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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.

25 May 2012 @ 16:22









  No legally required Bank Guarantees for Off-Plan deposits totalling 1.5 million Euros
  Lawsuit against CAM Bank & developer Cleyton GES SL filed in February 2011

  First Instance Court Preliminary Hearing held on 12 January 2012
  Trial commenced Monday 21 May 2012


To recover our Off-Plan Deposits paid in good faith to Cleyton GES SL & Caja de Ahorros del Mediterráneo (CAM Bank), which according to Spanish Law, in particular, LEY 57/68 Article 1.2, "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 (in this case CAM Bank), under its responsibility, will demand the bank guarantee to which the previous condition (Article 1.1) refers”.


70 members of the Finca Parcs Action Group arrived in Hellín on Sunday 20 May after being called to appear in person by CAM Bank – one of the co-defendants in Hellín’s ‘Trial of the Year’.

First stop for the group was a visit to the Las Higuericas Finca Parcs development which was abandoned in 2009 by Spanish property developer Cleyton GES SL, the other defendant in the trial.


The trial scheduled to last 4 days commenced on Monday 21 May 2012 in the First Instance Court in Hellín following the filing in February 2011 of a 1000 page Lawsuit against property developer Cleyton GES SL and the sole financial entity of the project, Caja de Ahorros del Mediterráneo.  The Lawsuit was filed in order to recover 1.5 million Euros of off-plan deposits paid to CAM Bank between 2005 and 2007 by FINCA PARCS ACTION GROUP members, in relation to their Sales Contracts for the Las Higuericas Finca Parcs development.

On the eve of the trial Juan Munoz, the lawyer representing developer Cleyton GES SL explained that:

“Cleyton GES SL is now in negative equity caused by different factors including lack of support from the financier of the project, CAM Bank”.  Munoz says that although they will continue fighting for the ‘continuation of the project’, the current economic situation means they cannot fund the completion of infrastructure works or to fulfil the agreement with the Hellín Town Hall.

For this reason, he added, Cleyton GES decided “to seek a partnership formed with several partners and companies with a proven financial solvency and extensive experience in the construction sector”.

Cleyton GES also regret that, “CAM did not want to discuss the future of the project and therefore does not have any respect for the rights of the buyers.  Cleyton GES hoped to expose those company representatives and despite everything hoped to reach a negotiated solution with “all sides lowering their claims to obtain an overall benefit”

In response, Keith Rule, co-ordinator of Finca Parcs Action Group stated: “We have suffered extreme stress and heartache over the past 5 years due to the actions of Cleyton GES and CAM Bank.  We were promised a dream of owning a house in an idyllic location in a natural park with a lake, however that dream has turned into a nightmare.  It is clear the project will never succeed while Cleyton GES and CAM are involved.  They are unable to work together and we are the victims of their negligence, deception and illegal use of our off-plan deposits.  We want nothing more than what is our inalienable legal right granted by Spanish Law, LEY 57/1968 which is a full refund of our deposit together with legal interest and costs”.


At 9:30am on Monday 21 May, 70 members of the Finca Parcs Action Group held a peaceful demonstration outside the CAM Branch on the Gran Via in Hellin.  They held banners and placards demanding the return of their money and calling for the law guaranteeing these amounts to be enforced.  The banner also quoted the words of the Bank of Spain Governor which described CAM as ‘Scandalous’ and ‘The Worst of The Worst’.



From there they marched in an orderly manner to Hellin’s First Instance Court where they held a further peaceful protest prior to the commencement of the trial.


The trial began at 10:45 with the presiding judge Consuelo Romero.  The claimants, members of Finca Parcs Action Group were represented by Jaime de Castro.  The defendants were represented by Pablo Toran for CAM Bank and Juan Munoz for Cleyton GES SL.


The first session allowed each of the parties to state their position.  Although miles apart the positions are quite clear.  Finca Parcs Action Group consider that all the promotional material and contracts confirm that the corresponding Bank Guarantees should have been issued by CAM as they did for other buyers in the project who had paid deposits to the same accounts.  As no house was delivered both defendants should be made liable.

For Cleyton GES SL, its current owner, Pedro Jimenez Penalver explained that the company he took over about 3 years ago intended to finish the work and deliver the houses.  He stated that he did not know what happened prior to his involvement in the company and therefore as the contracts subject to this litigation were signed between 2005 and 2007 he could not answer most of the questions put to him.  The most repeated phrase in his testimony was ‘I have no idea’.


