instance Sentence stated that, “The fact is that CAM knew that the payments into Cleyton GES accounts opened at its branches were payments by buyers on account of off-plan real estate purchases and CAM showed an absolute disregard to the obligations imposed on financial institutions by LEY 57/1968 and this behaviour can only be described as malpractice”.  The Judge noted that “it is clear the off-plan deposits were used in a manner contrary to the requirements of Spanish Law, LEY 57/1968”.

The First Instance Sentence concluded:

We must not forget that the obligation to deposit the amounts advanced to an account opened specifically for that purpose is that of the financial institution as not only does it receive the premium of the guarantees but also benefits by way of profit from the project.  In fact, CAM was the only financial entity involved in the project as it demanded exclusivity.

Keith Rule, the claimant questioned at the trial, clearly demonstrated that the buyers contacted both the developer and Bank through multiple means urging them to grant the Bank Guarantees for the deposits paid”


In its appeal CAM Bank again argued that it was oblivious to the payments made by the claimants and that clauses in the ‘Contract of Guarantee Operations’ signed between itself and Cleyton GES SL protected it from having to automatically issue the individual Bank Guarantees to buyers.

In its opposition to the Appeal, Finca Parcs Action Group Lawyer, Jaime de Castro argued that the reliance by CAM of the need for the buyers to pay their deposits to the ‘one’ Special Account was baseless. This argument was supported by evidence to show that over a 19 month period prior to June 2007 CAM had already issued well in excess of 100 Bank Guarantees with a value of 4.1 million Euros to other Finca Parcs buyers, not subject to this action, before a single entry was made in the Special Account that was opened in November 2005.

Finca Parcs Action Group Co-ordinator, Keith Rule says:

“As a result of opening the Special Account CAM must remain vigilant and ensure that all funds paid by buyers is entered into that account without deviation.  CAM also has an obligation according to Spanish Law LEY 57/1968 to ensure that those funds are only used for the construction of the housing.

Furthermore CAM included clauses in its own ‘Contract of Guarantee Operations’ that are in direct contravention to the obligations imposed on financial institutions by LEY 57/1968.  With regards to the operating of the ‘Special Account’ it is clear that there was absolutely no reliance by CAM on this account and that it performed a flagrant breach of its own contract.  To compound its negligence CAM attempted to shift all responsibility exclusively onto the developer”.


The Sentence issued on 11 April 2013 by the Albacete Appeal Court completely ratifies the First Instance Sentence and states:

“One need not look at the description of the fundamentals of the First Instance Sentence against the developer, Cleyton GES SL, since it has not been appealed by them”

The Appeal Sentence transcribes very broadly the following points from the First Instance Sentence:

“CAM argued that it was not bound by any legal relationship with the plaintiffs and that it did not provide Guarantees for the payments made by the plaintiffs in this action because the payments were made to ordinary current accounts.  However the relationship here was not regulated only by Article 1822 of the Civil Code but a guarantee of special nature governed by LEY 57/1968 aimed especially to ensure the inalienable rights of buyers of off-plan properties”

“Although it was agreed between CAM & Cleyton GES that the buyers payments should be entered in the special account and that the payments by the plaintiffs were not deposited mainly in that account, but in two ordinary accounts, the truth is that CAM issued guarantees to other buyers for funds paid to and held in the same ordinary accounts and described those accounts as ‘special’ on those corresponding guarantees”

“CAM knew perfectly well that the payments by the plaintiffs into the ordinary current accounts were payments by buyers in an off-plan property development in which it had assumed the role of guarantor under the law, LEY 57/1968”

The Appeal Court Sentence continues:

“The appellant, Banco CAM, was not happy with the reasoning of the First Instance Sentence.

All of the appellants argument revolves around the clauses contained in the ‘Contract of Guarantee Operations’ concluded between Itself and Cleyton GES SL whereby its obligation to guarantee the repayment of the amounts paid on account by the buyers of homes promoted by the co-defendant was not ‘automatic’, but that it depended on the timely request from Cleyton GES to formulate each of the individual guarantees together with a copy of each purchase contract and ensuring the funds were paid to the Special Account.

