NEW! Granada Appeal Court greatly applying Law 57/68

Ads:

You are completely right in your reasoning and Courts are actually foloowing that route of thinking in a  big majority of cases. The strongest cases are those were  developer/ developmenyt was funded by same Bank where payments were made by buyer. If a claimant can prove that, the circle is almost closed.

There is some Case Law, when payment was made by buyer with letter of exchanges, where Bank cashing promissory notes knew nothing about the origin/destiny of funds. In these cases, I would not advise clients to go against Bank but against conveyancing lawyer if they were part of the business.

But Ads, I repeat, almost all Courts in Spain ara producing a pro-consumer doctrine in these cases.

Hi Maria,

I posted on 14 Dec @ 10:10 asking Keith a couple of questions, which I believe are quite important, is it possible for you to answer them please.

Cheers.

María

Here are the questions from 'belucky358' regarding his AIFOS case:
 

Am I right in thinking that the below would apply to the AIFOS cases from which your firm are at present trying to obtain the details of clients deposits

It could also be an option for the Litigator to request that a representative from the buyers original conveyancing Lawyer be called as a witness to the Trial/Final Hearing.

If it transpires that there are no bank accounts in the AIFOS books appertaining to my deposits could your firm request the attendance of my original conveyancing lawyer, as, up till now he will not divulge this information ?

If the Lawsuit has not yet been filed then the Bank or conveyancing Lawyer could be named in a pre-procedure called Preliminary Diligences whereby the Court is asked for its assistance in obtaining evidence necessary for the case to proceed.

When you say that the court can "ask" for his assistance, what happens if he refuses to assist are there any penalties ?

Unfortunately there are many conveyancing Lawyers that accepted their clients off-plan deposit funds and now, despite repeated requests, will not provide evidence of the developers account to which they sent the funds.

Would the fact that he has deliberately ignored mine and Maria's requests for this information be highlighted in court ?

Thank you Maria.

You observe,  "There is some Case Law, when payment was made by buyer with letter of exchanges, where Bank cashing promissory notes knew nothing about the origin/destiny of funds. In these cases, I would not advise clients to go against Bank but against conveyancing lawyer if they were part of the business. ".

Does this therefore mean that it is bad practice for developers to request bills of exchange (promissory notes) if these could subsequently place purchasers at risk, i.e. if the Bank where BOE was encashed knew nothing of the origin/destiny of funds?

Could this be considered malpractice/lack of due diligence by the conveyancing lawyer who has not identified the risk to the purchasers?

BUT more importantly, doesn't this fly in the face of Ley 57/68, as it is not for the purchaser to have intellectual knowledge of where monies were subsequently placed, due to their inalienable rights for protection of their monies from the ouset?

What say you Keith? 

Sorry to interrupt your questions BELUCKY, as I hope Maria answers them also!

Hi Ads,

There is no need to apologise, the more answers we get, explaining these Spanish Court proceedings, the better.

I'm sure that someone will eventually get round to answering my queries.

Cheers

The reasoning of existing Case Law is that the Bank accepting letters of exchange is involved in a completely different bussiness, whcih could operate with total ignorance of the substance of the business behind.

This Bank is much more difficult to be proved as liable under Law 57/68 than the other Bank which, knowing perfectly the existence of building and off plan deposits ( for instance because of being the funding Bank) did not act according to Law 57/68 demands.

IN these cases, it is much safer to go against Lawyers indemnity insurance, in my opinion, as a matter of strategy.

I am not saying the Bank cashing BOE could never be deemed liable. I am talking of the current status of Case Law and what I consider the best strategy in these cases.

There is no final word for all cases. Every one is different.

Thanks for all the replies Keith and Maria.

I paid my stage payments via BOE. Although, the original deposit to secure the property was paid direct to the developer but that was only for about €13k roughly. I'm not liking the sound of this BOE situation. Sounds a lot less likely to be successful.

Btw, is it possible for the BOE bank to be the same as the developer bank? Or is this very unlikely?

Fazarelli:

Let´s see how case Law develops. There si still very few Court Decissions.

Yes, Bank cashing BOE might be, in some/many occassions same as funding Bank.

Thanks Maria, I really appreciate your quick reply.

I suppose the silver lining is that a lawsuit against the conveyancing lawyer's insurance would have to include legal interest for the whole time (like, 11 years in my case!), whereas against the bank it is usually from the date of action against tem (if at all). Perhaps.

Can I ask a question Maria?

Have conveyancing lawyers got a legal obligation to specify the Banking detail (Bank and Special Account where deposited monies are to be transferred) within an offplan purchase contract?

Ads: Yes, conveyancing lawyer has a professional obligation as part of due diligence work to not allow buyer to pay amounts which are not clearly deposited in the special account specified on the contract.

M11: To your questions below in bold green:

What happens if a bank is taken over by another bank after the deposit has been paid? Banks are developers in that case, would have to verify the buyer is not affected in its guarantees. Lawyer, as part of professional duties, would also have to perform a check to protect the client. 
Also does Ley 57/68 only apply if the house has not been completed, and what is their definition of completed.  Yes, just if the house as not been completed. According to Law 57/68 guarantees remains till house is handed over to buyer with all corresponding licenses.
Perhaps you could also clarify for us if it is possible to take the bank to court after you have won your case to cancel the contract, Yes, of course.

Ads,

This is precisely why myself and other AIFOS ex clients are having to pay out more money to get Maria and co, to take AIFOS to court, to examine their accounts because in 2004 my original "independant" Spanish Lawyer, who was guilty of acting with a lack of due diligence and negligence, failed to ensure that AIFOS had planning permission, hence our property was never built, plus he did not ensure the Bank Guarantee, or enter any details of the Bank or the Special Account, into which our deposits were paid, in our Purchase Contract.

Maria,

Could you answer the query I posted on the 14th of Dec, with reminders in Dec and Jan.

Maria,

If there was no Bank and special account detail as to where deposited monies were to be transferred specified in the original purchase contract and no individual Bank Guarantee was provided, then if the conveyancing lawyer was negligent from the outset, is this sufficient to gain cancellation of contract regardless of the need to prove breach of contract by the developer?  Does this failure to follow essential contract procedure of this nature for offplan purchase immediately deem the contract an illegal contract and therefore null and void? If not why not?

I'm wondering why this non provision of financial detail within the offplan contract together with non provision of an individual BG, essential for consumer protection (and presumably is in line with Ley 57/68 law) is not contrary to contract law?

This message was last edited by ads on 17/01/2014.

Maria,

Please can you advise if an offplan contract that makes no reference to the Bank and secure account where deposited monies were to be placed (and thereby adhere to Ley 57/68) is an illegal contract?

Hi Maria and Keith,

Could one of you please answer the queries I posted on the 14th of December 2013, with reminders in Dec and Jan, or could you at least tell me why you are not able to do so.

Belucky:

Would you be so kind of reminding me of the questions you made?

Ads:

One think is lawyers liability and another one, and completely foreign to the first one is grounds for contract cancellation. According to our Supreme Court, Lack of Bank Guarantee ( as the lack of precise expression of special account) is a reason for contract cancellation if this is claimed at early stages of construction, never when the house is finished. They have recently stated this reiteratedly.

The non provision of the account details and/or Bank Guarantee is contrary to contract law but, as said above, it just drives to contract cancellation if claimed at early stages of building process.