In the case of CAM their argument was that they have honoured Bank Guarantees which they issued to some buyers, but they have no relationship with members of the Finca Parcs Action Group as they did not formalise a contract of guarantee with the Bank.

One issue that gained most attention during the session was that of Bank Accounts.  CAM’s Lawyer insisted that, by law, the amounts paid in advance for off-plan property should be deposited in a special account and the funds should be used exclusively for the building of the houses.  But he said that Cleyton GES operated 3 accounts at CAM, two of which were ordinary current accounts and that legally bank guarantees can only be issued on money paid to the special account.

However, Keith Rule, who testified for the victims insisted that they were told by Cleyton GES that the 3 accounts were special accounts and in fact 200 Bank Guarantees were issued to other buyers in the project who paid into the same bank accounts as members of the Finca Parcs Action Group.  Furthermore the 3 accounts were described as Cuenta Corriente Especial (Special Accounts) on each of the Bank Guarantees issued to other buyers.

Julian Herrera, asset manager of CAM, stated in his testimony that although the accounts may have been called ‘Special’ on other Bank Guarantees, the fact is that “there is only one special account for this promotion and the other two are just ordinary accounts”.  He explained that CAM did not receive a request for Bank Guarantees from any of the victims and said that although the Sales Contracts stated that the Bank Guarantees would be issued by CAM, this did not make CAM liable to issue them.

He also confirmed that CAM demanded repeatedly that Cleyton GES transfer buyer’s deposits from the ordinary accounts to the special account, to avoid prejudicing the buyers.  He stated that CAM was oblivious to the transactions going through the ordinary accounts.


Jaime de Castro, representing the members of Finca Parcs Action Group stated that although the Special Account was opened in November 2005 the account remained with a zero balance and was not used until June 2007.  However, by the time of the first credit into the Special Account on 13 June 2007, CAM had already issued Bank Guarantees to other buyers on the development during the period November 2005 to May 2007 which amounted in value to over 4.5 million Euros.

Of the three persons who testified during Monday’s session, the one who spoke most strongly was Keith Rule, the co-ordinator of Finca Parcs Action Group who himself paid more than 50,000 Euros to CAM.  With the help of a translator, he insisted that group members were encouraged to reserve at Finca Parcs due to the promise on all the promotional material and in the contract of Bank Guarantees issued by CAM, who at that time were described as the 4th biggest savings bank in Spain.

But he added that despite repeatedly demanding the Bank Guarantees during 2007 from Cleyton GES SL nothing was forthcoming, only broken promises.  He demonstrated that in 2008 they demanded Bank Guarantees directly with CAM Bank via email to the CAM Manager, Fernando Martinez Hernandez at the Murcia Branch to which the money was transferred, however there was no response.  He explained that they then demanded the Bank Guarantees from CAM’s London office and that in January 2009 they had a 3 hour meeting with the London Manager, Aurelio Pedros who advised them to submit the complaint directly to the Alicante head office of CAM.  This they did in February 2009, however by the end of 2009 CAM denied any liability and they referred their complaint by email to Roberto Lopez Abad and Modesto Crespo, CAM’s CEO and President, respectively.  An email reply was received in the names of Lopez-Abad and Crespo; however this stated that ‘if you do not have a Bank Guarantee then you have no relationship with this entity’.

The Judge decided with the agreement of all parties that after hearing the testimony from one claimant it was not necessary to repeat a similar questioning of each of the buyers.  So the other 46 applicants did not have to testify.

THE SURPRISING OFFER “Would you accept a house from the ones that are built instead of money”
THE REPLY “We cannot trust any of you as we have been robbed and cheated for many years”

Juan Munoz, Lawyer for Cleyton GES, at one point in the interrogation of Keith Rule offered to the victims the possibility of existing houses instead of a refund.  Mr Rule was especially forceful in responding to this offer, as he said that Cleyton GES and CAM have ‘stolen the money’, lied ‘over and over again’ throughout the years, violated Spanish Law and its own promises therefore we cannot trust you anymore.

