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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.

UK man beats Spain's banks on home ground
Thursday, July 18, 2013 @ 8:35 AM

 UK man beats Spain's banks on home ground

Thanks to an all but forgotten 45-year-old property law he found with the help of Google Translate, Englishman Keith Rule has provided hope to thousands of expats who lost money in failed Spanish property ventures during the credit crunch.

Published: 17 Jul 2013 14:23 GMT+02:00 
Updated: 17 Jul 2013 14:23 GMT+02:00

The Local – Spain´s news in English

In 2006, Keith Rule bought two houses off the plan in Albacete province in the south-eastern Spanish region near Murcia.

The high-end Finca Parcs development had everything he was looking for. It was located in inland Spain, the town was nice and there was a good school for his young children.

"But then Spain's housing bubble burst and our house was never built," Rule told The Local by telephone from the southern Spanish city of Algeciras.

Like many other investors, Rule saw initial attempts to reclaim his deposit thwarted. The bank he had paid his money to — then CAM, now Sabadell — refused to return his outlay of £45,983 (€53,000, $70,000).

Unlike many investors in his position, though, Rule refused to give up the fight for the money he'd lost in the property deal.

While trawling the internet with the help of Google translate, this Englishman based in Milton Keynes came across a law which dated back nearly 50 years.

"Law 57/68 (from 1968) was designed exactly to protect people in my situation," Rule told The Local.

"It made banks liable for all kinds of cases where developers didn't meet their end of the bargain."

Armed with this law, Rule eventually went on to win back his deposit with judges ruling in his favour.

Thanks to his hard work, 46 other buyers at the development also had their down payments reimbursed.

The process was far from easy though. Rule had to do some serious lawyer shopping before he found a firm prepared to take on his case.

"It was his persistence that won me over eventually," Maria L. de Castro, Director of Costaluz Lawyers said to The Local, explaining why she had accepted the case.

The lawyer explained that she had come across a relevant ruling in the high court of the Spanish region of Navarre.

There, judges found banks could be liable in certain cases where property developers failed to deliver their products.   

The opinion of a lawyer in Seville also helped persuade de Castro to take on Rule's case.

"But mostly it was the fact that Keith clearly saw that the bank was liable in his case, and that we had to find a way to enforce that liability.

"At the beginning they called us crazy," the lawyer freely admits of her firm's fight to see banks cough up deposits.

"One lawyer criticized Keith very harshly online, saying that he was a cheat and that he was trying to steal clients," de Castro told The Local.

Being a woman didn't help either, she explained. "I think the legal profession thought we were dreamers." 

There were also issues with Law 57/68 which mentioned bank liability without specifying how this would be enforced.

"We had to change people's thinking," said the lawyer.

"Luckily the law came to light at the same time as society was changing as a result of the crisis. There was more acceptance among judges that you can fight the banks".

Given the results of Rule's case, de Castro is now optimistic about similar cases in future.

"A lot of people had given up on getting their money back but this decision has reignited their motivation." 

But de Castro sounded a note of warning for people who may be looking to see their deposits again. "We need to have data," she said.

"You need to be able to show that you cancelled your contract with the developer, and you also need to see if a bank guarantee existed on the property.

"You will also need to be able to show that you made payments to a bank account held by a developer."

Some clients were also lacking a certificate of guarantee (certicado bancario), she added.

"What we have done now (with Law 57/68) is provide a new way to look at these cases," Rule told The Local.

"Of course the judges have to choose on a case-by-case basis. Now, though, we have seen some 35 to 40 similar decisions around Spain."

And despite everything, Rule still feels he has been fortunate.

"We were lucky we bought off the plan in Spain where there is a law. If we had bought in Bulgaria, for example, it would be quite different.

"There was a lot of corruption and greed in Spain during the building boom," Rule says.

"But Spain is slowly rebuilding the confidence people had."   

George Mills (

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