The appellants ‘Contract of Guarantee Operations’ does not comply with the provisions of LEY 57/1968 and introduces a number of conditions that could result in the amounts paid by buyers not being guaranteed.  These conditions included the notification of the Purchase Contract by Cleyton GES, the entry to the Special Account of the buyers deposit payments and also most importantly the ‘the positive rating’ by the Bank.

Put another way, the appellant Bank provided a way for Cleyton GES SL to give the appearance of fulfilling the Law, and thus buyers generated the belief that by making payments to the account, the eventual return of those funds was supported automatically when in fact the existence of the guarantee was subject to various conditions, among which was one that depended on the will of the Bank.  Such clauses, which contravene the provisions of the Law, must not be used against the plaintiffs, for indeed they pose a loss of rights that Article 7 of LEY 57/1968 deems as ‘indispensible’.

In a similar sense various rulings of the Supreme Court state that buyers cannot be harmed by clauses that contradict LEY 57/1968 or the lack of harmony or proper relations between the bank and developer, since the buyers who merely fulfilled their contractual obligations are not involved in the formulating or signing of the aforementioned warranty contract.

The existence of the guarantee referred to in Article 1 of LEY 57/1968 is not dependent on the amounts being deposited in a Special Account or communication to the bank of the realization of the sale, much less for the approval or positive rating of the Bank.  The law refers to the amounts being paid to a bank or savings bank and adds that the amounts must be deposited in a Special Account, but that does not mean that the buyer is obliged to admit the funds to the special account.

The appellant was the guarantor bank of the promotion and the bank to which all buyers off-plan deposits were paid.  Not only did CAM issue guarantees to other buyers, not subject to this action, for amounts paid to accounts other than the ‘Special Account’ but the bank also described those other accounts as ‘Special Accounts’ on the guarantee documents issued to those other buyers.

It follows therefore, that the refusal by the defendant Bank to endorse the payments of the plaintiffs is arbitrary and not in accordance with the Law as it has not always considered it essential that the payment was made to the Special Account.

And the defendant Bank inferred that it was a seemingly inexplicable practice of Cleyton GES SL to provide its clients with a non-special account number in which to make its payments, however the Bank did not give importance to the account into which the payments were made as it issued many guarantees to other buyers where the payments were made to the same ordinary accounts to which the plaintiffs paid.

With regards to the need for Cleyton GES to seek each individual guarantee, although we have already stated that this contravenes the Law, we must add that in practice it was purely formal.  We can see from evidence provided that the dates of the guarantees issued to other buyers and the dates of those applications coincide, which means that the process was not firstly a request, then studied by the relevant departments of the Bank, then to be approved and then to issue the guarantees.  In fact the issuing of the guarantee and the request for guarantee were simultaneous”.

The Appeal Court Sentence concludes:

“For all these reasons, and for the reasons stated in the decision appealed against, the appeal should be dismissed and the costs against the appellant”.

“We dismiss the appeal filed by the representation of BANCO CAM S.L.U. against the sentence of 8 June 2012 in Ordinary Procedure 182/11 issued by the Judge of the First Instance Court No.2 of Hellín.  We CONFIRM that decision and order the appellant (BANCO CAM S.L.U.) to pay the costs of this appeal”.



Keith Rule, Co-ordinator of the Finca Parcs Action Group says;

“We always believed that we had a very strong first Instance Sentence and that our opposition to CAM’s Appeal included a significant amount of Case Law on the issue of banks liabilities according to Spanish Law, LEY 57/1968.

This appeal court decision could not be any better.  It totally dismisses the CAM Bank appeal, upholds the First Instance Sentence in full and imposes all costs of the Appeal on the Bank.

Our group members are elated at the significance of this Appeal Court decision.  Justice has prevailed”

María de Castro, Director of Costa Luz Lawyers comments:

“The Appeal Court Sentence is an excellent example of how Judges in Spain are teaching Banks to treat people.

It follows the Supreme Court Interpretation of the inalienable rights of buyers according to LEY 57/1968.

It is a positive sign of the good health of Spanish Law and the judicial system, which puts balance on the wild behaviour of financial entities.  A pro-consumer Court Decision”


With regards to the behaviour of the Banks in cases such as this, Keith says:

“It has now been established by two Courts that CAM Bank attempted to harm the buyers by the use of a ‘Contract of Guarantee Operations’ between itself and the developer that contained several abusive clauses that contradict the requirements of LEY 57/1968.  CAM exhibited a total lack of professional due diligence, flagrantly violated its own Contract with the developer and systematically and repeatedly violated the obligations imposed on financial entities by LEY 57/1968.