Jaime de Castro responded on behalf of the victims by saying, “Cleyton GES cannot offer these properties simply because they are no longer yours to offer”.  In his view the bank and developer have the “same level of responsibility” in this matter.

Pedro Jimenez Penalver, manager of Cleyton GES said that in Las Higuericas Finca Parcs, where he was planning to build more than 600 houses, that after 7 years there are 73 houses finished, and ‘seventy-something’ to which only needed 10 to 15% more work to complete.  He also indicated that the urbanisation infrastructure is complete to around 75%-80%, and that the reason that no property has a Licence of First Occupation is because there was no way to solve problems such as the high tension electric cable which runs through the site for which Iberdrola should have carried out an environmental impact study and which was not done.  He also criticised the attitude of CAM who took possession of the houses “which were the property of others”.


“FINCA PARCS ACTION GROUP” - Those affected say they have had enough of broken promises.  Their spokesman, Keith Rule, stated that they only want to enforce the Law and receive their money back that they paid for houses which were not delivered.

“CONFIDENCE IN SPANISH JUSTICE” – Keith Rule, one of the victims, who acted as spokesman for the Finca Parcs Action Group, together with their Lawyer Jaime de Castro insisted that they trust in Spanish Justice and that their legal rights will be upheld.  “The buyers, said de Castro, trust in the Spanish courts and I will also say that the Bank will respond if they are sentenced to do so.  Even in these times where there is so much distrust, to favourably resolve a case like this can be good for the image of Spain around the world”.


On day two several witnesses appeared to testify and each of the three parties to this case delivered their conclusions.


Calls for Cleyton GES and CAM to jointly refund the money

He stressed that the firm is willing to continue the development

PABLO TORAN for Caja de Ahorros del Mediterraneo (CAM)
He claims that CAM has no direct relationship with the plaintiffs and owes nothing……

The trial of Las Higuericas Finca Parcs was completed on day 2, in half the time originally planned.

The plaintiffs, who claim their money was deposited in Cleyton GES accounts at the funding entity CAM, confirmed their evidence and must now wait for Judgment.

The three hours of Day 2 of the trial began at 10:30 with the witness testimony of Enrique Ros, representative of the company Lauara Europea SL (the company that has agreed to take over the obligations of completing the project).

Then ex-employees of Cleyton GES SL were called to testify.  The first being Antonio Jose Veas Arteseros, who worked for Cleyton GES from 2004 until April 2009.  He said that CAM was fully funding the project and fully endorsing and paying for everything relating to the urbanisation.  His involvement with the Bank Guarantees was to send an application to CAM for each of the contracts.

All the witness interrogations, except for that of Patricia Ramos Calderon, architect from the Hellin Town Hall, focussed on the CAM bank accounts to which the buyer’s deposits were paid.

Gerardo Cantore, sales manager of Cleyton GES from 2004 to 2009 revealed that in relation to the Bank Guarantees he went to the CAM offices in person with two lawyers, “because first CAM said one thing and then changed their criteria”

Ramon Ramiro Mauleon, another ex-employee of Cleyton GES from 2001 to 2009 said that “when he initially presented the project to several banks, CAM agreed to fund the project in totality.   Banks were queuing to fund the project”.

Fernando Martinez Hernandez, an employee of CAM confirmed that he was the business manager at the Branch in which the Cleyton GES accounts were operated.  He confirmed that CAM issued Bank Guarantees for deposits which were not necessarily paid to the special account.

When shown copies of several Bank Guarantees, many of which he had signed, from the 200 that CAM had issued on the development for deposits paid to the same accounts as those deposits paid by members of the Finca Parcs Action Group he said he did not know why this happened and why on each bank guarantee the 3 accounts were described as ‘Special Accounts’.

Furthermore, Fernando Martinez, when shown several bank account extracts, was unable to explain why CAM authorised many withdrawals from the Special Account, in complete contravention of the requirements of LEY 57/1968 including a cash withdrawal in excess of 80,000 Euros.

He added that none of the buyers ever demanded Bank Guarantees directly with CAM and that this issue was only managed between the developer and the buyers.

When questioned he ‘could not remember’ receiving emails from Keith Rule in 2008 demanding CAM to issue Bank Guarantees nor ‘could he remember’ ever seeing Keith Rule or any other buyers at his CAM Branch to demand the Bank Guarantees in person.

