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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, January 29, 2016 @ 4:11 PM

Finca Parcs Action Group win second group claim against developer, Cleyton GES S.L. & Banco CAM in the First Instance Court in Hellín.

The 13 claimants were included in Finca Parcs Action Group Lawsuit 2 which was submitted to the Court in December 2012. The Trial was held in the First Instance Court in Hellín on 28 September 2015.

Just as in Finca Parcs Action Group Lawsuit 1, which was won in the First Instance Court in 2012 and in the Provincial Appeal Court in 2013, the 13 group members in Lawsuit 2 did not receive Individual Guarantees from the developer, Cleyton GES S.L. or from Banco CAM (Caja de Ahorros del Mediterráneo), the Bank to which their off-plan deposit was paid.

The final paragraphs of the First Instance Sentence delivered on 28 January 2016 and notified on 29 January 2016 state:

“Fully upholding the Lawsuit filed on behalf of 13 INDIVIDUAL CLAIMANTS against CLEYTON GES S.L. & BANCO CAM S.A.U., on its merit,

a) I must declare cancelled the Purchase Contracts concerning the housing promotion called Finca Parcs Las Higuericas, signed by the claimants and the entity Cleyton Ges S.L. between 14 April 2005 & 21 April 2008.

b) I must condemn jointly CLEYTON GES S.L. to refund to each of the claimants the amounts paid in advance by each one, totalling 449,000 Euro according to the schedule in clause 3 of the Lawsuit plus legal interest on each amount accrued from the date on which the buyers paid to the accounts of Banco CAM until full repayment, subject to the mandatory implementation of interest in Article 576 of the LEC.

c) I must condemn jointly BANCO CAM S.A.U. (formerly Caja del Mediterráneo) to refund to each of the claimants the amounts paid in advance by each one, totalling 449,000 Euro according to the schedule in clause 3 of the Lawsuit plus legal interest on each amount accrued from the date on which the buyers paid to the accounts of Banco CAM until full repayment, subject to the mandatory implementation of interest in Article 576 of the LEC.

d) I must condemn CLEYTON GES S.L. & BANCO CAM S.A.U. to pay the legal costs”

So CLEYTON GES S.L. & BANCO CAM S.A.U. are jointly & severally liable to refund the total amount claimed which is 449,000€ plus legal interest from the date each amount was paid to the developer’s bank accounts opened at Banco CAM.

Legal costs are imposed on Cleyton Ges S.L. & Banco CAM.

Interesting statements by the Judge in the Sentence are:

“With regards to the action against BANCO CAM S.A.U., the dispute is limited to the extent of the obligation of the bank to issue Individual Guarantees according to Article 1 of LEY 57/1968.

From the documentary evidence in the Lawsuit it is established that a Special Account was opened in Banco CAM in addition to 2 other accounts in which the developer, Cleyton GES, deposited amounts paid by the buyers. The bank manager when questioned in Court at the Trial said that the developer was not diligent when using the 3 accounts. He said he should have been more careful but admitted that he did not control the concepts of the income and outgoings of the 3 accounts.

In the absence of the Individual Guarantees to secure the buyers amounts deposited, whose delivery has not been contested, the controversy is limited to whether the financial institution is responsible for the failure of the developer to issue the Guarantees.

Sentences issued by the Supreme Court on 16 January 2015, 13 January 2015 & 30 April 2015 confirm the responsibilities of the financial institution including the fact that the obligation to pay the amounts in the special account lies with the seller and not the buyer.

This line of Buyer Protection jurisprudence culminates with the recent Sentence 733/2015 of 21 December 2015 in which the doctrine is set as follows: ‘In off-plan house sales governed by LEY 57/1968 financial institutions that accept income from buyers in an account opened by the developer, without opening a Special Account and requiring the relevant security, must be responsible to the buyers for the total amounts paid into accounts in the financial entity’

This recent doctrine of the Supreme Court not only states that the bank has to require the opening of the Special Account but should also be responsible to the buyers if the corresponding Guarantees are not issued. So in this case Banco CAM, by not issuing or verifying the existence of the individual guarantees, has incurred responsibility towards the buyers who paid off-plan deposits to the developer accounts opened at its branches.

It has not been established if the bank directed the developer to proceed with the issuing of the Guarantees as required by law or any other security requirement regarding the amounts entered, even though the bank manager when questioned as a witness admitted that there were irregularities in the fate of the money deposited by buyers. He said I do not know if the developer claimed to have acted according to the law, even though no guarantees were issued by the bank, despite receiving the money into the accounts.

The failure of the entity Banco CAM in its legal obligation to issue the Guarantee/corresponding endorsement, does not exempt it from responding in solidarity together with the developer to pay the amounts delivered under the purchase contracts that have now been resolved”

BANCO CAM S.A.U. has 20 working days from the date of notification of the Sentence, which was 29 January 2016, to comply with the Sentence or to file an Appeal to the Provincial Appeal Court of Albacete.

If an Appeal is filed by BANCO CAM S.A.U. it will be necessary for us to file an Opposition to the Appeal on behalf of the group.

If the defendants fail to comply with the sentence we will enforce the sentence against them.

Even if Banco CAM files an Appeal we will provisionally enforce the First Instance Sentence against it.

Like 0


M11Block said:
Tuesday, February 2, 2016 @ 10:05 AM

It would be wonderful if there is no appeal and this is the final conclusion for all these people. Everyone involved in these cases deserve justice, they have waited long enough. Well done to all concerned. What an extra triumph this would be if the banks and developers accepted Ley 56/68 and finally settled this case. Good Luck. Ex M 11

Keith110 said:
Tuesday, February 2, 2016 @ 10:20 AM

Thanks. I will let you know if there is an Appeal from Banco CAM. This was the 2nd Finca Parcs group Lawsuit against CAM. We also have Lawsuit 3 & 4.
Lawsuit 4 was submitted before Christmas. We are waiting to receive the Banco CAM defence for this Lawsuit.

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