We complied with each and every one of our contractual obligations and we as buyers have no control over the relationship between the Bank and Developer; therefore we cannot be prejudiced or harmed by deficiencies in the contract or in the relationship between bank and developer.

As a financial institution CAM Bank is fully aware of the obligations imposed on financial entities by LEY 57/1968, however it was instrumental in creating and endorsing the violations against that Law during the period 2004 to 2010 in collaboration with the co-defendant.

After initially chasing the developer for our Bank Guarantees we first contacted CAM Bank in July 2008 and on a number of occasions after that by multiple means including the submission of a 100 page dossier of evidence.  Yet throughout the legal process CAM continued its attempt to avoid complying with its legal obligations by maintaining that is was oblivious to the payments we made to the developers accounts at its branches.

Our long term beliefs regarding the liability of banks have now been substantiated and this Appeal Court decision is now evidence that there has always been substance to our views and opinions in cases such as this”


Lawyers representing other buyers of off-plan property in Spain who were not issued with the legally required Bank Guarantees to protect their deposits can now use this Appeal Court Decision as Case Law to strengthen legal arguments in their own cases.

Keith says;

“There has always been great interest in our Finca Parcs case from other buyers of off-plan property in Spain who did not receive the legally required Bank Guarantees many of whom have their life savings at risk.  We have always believed that according to LEY 57/1968 banks have a liability in these types of cases.  Together with our legal team we have worked tirelessly since 2008 to highlight this issue in the media and to the Spanish & British Governments.  That belief and hard work is now backed up by two very strong sentences from the Hellín First Instance Court and the Albacete Appeal Court which is now Case Law”


In July 2012 the group’s legal team provisionally enforced the First Instance Sentence against both defendants and this resulted in CAM Bank paying the funds to the Court Bank Account.  As a result the enforcement process should now be concluded in a timely manner by the Court and the funds will be released to the group via the legal team.  Initially this will be the principal amount of each group members deposit and interest and costs will follow when the case is ‘firm’.


CAM Bank has the right under Spanish Law to file a cassation appeal with the Supreme Court and this must be done within 20 working days from the date of notification of the Appeal Court Sentence.  If after 20 working days no Supreme Court appeal has been filed by the Bank then the case is ‘firm’ against both defendants.

Group Lawyer, Jaime de Castro comments:

“I would say that although a cassation appeal is possible the Banks chances of success are now reduced to less than 5% according to the statistics.  The decision is technically sound and the given facts cannot be challenged in a cassation appeal, only the legal grounds of the decision”


In December 2012 Finca Parcs Action Group filed a second Lawsuit against the developer Cleyton GES SL and CAM Bank for another 13 group members who were not members of the group at the time Lawsuit 1 was filed in February 2011.  This second Lawsuit was admitted into procedure at the First Instance Court in Hellín on 2 January 2013.

The value of deposits claimed by the 13 buyers in the second Lawsuit is just under 500,000 Euros.

CAM Bank had a deadline of 13 March to submit a defence to this Lawsuit.

We can now confirm that no defence was filed by CAM Bank to this second group Lawsuit.

Therefore, in the absence of any defence from the Bank the First Instance Court in Hellín will set a date for the Preliminary Hearing with a full trial to follow thereafter should a settlement not be reached in the meantime.

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Thursday, April 11, 2013


Justice has prevailed.  We have won in the Albacete Appeal Court with a sentence totally dismissing the Banco CAM Appeal.

Here is a translation of the final paragraph of the Appeal Court Sentence:


Apelación Civil 272/12




In Albacete 11 April 2013


We dismiss the appeal filed by the representation of BANCO CAM S.LU. against the judgment of 8 June 2012 in ordinary procedure 182/11 issued by the Lady Judge of the First Instance Court No. 2 of Hellin.  We CONFIRM that decision and order the appellant (BANCO CAM S.L.U.) to pay the costs of this appeal.

Congratulations to all!!!!

Kind regards

Finca Parcs Action Group (FPAG)

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