Patricia Ramos Calderon, municipal architect, who had visited the site, stated that according to the environmental impact Law of 2007, there was a requirement for the removal of the high tension electricity cable running through the development, which was the obligation of the developer and that no First Occupation Licences could be issued until this was done.

The final witness was a representative from the electric company, Iberdrola.  However, during the first question the Judge intervened to state that it was not necessary to question this witness as nothing he may say would affect the case.

After a break of 5 minutes, Jaime de Castro, Lawyer for the Finca Parcs Action Group delivered his conclusions in which he sated that “due to bad practices my clients have been harmed”.  He argued that the actions of the Bank and developer must not affect the buyers and that all 3 accounts were presented as special and that it was always understood that deliveries to these accounts must have the corresponding Bank Guarantees, by Law.

He stressed that the involvement of CAM in the project was so intense, something that he had demonstrated since the beginning, that Cleyton GES and CAM “should be condemned jointly and severally” to repay the sums paid by the purchasers that never received their homes.

CAM’s Lawyer, Pablo Toran, argued just the opposite.  He said Cleyton GES bore responsibility, accusing it of not fulfilling its commitments, especially when it came to handling money from the promotion in the special account and ordinary accounts.  He pleaded therefore that CAM be absolved of any liability in this case, insisting that the plaintiffs did not have any contractual relationship with CAM.

In his concluding speech Juan Munoz, Lawyer for Cleyton GES SL said that there are available sufficient financial means to continue with the urbanisation and to fix the problem of the high tension Iberdrola electric cable.  He opposed both the demands for contract cancellation and for refunds.  He insisted that Cleyton GES ‘wants to move on’…………..

The trial was completed in 2 days and now sentencing is awaited which in principle may be delivered within 20 days.

Following the conclusion of the trial, Keith Rule, co-ordinator of the Finca Parcs Action Group comments:

“Our relationship with CAM is not primarily derived from the contract, but from the Law, LEY 57/1968.  For the opening of the Special Accounts CAM must be vigilant.  CAM is responsible for ensuring that all payments to the promoter for the construction of housing is credited to the special accounts, without deviation.

CAM was the sole financial entity of the Las Higuericas Finca Parcs project and received all the off-plan deposits though it’s branch in Murcia.

We must not suffer any prejudice or harm due to the failure in the relationship between CAM and Cleyton GES SL nor as a result of CAM’s negligence and lack of due diligence particularly in respect of its complete failure to observe the requirements of LEY57/1968.

There has been a fraudulent use of our off-plan deposit money which amounts to 1.5 million Euros and CAM has been a party to this fraud over a 5 year period.

CAM failed to control, supervise or audit the activities of Cleyton GES and this is evidenced by the fact that they allowed and authorised illegal withdrawals from the Special Account.

There has been a complete failure by both defendants to observe Spanish Law, in particular LEY 57/1968.

In approximately 25 court judgements during the past 2 years Cleyton GES has been declared as ‘Whereabouts Unknown’.  However in this case, not only did they defend our Lawsuit but actually appeared in person at the trial.

We are the innocent victims of this corruption and we are confident that a verdict will be delivered condemning both defendants jointly and severally liable for the refund of our deposits, together with legal interest and costs.

Only then will it be possible for us once again to have trust and confidence in Spain.

I would like to thank all our group members who travelled to Spain at their own expense and who have, like me, suffered unnecessary stress and heartache over the past 5 years due to Cleyton GES SL and CAM Bank.

I also give thanks to our legal team without whom it would not have been possible to bring the defendants to trial.  Maria de Castro from Costa Luz Lawyers has been a tower of strength throughout the last 4 years both with the initial study of our case and with the continuing study of Case Law related to Banks liabilities according to LEY 57/1968.

Our litigator, Jaime de Castro, from De Castro Gabinete Juridico has worked tirelessly on this issue which we feel resulted in a very comprehensive Lawsuit and a very strong delivery of the facts and evidence at the trial.

Finally thanks to Hotel Emilio in Hellin who provided us with superb facilities and service throughout our stay in Hellin.  Our issues are not with the town or people of Hellin, but with the actions of Cleyton GES SL and Caja de Ahorros del Mediterraneo.

We now await the verdict with interest.

Note:  Additional reporting courtesy of La Verdad

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