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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.

03 May 2011 @ 15:58






-          Many Spanish Banks are guilty of gross negligence and lack of
            professional due diligence for their failure to issue or to verify the
            existence of Bank Guarantees/Certificates of Insurance to protect
            deposits paid in advance by purchasers for off-plan property
            in Spain, as required by Spanish Law, in particular, LEY 57/1968,
            Article 1.2

-          Purchasers hold Spanish President, Mr José Luis Rodríguez
            Zapatero and the Governor of the Banco de
España, Mr Miguel
            Ángel Fernández
Ordoñez ultimately responsible due to their lack
            of supervision and regulatory control.

-          In many cases where Bank Guarantees were issued to purchasers
            Banks are now refusing to honour them even though the developer
            has clearly defaulted on the contract, thereby unnecessarily
            forcing the purchaser into a lengthy and expensive litigation


Spanish Law - LEY 57/1968 provides comprehensive protection for purchaser deposit funds paid to the developer in advance for a property.  The rights granted to the purchaser under LEY 57/1968 are of a 'Caracter de Irrenunciables' (Inalienable Character) and are INDISPUTABLE.

LEY 57/1968 states:

Article 1.1
The developer must ensure the return of the payments made plus six percent annual interest*, by means of a Contract of Insurance granted with an Insurance Entity inscribed and authorized in the Record of the General Sub-department of Insurers or by means of a Bank Guarantee issued by an Entity inscribed in the Record of Banks and Bankers or Savings Banks, if the construction does not commence or complete for any reason by the agreed deadline.
* The Building Act LEY 38/99 amends this percentage to the legal rate as published annually in the Boletín Oficial del Estado.
Article 1.2
: Must receive the sums advanced by purchasers through a Bank or Savings Bank, which must be deposited in a Special Account, with separation from any other funds belonging to the promoter, which may only contain funds deposited for the construction of dwellings. For the opening of these accounts or deposits the Banking institution or Savings bank, under its responsibility, will demand the guarantee to which the previous condition refers.

The preamble of LEY 57/68 explains clearly the reasons for its implementation in 1968.  It states that there was justified public alarm at the fact that repeated abuses had been taking place with regards to off-plan deposits.  It says the abuses which were obvious criminal acts had a serious disruption of social life, constituted a serious alteration of the social coexistence and caused irreparable
damage to trust and good faith.

It says LEY 57/68 was being introduced in the Public Interest to create general preventative standards to ensure the real and effective protection of funds paid in advance by purchasers and to ensure they received a refund in the event that the house building did not take effect.

However, despite LEY 57/68 being introduced in the public interest to protect deposits paid by Off-Plan purchasers we now find that during the past 10 years thousands of Off-Plan purchasers in Spain were
not provided with the legally required Bank Guarantees and in many cases where Bank Guarantees were issued the Banks & Savings Banks are now refusing to honour them.

A number of Spanish Banks & Savings Banks accepted funds which they knew were for off-plan deposits and failed in their obligations under Spanish Law – LEY 57/68 – to either issue the corresponding Bank Guarantee or to verify the existence of a Bank Guarantee or Certificate of Insurance.

Some Banks included pre-determined expiry dates in Bank Guarantees that they issued even though this is contrary to the requirements of Article 4 of LEY 57/68 which states: ‘
Once the Certificate of Occupancy is issued by the Provincial Delegation of the Ministry of Housing and given by the promoter of the housing to the buyer the rights guaranteed by the insurer or guarantor will be cancelled’.
As a direct result of this negligence many purchasers have been unnecessarily forced to take expensive and lengthy litigation proceedings in an effort to have their
inalienable rights which are granted by LEY 57/68 upheld.


The Banco de España is the national central bank and supervisor of the Spanish banking system.

Banco de España stated in their 2008 customer service report (Memoria del Servicio de Reclamaciones 2008) and in August 2008 in El Pais Newspaper "There are obligations imposed by LEY 57/1968 on financial institutions - some banks have not acted with diligence"

Spanish President Mr José Luis Rodríguez Zapatero said in THE EU PARLIAMENT ON 6 JULY 2010:  "My country is based on the rule of law and it respects and ensures that laws are respected.  The courts are responsible for the application of law. We stand shoulder to shoulder with those people who, maybe, have had the wool pulled over their eyes in the property sector"


The ultimate responsibility lies with Mr Zapatero and the Banco de España for their failure to adequately and effectively supervise the Banks & Savings Banks who are the guardians of LEY 57/68 and who were the 'vehicle' through which the illegalities were allowed to operate.


Off-Plan purchasers are the innocent victims in a trail of lies, deception, negligence, lack of due diligence and complete lack of control within the real estate sector.  In many cases the negligence and lack of due diligence began with the Estate Agents and has ended with the Banks & Savings Banks.

In a direct response, Ruth Genda, herself a victim of Bank Guarantee abuse, submitted a Petition to the Banco de España in January 2009, however at that time the Banco de España suggested that the matter be dealt with by the Spanish courts.  This was a totally unsatisfactory response from the Supervisor of the Spanish Banking System, therefore another more detailed PETITION has now been organised for purchasers of Spanish Off-Plan Property who are currently suffering or have suffered
ANY type of Bank Guarantee abuse.

This new PETITION has been organised by Keith Rule, Coordinator of the Finca Parcs Action Group, a group currently consisting of 63 purchasers on the Las Higuericas, Finca Parcs development, none of whom were provided with the legally required Bank Guarantees for their Off-Plan deposits.

The main aims of the PETITION which is primarily addressed to Spanish President, Mr José Luis Rodríguez Zapatero and the Governor of the Banco de
España, Mr Miguel Ángel Fernández Ordoñez are:

• To expose the
negligent actions of all those involved including the Banks & Savings Banks

• To highlight the
unacceptable delays innocent purchasers are unnecessarily being subjected to in the courts

• To force accountability and demand justice

• To ensure change for the future


This is a serious public order matter and our petition demands that the Banco de España and Spanish Government act immediately to ensure that:

• Any purchaser not provided with the legally required Bank Guarantee is  
refunded immediately in accordance with LEY 57/68

• Any purchaser in possession of a Bank Guarantee, where the developer has
clearly defaulted on the contract, is able to execute the Bank Guarantee, in accordance with LEY 57/68, without the need for litigation

'Fast Track' specialised courts be established

• The Spanish Government and Banco de España must immediately set up a fund to underwrite the refunds on all Bank Guarantee cases

• The Spanish Government and Banco de España must act now to ensure the abuse being suffered by innocent off-plan purchasers in Spain is ended immediately and that it is never allowed to happen again.


If the Banco de España and Spanish Government fail to act within defined timescales on the above issues then we ask the European Parliament and European Commission to take firm and effective action demanding that these very serious financial illegalities be addressed as a matter of extreme urgency.


This is the most extensive Bank Guarantee petition ever undertaken and it is essential that we gather as much information as possible to ensure we are able to present a comprehensive dossier of evidence and a complete account as to the scale of abuse suffered by innocent purchasers of Off-Plan Property in Spain.

Any person affected by this issue is urged to visit the Bank Guarantees in Spain website and add their voice to this very important PETITION:

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